Dean Says Seattle is Different; Keep Buying!

It’s not just Trace North that wants you to keep buying Seattle Business Monthly wrote about the “Real Estate: Condo Conundrum” (via Marlow) and talks to Dean Jones of Realogics who after Leslie Williams profits from keeping us buying:

“The media spectacle makes it difficult for the average consumer to understand that Seattle is significantly different from the rest of the country,” says Dean Jones, president and CEO of Seattle-based real estate research firm Realogics. “Real estate is hyperlocal.”
According to Jones and other industry insiders, the condo market in downtown Seattle is doing amazingly well. Demand is high, and it’s going to stay that way, Jones says. According to Realogics, 93 percent of new-construction condos delivered in 2007 have sold, and 73 percent of 2008’s new inventory has already found buyers. While many people are buying, a lot of others are not selling. Despite a nationwide panic to offload property, Seattle has experienced a decrease in new listings; just 99 in June 2008, compared to 150 in June 2007. What’s even more intriguing is that almost 1,000 new units were added to the market in 2007. If the trend continues, the downtown condo sales absorption rate will soon eclipse that of last year.

I would love to see a spreadsheet of the projects that Dean believes are 93 and 73 percent sold! As well as his projections for 2009. Dean?

Off the top of my head let’s go through the all out failures: Domaine, Expo 62, Moda

And those struggling or who have struggled to move inventory: Queen Anne High, Veer Lofts, Rollin Street, Trio, Trace North, Brix

About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

You can also find Matt on Twitter or skiing.

  • Anonymous

    He’s lying. It is really just that simple.

  • http://americandigest.org Vanderleun

    He’s lying. It is really just that simple.

  • Dan C

    Realogics is a “research” firm? Since when did research become synonymous with real estate agent/marketing shill? No different than a used car salesman on Aurora.

    I would love to see some of the numbers these guys run, along with an explanation.

  • Dan C

    Realogics is a “research” firm? Since when did research become synonymous with real estate agent/marketing shill? No different than a used car salesman on Aurora.

    I would love to see some of the numbers these guys run, along with an explanation.

  • http://www.mikeplummer.com Mike

    I’m with Dan C. Realogics describes itself as an “Award-Winning Market Catalyst for Residential and Mixed-Use Real Estate” — hardly an objective bias for a research firm.

    Let’s go Dean, where are the spreadsheets?

    I also love how they use June08 vs June07 data when it’s now September. I realize there’s a lag in the data becoming public, but the rainy season has clearly begun in earnest, so I don’t really care what happened in June. Moreover, just yesterday Wendy posted July data for new and existing condos aggregated. This data doesn’t paint such a pretty picture, especially outside of belltown/downtown.
    Interesting times, no doubt.

  • http://www.mikeplummer.com Mike

    I’m with Dan C. Realogics describes itself as an “Award-Winning Market Catalyst for Residential and Mixed-Use Real Estate” — hardly an objective bias for a research firm.

    Let’s go Dean, where are the spreadsheets?

    I also love how they use June08 vs June07 data when it’s now September. I realize there’s a lag in the data becoming public, but the rainy season has clearly begun in earnest, so I don’t really care what happened in June. Moreover, just yesterday Wendy posted July data for new and existing condos aggregated. This data doesn’t paint such a pretty picture, especially outside of belltown/downtown.
    Interesting times, no doubt.

  • http://www.realogics.com Dean

    Hi Matt – You are certainly welcome review our reports if you like – come on by for coffee talk(sorry all – we can’t publicize individual sales reports for actively selling projects – Matt can validate). Stats are commonly misunderstood (and debated), especially when editorialized without proper context. This article was focused on MLS Area #701, which is a statistical area bound by Yesler Way north to Denny Way (we include Enso, Rollin St, etc.) and from I/5 west to Elliott Bay – so this won’t pick up the submarkets outside the downtown core. We track all active new construction projects, which excludes the referenced projects that flipped to third parties or reverted to apartments (due to market acceptance, buyer credit or product issues). When measuring market trends, we use stats with broader time periods (i.e. year-to-date) versus radical month-to-month fluctuations. Today we can see that MLS Area #701 appreciated 2.66% year-to-date in August over the same period in 2007 (since down from June’s report in the article). Note this excludes most new construction presales because 90% aren’t listed on the MLS. Add in new construction and the total sold and median home price numbers are considerably higher (more than 600 presold units in MLS Area #701 are still yet to close but most should by late spring 2009). Choosing the right time to buy has many variables but a popular belief that all markets will eventually follow national trends ignores the law of supply and demand (thankfully we’re not Miami). While Seattle has strong real estate fundamentals only time will tell if we’ll be the last one in and the first one out of this national housing correction. I think consumer confidence may prove to be a larger issue than everything else but fortunately, buyer emotions can sway as fast as any market index. Cheers.

