Last week, Goldman Sachs put another feather in Seattle Bubble’s cap, predicting that Seattle housing prices will drop 22 percent over the next two years. Of the 20 major U.S. cities in the report, Seattle’s price drop projection was by far the most severe—the next largest projected decline was 12 percent, and that second-place honor went to none other than our lovable neighbor to the south, Portland. The report attributed the Seattle’s situation to overvalued homes (um, duh?).
Given such projections, it’s not surprising to hear about the death of another proposed multifamily housing project in Seattle. As reported on the PI.com yesterday, Othello Partners, which currently has a 352-unit apartment building under construction adjacent to the Othello light rail station in southeast Seattle, has “held off a planned second apartment and are searching for a buyer or new partner for it.” Alas, the future—as rendered below—isn’t coming to Othello Station as quickly as some of us had hoped.
The building on the right is under construction. The one on the left is not to be.
As for the national real estate scene, here’s what the Urban Land Institute has to say: “Disappointment and resurging angst were generated by numerous US indicators in May.”
And here’s the Wall Street Journal chiming in on a new study out of Harvard: “With the U.S. job market in dire straits, household incomes declining and foreclosures dragging down home values, the housing market may take years to recover.”
Architecture is a leading indicator for real estate development, and based on the lack of action I currently see firsthand in the local design community —particularly in the private sector—these dismal projections would seem to be right on.
But wait. All is not dead.
Yesterday, the Daily Journal of Commerce reported that AvalonBay Communities broke ground on a 204-unit mixed-use apartment building in lower Queen Anne, rendered below (disclosure: GGLO, where I work as an urban designer, designed the building). To the best of my knowledge, this project is the first large, market-rate multifamily housing project in Seattle to move forward in aftermath of the housing bubble (readers, please correct me if I’m wrong).
The projections for Seattle’s long-term population and job growth are still robust compared to most US cities. The project’s developer, AvalonBay, has plenty deep pockets, and the timing for this project may turn out to be perfect, assuming the economy actually recovers over the next 18 months or so.
But given the massive trauma over the past two years, the big question remains: Will things eventually return to “normal,” or has something broken for good, forcing us into a new, unknown paradigm?