Trace compared

Tomorrow I’m going to tour unit #408 ($495,000 for 776 square feet, 120 square feet of terrace), the unit I reserved, at Trace Lofts. Before going and getting too excited I thought it would be important to run the numbers while I’m still jaded. What I did was have an agent pull past sales from 01/01/2005 to present for a number of buildings in the area. The result is my Trace comp spreadsheet. The results are not promising. At $637/square foot it will be pretty much one of the most expensive units to sell in its peer group and it’s not even concrete and steel construction like 1310 E Union. The only two comparable units in price are much smaller studio units (one at 1310 and one at Monique.)

Let me know what you think. Did I miss a key project on Capitol Hill? Is Trace really that much better?

Also here is the purchase and sale [pdf].

About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • Jen

    Hi Matt,

    How long do you plan to stay in the condo? Is is primarily an investment or a place to live?

    If it’s primarily a place to live and you love it and can afford it, the comps mean much less.

    For what it’s worth, I really like the Trace project and it seems (based on what you’ve written) to be a good choice for you.

  • Jen

    Hi Matt,

    How long do you plan to stay in the condo? Is is primarily an investment or a place to live?

    If it’s primarily a place to live and you love it and can afford it, the comps mean much less.

    For what it’s worth, I really like the Trace project and it seems (based on what you’ve written) to be a good choice for you.

  • jaap

    Matt,
    I especially like the beautiful large terrace which extends the space considerably – that sure seems worth the extra $$ to me.

    btw. I heartily recommend getting excited! Will be interested to hear how the tour goes.

  • jaap

    Matt,
    I especially like the beautiful large terrace which extends the space considerably – that sure seems worth the extra $$ to me.

    btw. I heartily recommend getting excited! Will be interested to hear how the tour goes.

  • chris

    Matt, If you really like this project and have the money to comfortably make it work, go for it. My opinion is that I would not buy there expecting it to perform well as an investment over the short (2-4 yr) term given the macro market and the price points of this project within the submarket. I am only giving my slightly educated opinion, nothing else.

    I’m a prospective first time buyer working in commercial real estate, and I’m in the “rent a really nice place or buy a POS condo” income bracket (I have no equity stake from another property nor inherited wealth) so for me the financial analysis is a key part of the rent/buy equation. That said, I’m seeking an in-city condo for lifestyle reasons knowing that, financially, its probably a better deal to buy a piece of dirt someone farther out instead of a condo. And, as a disclaimre, right now I feel rent is a better financial choice than buying, but I’m following the market.

  • chris

    Matt, If you really like this project and have the money to comfortably make it work, go for it. My opinion is that I would not buy there expecting it to perform well as an investment over the short (2-4 yr) term given the macro market and the price points of this project within the submarket. I am only giving my slightly educated opinion, nothing else.

    I’m a prospective first time buyer working in commercial real estate, and I’m in the “rent a really nice place or buy a POS condo” income bracket (I have no equity stake from another property nor inherited wealth) so for me the financial analysis is a key part of the rent/buy equation. That said, I’m seeking an in-city condo for lifestyle reasons knowing that, financially, its probably a better deal to buy a piece of dirt someone farther out instead of a condo. And, as a disclaimre, right now I feel rent is a better financial choice than buying, but I’m following the market.

  • Andy

    Chris — here’s a fresh listing you may want to consider if you can do without parking and don’t need a ton of space. For about $100,000 less than the entry level Trace units you get a true loft in a good location with a cool view of a tree:

    http://www.redfin.com/stingray/do/printable-listing?listing-id=663985

  • Andy

    Chris — here’s a fresh listing you may want to consider if you can do without parking and don’t need a ton of space. For about $100,000 less than the entry level Trace units you get a true loft in a good location with a cool view of a tree:

    http://www.redfin.com/stingray/do/printable-listing?listing-id=663985

  • http://blog.mattgoyer.com Matt

    Jen and Chris, this will be a primary residence but for two reasons I’m worried about the short term market effects. Firstly, this will represent a significant portion of my net worth. Like any other investment I want to be very careful. Secondly, I’ve been sort of thinking of moving to San Francisco and don’t want a condo tying me down. This is why I’ve stayed clear of condos where you can’t sell them initially without a penalty (Veer, Brix).

    Jaap, the terrace was much different in person. I wish I had taken a photo of it, but the terrace wall was very large as it was both tall and wide while the actual deck space was narrow and smaller than I expected. It certainly wasn’t the outdoor space that I envisioned.

    Now if only I had some inherited wealth I wouldn’t hesitate at all and get unit 502 or 508. They were both gorgeous.

