As I've told a number of friends and clients, I'm not ready to take off my cheerleader uniform just yet, but I've certainly had to put down my pom-poms... we are indeed seeing some prices drop, especially in new (and newer) condos and townhouses. But in many cases, these properties were overpriced, considering either the quality of design and construction or the fact that there were so many similar properties out there. Here's an example from my neighborhood, lower southeast Queen Anne:
This townhouse is new construction, just up the hill from the heart of Seattle Center. It has all the bells and whistles (granite counters, stainless appliances, a soaking tub) buyers seem to want these days, though I wonder if they just think that's what they're supposed to have... I love the way stainless appliances look but I gotta tell ya, they're difficult to keep clean, and most of what's sold with new construction is no different than the stock black or white appliances you found a few years back. I'm not saying you shouldn't like them--just look past them at the property itself and whether it's right for you.
This 3-bedroom, 2-bathroom townhouse came on the market over a year ago (January '07) for $659,000 with "view home" emblazoned on its yard sign. It sits with its three sibling townhomes just far enough up the south slope of Queen Anne that one expects great views of downtown Seattle and the Space Needle, and no doubt the developer expected to cash in on that aspect of the property when he/she tore down the bungalow that previously sat there. One would think that the design and layout would make the most of these views by placing the living/entertaining space on the top floor.
But guess what? The only views are from the master bedroom and its small deck which is on the top floor while the living space is on the second floor with the main windows facing west toward... a carport across the street. Even up in the master "suite" the window placement does not allow one to take in the view from the bed.
Hey everyone, it's a beautiful, clear evening... grab your cocktail and let's head up to the corner of our bedroom and enjoy the view.Which means this "city view" townhouse is just like the scores of others not only on Queen Anne but in practically every other neighborhood in and around Seattle for literally hundreds of thousands of dollars less. Same finishes. Same exterior details and look. Same cramped driveways with nearly impossible entry angles that practically assure the small garages will serve as storage units while the owners' cars are parked on the street.
And so this townhouse sat unsold for five weeks at $659,000... for two months at $639,000... for five weeks at $599,000... then another two-and-a-half months at $579,000 (during which someone almost bought it, I should mention)... then dropped to $549,000, then $529,000 over the holidays...
And then dropped to $499,000 almost one year to the day from when it first listed... that $160k difference represents a 25% "drop", which of course factors into some of the "declining market" mentality. It is finally under contract to be sold... I won't know what the sale price is unless/until it closes but I'll keep you posted.
These scenarios are playing out all over town... spec houses built on property purchased at the height of the run-up in values, and at the height of the market for lumber, concrete and the like...
So when you read that condo and townhouse prices are falling, it's sometimes true... just as it's true that many of those prices were too high to begin with due to the fact that they are competing with many similar, nearly identical, properties. (Isn't it funny how, like many things in life and nature, a little diversity is healthy?)
But for all these townhouses sitting unsold, there are many, many properties that are pushing values up in their category or area, often in multiple-offer situations, just like the old days. Single-family home prices were up 6% last month... doesn't sound like a down market, now does it? More on that in my next post.
