Saviors at the Gate
Out-of-state buyers are helping to prop up the downtown condo market.
THREE YEARS AGO, Linda and David van der Merwe were ready for a change. No longer tethered to their life and home in Florida—their youngest child had moved out, and David had just sold his electric-motor-manufacturing business—and desperately seeking a milder climate, they dusted off their atlas and brainstormed relocation locales. No city was too exotic or remote for the South African natives. “We were free for the first time in our lives,” David says. “We could go literally anywhere in the world.”
They made it as far as the Pacific Northwest. Drawn, they say, by its cultural offerings and progressive politics, the empty nesters settled on Seattle and bought a 2,000-square-foot condo in the downtown high-rise Fifteen Twenty-One Second Avenue last February. And they were part of just the first wave of interstate and international buyers who are moving downtown and helping to keep the city’s flagging luxury—condo market afloat. “In the past, I haven’t seen these numbers of people coming from outside the area,” says Jim Stroupe, an associate broker with Windermere who deals almost exclusively in downtown condos. “Normally, you just saw Seattle residents upgrading from somewhere else in the city.”
In the absence of a cash-incentive cattle prod like the $8,000 first-time homebuyer tax credit to spark interest among buyers—with prices in the seven figures, the luxury units downtown aren’t exactly attracting loads of longtime renters—closed sales of condos were off by nearly 50 percent last summer, compared to numbers from the previous summer. And that makes the crush of buyers from elsewhere at buildings like Fifteen Twenty-One that much more significant; 25 percent of the building’s residents came from outside of the state. William Justen, the tower’s “project visionary,” won’t go so far as to call the transplant influx a lifesaver, but he will call it “significant.”
Why they’re flocking downtown now is up for debate. Dean Jones, the president of local real estate marketing firm Realogics, credits the cruise lines for introducing domestic domicile hunters to the area and quality condo design for convincing them to buy. Stroupe can name a handful of Taiwanese and Korean clients who snatched up units for their children who are attending UW. And Mac McQuade, a representative for Olive 8, says he’s been specifically targeting out-of-state buyers with recent marketing campaigns. “We actively seek an audience of relocation agents, so people from California or the East Coast or even abroad are aware of us.”
One thing almost everyone can agree on is that even though those foreign buyers who are interested in condos only as an investment see U.S. real estate as a bargain, they’ve all but fled the Seattle market. “If they’re looking for distressed properties, they’re going to Las Vegas or Phoenix,” says Eric Midby, of the 30-story Escala tower project, where nearly 20 percent of buyers are from out of the state. “Our international buyers have homes in several locations, and they spend their year traveling from one to another.”