  • http://twitter.com/mattgoyer mattgoyer

    Jen and Chris, this will be a primary residence but for two reasons I’m worried about the short term market effects. Firstly, this will represent a significant portion of my net worth. Like any other investment I want to be very careful. Secondly, I’ve been sort of thinking of moving to San Francisco and don’t want a condo tying me down. This is why I’ve stayed clear of condos where you can’t sell them initially without a penalty (Veer, Brix).

    Jaap, the terrace was much different in person. I wish I had taken a photo of it, but the terrace wall was very large as it was both tall and wide while the actual deck space was narrow and smaller than I expected. It certainly wasn’t the outdoor space that I envisioned.

    Now if only I had some inherited wealth I wouldn’t hesitate at all and get unit 502 or 508. They were both gorgeous.

  • http://twitter.com/mattgoyer mattgoyer

    Also, you can read more about my walk through here: http://seattle.urbnlivn.com/forums/viewtopic.php?t=51

    I’ll post more about it later this weekend.

  • http://blog.mattgoyer.com Matt

    Also, you can read more about my walk through here: http://seattle.urbnlivn.com/forums/viewtopic.php?t=51

    I’ll post more about it later this weekend.

  • Rachel

    I saw 408 too. The terrace wall was huge and solid. You could kind of see over it when standing at the level the floor will be, but you would not be able to see over it while sitting. We crawled out one of the windows and physically went on the terrace. Ted (the developer) told us to. The terrace space was very narrow, and again, you would not see anything but the wall when sitting. This will affect the light in the unit at all times too.

  • Rachel

    I saw 408 too. The terrace wall was huge and solid. You could kind of see over it when standing at the level the floor will be, but you would not be able to see over it while sitting. We crawled out one of the windows and physically went on the terrace. Ted (the developer) told us to. The terrace space was very narrow, and again, you would not see anything but the wall when sitting. This will affect the light in the unit at all times too.

  • Rip

    I have not had the opportunity to see the units first-hand, but the numbers alone are scary. ESPECIALLY if this is a short-term play. Say you were to buy and do a quick flip, you can expect to lose 6-10% depending on who and how much you cut for your agent(s). Let’s say you do FSBO and find a buyer directly, then you’ll still owe ~4% of sale price (which will likely stay flat if not lower if the flip comes quick). This means you are $20K out already!

    Outside of the numbers, I will add that appreciation is going to be a bit slower given the large number of Trace units.

    Have you tried to gauge comp value from the Onyx on 12th and E. Olive? It seems to be closest to Trace with respect to location and construction (also not steel/concrete). The sale price of those units were markedly cheaper than “market value” given the developer’s sales strategy, but is there a good way to estimate current market value if an Onyx unit were to sell? That to me is the benchmark for what the Trace purchase is (or is not) worth.

  • Rip

    I have not had the opportunity to see the units first-hand, but the numbers alone are scary. ESPECIALLY if this is a short-term play. Say you were to buy and do a quick flip, you can expect to lose 6-10% depending on who and how much you cut for your agent(s). Let’s say you do FSBO and find a buyer directly, then you’ll still owe ~4% of sale price (which will likely stay flat if not lower if the flip comes quick). This means you are $20K out already!

    Outside of the numbers, I will add that appreciation is going to be a bit slower given the large number of Trace units.

    Have you tried to gauge comp value from the Onyx on 12th and E. Olive? It seems to be closest to Trace with respect to location and construction (also not steel/concrete). The sale price of those units were markedly cheaper than “market value” given the developer’s sales strategy, but is there a good way to estimate current market value if an Onyx unit were to sell? That to me is the benchmark for what the Trace purchase is (or is not) worth.

  • http://twitter.com/mattgoyer mattgoyer

    Hi Rip,

    Fortunately I work at a real estate brokerage (Redfin) so my transaction costs are much lower than for someone not in the business but as you point out there will also be some overhead (taxes) and buying agent commission (I don’t think I’d ever go FSBO).

    I disagree with your recommendation of comparing Trace to Onyx. I encourage you to check Trace out, as it’s not at all comparable to Onyx. Trace is a gutted and rebuilt turn of the century warehouse with a lot of original details left, steel I beams, huge wood posts and beams, solid hardwood floors and ceiling, exposed brick etc. while Onyx was a quick flip conversion job. Also because of Trace Lofts unique nature it doesn’t really compare to Trace North which is being built right besides it.

