Condos are returning to Seattle and Bellevue on a large scale for the first time since 2010. Representatives from the housing sector say new condos will add variety for prospective buyers, however the high price tag will do little to address housing affordability.
Since 2000, condo construction in both cities peaked in 2007 with 1,590 builds but eventually tapered off without any completed condo projects between 2011 and 2014. Starting in 2019, there will be between 1,000 and 2,200 condos planned each year, as reported by the Seattle Times.
Marco Lowe, Director of Government Affairs for the Master Builders Association of King and Snohomish Counties (MBAKS), told Lens that condos have not been built in the past several years due to litigation issues related to condo defects. Recently, the appreciation of condo prices has attracted the eye of some developers.
“They are a critical step in housing,” said Lowe. “For many people, condos are the first home they purchase after renting. The equity in condos can help buy a next home or some may live their adult lives in a condo and pass it on to the next generation.”
It’s an essential tool for the middle-class, he added.
Condos are typically an affordable way to bring more homes to the market. They also serve populations who want to walk to work or have a shorter commute, and condos tend to be less expensive than single-family home alternatives. However, the ones in development now won’t be a good fit for all.
“The units being built are very expensive, and that is not serving the more affordable ends of the market,” said Lowe.
He added that MBAKS is lobbying for corrections to the condominium law in the next legislative session which would help strike a balance between consumer protections and affordable housing, and hopefully encourage more developers to consider building more condos in the future.
Washington Realtors Association Government Affairs Director Nathan Gorton told Lens that the slight uptick in condos being built is due in large part to vacancies in apartment buildings and the fact that the region’s developers have primarily built apartments for the last 10 years.
“What we are seeing right now are high-end condos being built,” said Gorton. “These are builders who built high-end apartments and are now turning to condos.”
Big builders typically self-insure, and the high-end condos make them enough money to take on the risk, he continued. Until the dangers are minimized, developers will likely only focus on high-end condos.
“We need to see developers building condos in areas like Shoreline, Everett and Tacoma where the land costs are less…that would absolutely help on the housing affordability side. Until then, we will see high-end condos being built.”
The biggest challenge for condos is the fact that there is no exact definition for what a condo defect is. Just over 10 years ago, the state legislature tried to fix the legal issues with condo defects, however it wasn’t as successful as lawmakers hoped.
“What builders want is certainty,” said Gorton. “Whatever the standard is would be great but give us a standard.”
Gorton said he is glad to see condos making a comeback, however they are unlikely to help too much with housing challenges when pricing starts at $600,000.
Jessie Culbert, a Redfin agent who primarily focuses on condo sellers in the downtown area, told Lens that Seattle has been in a building binge with apartments since the heels of the recession, and now the city can expand to other options.
“It was not as financially appealing to build condos for developers, and there was all this new demand with the massive migration to Seattle with the jobs being created,” she said.
Since working at Redfin, Culbert said she has noticed an increase in the number of housing choices that potential buyers will view before making their decision which means they take longer to sign, and they are getting homes for below market price.
Seattle has built more apartments in the last five years than in the prior 50 years combined. The city has more competition among apartments which is causing rents to stabilize at last, however it left little room for condo growth in the resale market, added Culbert.
“If you are a developer, at this point you are thinking about where the next place you can build …and how you will be profitable.”
The challenge with the new condos in development is that $1000 or $1200 per square foot will put many of the new builds out of the price range for first-time or younger buyers.
Culbert said that condos are great for adding density in places that can support it.
“I think the city has been working to address the issues caused by this increase in population… adding density in neighborhoods that are already dense living places makes a lot of sense and is probably where Seattle is heading and needs to head.”
Culbert said while she would love to say more affordable condos are on the horizon, developers have to deal with expensive labor, material and permitting costs first.