Inventory Overload

Covid-19 Has Created a Condo Conundrum in Downtown Seattle

Can buyers and developers bet on the return of a vibrant downtown?

By Benjamin Cassidy September 14, 2020

Seattle condos

The pandemic has prompted a different fear of heights.

For months now, Seattle home shoppers have had to weather an unrelenting seller’s market. After a torrid July, home prices climbed even higher in August, and inventory remained astonishingly low amid the coronavirus pandemic. This scarcity was felt across the Puget Sound region, where buyers had to do “some pretty illogical things”—waiving inspections, paying way above asking—to close on a property, according to Frank Wilson, the Kitsap regional manager and branch managing broker at John L. Scott Real Estate in Poulsbo. “These are counterintuitive to what we used to see with a negotiation process.”

But there’s one sector of our local real estate market where home browsers can still avoid crushing competition: downtown condos. Though the pandemic has cleared out many offices, developers have pressed on with projects rising from the city's core, adding to its condo supply at a time when few are willing to make the move downtown. The resulting inventory numbers are jarring: While it would take about one month to unload every single-family house on the market in Seattle at August’s rate of sales, accomplishing the same for every downtown and Belltown condo would require a whopping nine-month slog, per Northwest Multiple Listing Service's August breakdown. In March, that number was under three. “I've gotten more inquiries about, ‘Can you sell my downtown Seattle condo for x?’ than we've gotten in a long time,” says Lindsey Gudger, the owner of Georgetown-based Every Door Real Estate. “And unfortunately, the answer for a lot of those people is, based on market data, ‘No, we cannot.’”

It's easy to surmise why home buyers are casting shade at all those downtown lofts. Uncertainty about the future of workplace-centric neighborhoods abounds, and quarantine has made many warier of "cozy" confines. "We used to get people that would say, 'I want to live on one or more acres,' and what they really meant was, 'I want to feel like I have space and privacy,'" says Gudger. "And we're seeing a lot more interest in, 'I just want room.'"

He's seen diminishing interest in what he calls “exterior lifestyle,” or the cultural and institutional offerings in the vicinity of one’s home. “I used to hear about Walk Score all the time,” he says. “I haven't heard that word in six months.”

Gudger also cites social unrest in the city’s core and social distancing as secondary reasons why prospective home buyers are hesitant to close on high-rise pads. “Who wants to ride an elevator with 10 other people?” he wonders.

Josh Nasvik has heard that very concern while trying to fill units at The Emerald, a 40-story, 262-condo tower that's slated to open near Pike Place Market later this year. A potential buyer asked him how many people would be allowed to share an elevator. “That's certainly not a question that I've answered in 20 years of real estate,” says Nasvik, a managing partner at Polaris Pacific.

He's prepared for it now, though. The parties behind the building at Second Avenue and Stewart Street have prepared to open the development's doors in a socially distanced world. Elevator rides will, indeed, be limited to four people. Fitness center and yoga studio reservations will limit crowding. And a rooftop lounge will allow for plenty of space between residents. Still, these amenities were little comfort to buyers during the crisis's early months. “Sales fell off the map,” says Nasvik.

Demand may be starting to return. Nasvik points to an uptick in transactions during the past several weeks, including significant interest from tech workers relocating to Seattle. He’s also witnessed some unexpected movement across Lake Washington: Young buyers from Bellevue have seized this opportunity to live in downtown Seattle condos. “It's really bizarre,” says Nasvik. “That's the last thing any of us expected, but we were happy to embrace it.”

Are these home shoppers making good investments? Nasvik notes that both buyers and sellers desire certainty, which the pandemic may not allow for anytime soon. But he's bullish on downtown's recovery, and Gudger wouldn't bet against the area's long-term rebound. “I think that five years from now," says Gudger, "if you buy a downtown condo now, you're going to be in pretty good shape.”

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