  • http://blog.mattgoyer.com Matt

    Hi Rip,

    Fortunately I work at a real estate brokerage (Redfin) so my transaction costs are much lower than for someone not in the business but as you point out there will also be some overhead (taxes) and buying agent commission (I don’t think I’d ever go FSBO).

    I disagree with your recommendation of comparing Trace to Onyx. I encourage you to check Trace out, as it’s not at all comparable to Onyx. Trace is a gutted and rebuilt turn of the century warehouse with a lot of original details left, steel I beams, huge wood posts and beams, solid hardwood floors and ceiling, exposed brick etc. while Onyx was a quick flip conversion job. Also because of Trace Lofts unique nature it doesn’t really compare to Trace North which is being built right besides it.

  • jaap

    arg, bummer about the terrace! Just shows you can only tell so much from blueprints – hadn’t imagined the wall would be that high. Rachel has a good point – available light is so crucial here with our 326+ days of clouds. Definitely good to add that to the decision mix – we recently reserved at Brix and the unit having windows on two sides was a big decider.

  • jaap

    arg, bummer about the terrace! Just shows you can only tell so much from blueprints – hadn’t imagined the wall would be that high. Rachel has a good point – available light is so crucial here with our 326+ days of clouds. Definitely good to add that to the decision mix – we recently reserved at Brix and the unit having windows on two sides was a big decider.

  • Peckham

    “Firstly, this will represent a significant portion of my net worth.”

    A mortgage represents a significant portion of your net worth? Maybe you should consider renting.

  • Peckham

    “Firstly, this will represent a significant portion of my net worth.”

    A mortgage represents a significant portion of your net worth? Maybe you should consider renting.

  • Rip

    Any thoughts on a good comp or price per sq. ft. for the Onyx? Would be good to gauge value if/when a unit is up for resale, and to compare with the other projects in the 4-block radius (new Howell project as well).

  • Rip

    Any thoughts on a good comp or price per sq. ft. for the Onyx? Would be good to gauge value if/when a unit is up for resale, and to compare with the other projects in the 4-block radius (new Howell project as well).

  • Andy

    Wasn’t the Oliver/Onyx built six or seven years ago? A slightly better location aside, I think it’s comparable to the Jeffrey/Epic. These (with the Rianna) were the de facto off-campus SU dorms.

    Neither conversion appealed to me, probably because I can’t fathom paying real money for a place I rented for $700/month in college.

  • Andy

    Wasn’t the Oliver/Onyx built six or seven years ago? A slightly better location aside, I think it’s comparable to the Jeffrey/Epic. These (with the Rianna) were the de facto off-campus SU dorms.

    Neither conversion appealed to me, probably because I can’t fathom paying real money for a place I rented for $700/month in college.

  • Art Vandelay

    I lived in the Oliver for a couple of months before it was converted to the Onyx. It was a decent enough apartment but not something I’d buy as a condo. There isn’t much sound insulation between units. Also, they did the bare minimum when they converted it to condos unless you paid for upgrades.

    I saw my unit after it was “converted” and the only change was that they put stainless steel-like doors on the original black refrigerator. It was the same carpet, the same linoleum floors, the same cheap, unpainted baseboards that you see in every apartment, and the same laminate cabinets and countertops.

  • Art Vandelay

    I lived in the Oliver for a couple of months before it was converted to the Onyx. It was a decent enough apartment but not something I’d buy as a condo. There isn’t much sound insulation between units. Also, they did the bare minimum when they converted it to condos unless you paid for upgrades.

    I saw my unit after it was “converted” and the only change was that they put stainless steel-like doors on the original black refrigerator. It was the same carpet, the same linoleum floors, the same cheap, unpainted baseboards that you see in every apartment, and the same laminate cabinets and countertops.

  • Rip

    Thanks for the comments! I am aware the Oliver/Onyx construction is not your classic downtown-grade condo, but that’s actually why it’s interesting to me (for the right price point), as someone looking for value and flexibility.

    The liquidity of high-grade construction units will continue to suffer as the entry-level price points skyrocket. I would much rather pick up a apartment-grade unit in a great location on the cheap (less than $500-600 / sq. ft.) and be able to sell it off quickly if or when I want out (and for the same % gain, just off a lower base price). Unless of course ‘low-grade’ condos appreciate slower than their ‘high-grade’ counterparts, which I have seen very little data around to prove and have actually seen more anecdotal evidence to support the opposite.

    Housing affordibility in Seattle is a very real issue and is going to worse before it gets better. A condo report (from Seattle Times, I think?) last fall showed that studios appreciated significantly faster than one-bedrooms, which appreciated faster than two-bedrooms – part of this can be attributed to the demographic skew of condo buyers e.g. single young professionals, but in my opinion an even larger factor at play is simply affordability. Anyone looking for value and flexibility may be better-served huting down gems in older projects, even if they aren’t the latest headline in the local newspaper.

    Just my two cents, but love hearing others’ thoughts!

  • Rip

    Thanks for the comments! I am aware the Oliver/Onyx construction is not your classic downtown-grade condo, but that’s actually why it’s interesting to me (for the right price point), as someone looking for value and flexibility.

    The liquidity of high-grade construction units will continue to suffer as the entry-level price points skyrocket. I would much rather pick up a apartment-grade unit in a great location on the cheap (less than $500-600 / sq. ft.) and be able to sell it off quickly if or when I want out (and for the same % gain, just off a lower base price). Unless of course ‘low-grade’ condos appreciate slower than their ‘high-grade’ counterparts, which I have seen very little data around to prove and have actually seen more anecdotal evidence to support the opposite.

    Housing affordibility in Seattle is a very real issue and is going to worse before it gets better. A condo report (from Seattle Times, I think?) last fall showed that studios appreciated significantly faster than one-bedrooms, which appreciated faster than two-bedrooms – part of this can be attributed to the demographic skew of condo buyers e.g. single young professionals, but in my opinion an even larger factor at play is simply affordability. Anyone looking for value and flexibility may be better-served huting down gems in older projects, even if they aren’t the latest headline in the local newspaper.

    Just my two cents, but love hearing others’ thoughts!

  • Chris

    yeah, here’s a thought. If you buy a wood frame condo your living in a depreciating asset that has a 40-50 years of useful life left, possiibly less if it was built in the 80’s. Warehouse conversions at least offer something that really is irreplicable in terms of architecture; price points for how much that is worth being debatable. I’ve thought about buying a low-end condo and hoping the investment would be protected by seemingly ever-increasing replacement construction costs, which may happen. that said, costs have spiked 50% in the last two years, hence entry level new product starts at $475-$500/sf no matter where it is located. Contrary to most, I think a scenario where a reversion to lower commodities prices as more supply comes on line and technology improves is plausible, which may lead to a supply of more affordably prices condos

  • Chris

    yeah, here’s a thought. If you buy a wood frame condo your living in a depreciating asset that has a 40-50 years of useful life left, possiibly less if it was built in the 80’s. Warehouse conversions at least offer something that really is irreplicable in terms of architecture; price points for how much that is worth being debatable. I’ve thought about buying a low-end condo and hoping the investment would be protected by seemingly ever-increasing replacement construction costs, which may happen. that said, costs have spiked 50% in the last two years, hence entry level new product starts at $475-$500/sf no matter where it is located. Contrary to most, I think a scenario where a reversion to lower commodities prices as more supply comes on line and technology improves is plausible, which may lead to a supply of more affordably prices condos

  • Jen

    Matt,

    What’s your reason for wanting to buy now? It seems like you want the flexibility to move in the short term and aren’t “sold” on one of the Trace units. I guess I don’t see (especially when we may be at a market peak right now) why you would want to buy versus renting a similar space for a fraction of the cost.

    Call me conservative, but what would you do if you wanted to move in a couple years and your condo’s value has gone down? If you’re renting, moving whenever you want is comparatively hassle free.

    I know there’s a lot of pressure to “buy, buy, buy” and avoid “throwing money away on rent,” but there are very real and very good reasons to rent in some situations. From what you’ve shared, it seems like yours may be one of these situations.

  • Jen

    Matt,

    What’s your reason for wanting to buy now? It seems like you want the flexibility to move in the short term and aren’t “sold” on one of the Trace units. I guess I don’t see (especially when we may be at a market peak right now) why you would want to buy versus renting a similar space for a fraction of the cost.

    Call me conservative, but what would you do if you wanted to move in a couple years and your condo’s value has gone down? If you’re renting, moving whenever you want is comparatively hassle free.

    I know there’s a lot of pressure to “buy, buy, buy” and avoid “throwing money away on rent,” but there are very real and very good reasons to rent in some situations. From what you’ve shared, it seems like yours may be one of these situations.

  • Rip

    Agree with Jen. Am particularly confused about your strong drive for buying a new (and hefty priced) condo when your buddy Tim has spent the past year diligently blogging about the cataclysmic end that will be our local real estate market.

  • Rip

    Agree with Jen. Am particularly confused about your strong drive for buying a new (and hefty priced) condo when your buddy Tim has spent the past year diligently blogging about the cataclysmic end that will be our local real estate market.