  • http://www.realogics.com Dean

    Hi Matt – You are certainly welcome review our reports if you like – come on by for coffee talk(sorry all – we can’t publicize individual sales reports for actively selling projects – Matt can validate). Stats are commonly misunderstood (and debated), especially when editorialized without proper context. This article was focused on MLS Area #701, which is a statistical area bound by Yesler Way north to Denny Way (we include Enso, Rollin St, etc.) and from I/5 west to Elliott Bay – so this won’t pick up the submarkets outside the downtown core. We track all active new construction projects, which excludes the referenced projects that flipped to third parties or reverted to apartments (due to market acceptance, buyer credit or product issues). When measuring market trends, we use stats with broader time periods (i.e. year-to-date) versus radical month-to-month fluctuations. Today we can see that MLS Area #701 appreciated 2.66% year-to-date in August over the same period in 2007 (since down from June’s report in the article). Note this excludes most new construction presales because 90% aren’t listed on the MLS. Add in new construction and the total sold and median home price numbers are considerably higher (more than 600 presold units in MLS Area #701 are still yet to close but most should by late spring 2009). Choosing the right time to buy has many variables but a popular belief that all markets will eventually follow national trends ignores the law of supply and demand (thankfully we’re not Miami). While Seattle has strong real estate fundamentals only time will tell if we’ll be the last one in and the first one out of this national housing correction. I think consumer confidence may prove to be a larger issue than everything else but fortunately, buyer emotions can sway as fast as any market index. Cheers.

  • Anonymous

    First, we flush the turkeys:
    “which excludes the referenced projects that flipped to third parties or reverted to apartments (due to market acceptance, buyer credit or product issues”

    Then we add in the stuff that nobody knows about at all:

    “Add in new construction..”

    And backload that with a “most” qualifier:

    “more than 600 presold units in MLS Area #701 are still yet to close but most should by late spring 2009…”

    Which produces….. A fully lipsticked pig.

    Sure is purty.

  • http://americandigest.org Vanderleun

    First, we flush the turkeys:
    “which excludes the referenced projects that flipped to third parties or reverted to apartments (due to market acceptance, buyer credit or product issues”

    Then we add in the stuff that nobody knows about at all:

    “Add in new construction..”

    And backload that with a “most” qualifier:

    “more than 600 presold units in MLS Area #701 are still yet to close but most should by late spring 2009…”

    Which produces….. A fully lipsticked pig.

    Sure is purty.

  • Anonymous

    Methinks we are getting “The Full Barnum.”

  • http://americandigest.org Vanderleun

    Methinks we are getting “The Full Barnum.”

  • rollin st.

    Rachel Maddow rules.

  • rollin st.

    Rachel Maddow rules.

  • http://twitter.com/mattgoyer mattgoyer

    Hi Dean,

    Thanks for stopping by and explaining how you arrived at the number even if you can’t share the data.

    I agree with another commentor that you shouldn’t be taking out the distressed buildings. Taking them out gives you a false sense of reality.

    I would also be curious to take a look at pre-sale rates and what the success rate is on pre-sales these dates. Moda was effectively considered 100% pre-sold and then everything evaporated drastically dropping the pre-sold number. With financing increasingly difficult to obtain I’m sure there are a lot of people who have pre-bought but will soon find out that they can’t close.

  • http://blog.mattgoyer.com Matt

    Hi Dean,

    Thanks for stopping by and explaining how you arrived at the number even if you can’t share the data.

    I agree with another commentor that you shouldn’t be taking out the distressed buildings. Taking them out gives you a false sense of reality.

    I would also be curious to take a look at pre-sale rates and what the success rate is on pre-sales these dates. Moda was effectively considered 100% pre-sold and then everything evaporated drastically dropping the pre-sold number. With financing increasingly difficult to obtain I’m sure there are a lot of people who have pre-bought but will soon find out that they can’t close.

  • Dan C

    Dean,

    Was that picture of you taken in your place? Do you hang with Liberace or what?

    Given that we have this massive pent-up demand in the 701 MLS area, could your firm work on converting the WaMu tower into condos? All of those laid off employees are going to have to live somewhere right?

    At least THAT building has some style!

  • Dan C

    Dean,

    Was that picture of you taken in your place? Do you hang with Liberace or what?

    Given that we have this massive pent-up demand in the 701 MLS area, could your firm work on converting the WaMu tower into condos? All of those laid off employees are going to have to live somewhere right?

    At least THAT building has some style!

  • Anonymous

    As financing tanks and more and more impossible condos come online, it seems to me that the developers are going to have to start cutting somewhere.

    They’ll probably start with marketing consultants. On the other hand, if you cut prices enough you can fill the condos with subprime defaulters now made into renters with government subsidies.

    And that’s how the condo boom of Seattle turned into projects.

  • http://americandigest.org Vanderleun

    As financing tanks and more and more impossible condos come online, it seems to me that the developers are going to have to start cutting somewhere.

    They’ll probably start with marketing consultants. On the other hand, if you cut prices enough you can fill the condos with subprime defaulters now made into renters with government subsidies.

    And that’s how the condo boom of Seattle turned into projects.

  • http://twitter.com/mattgoyer mattgoyer

    Or you could argue that developers are going to need marketers more than ever since condos will no longer sell themselves.

  • http://blog.mattgoyer.com Matt

    Or you could argue that developers are going to need marketers more than ever since condos will no longer sell themselves.

  • Anonymous

    True, but as we have seen — at the top of the bubble and the bottom of the crash — the right price sells condos.

  • http://americandigest.org Vanderleun

    True, but as we have seen — at the top of the bubble and the bottom of the crash — the right price sells condos.

  • EconE

    Yeah…sure…more marketing/advertising.

    That’s the ticket.

    It’s not like there hasn’t been enough of it over the last couple years.

    I guess advertising is OK if you want to try to sell me a nice cheeseburger…but a home? Get real!

    It kind of reminds me of the quote by Stephen Leacock I believe…

    “Advertising: The science of arresting the human intelligence long enough to get money from it.”

  • EconE

    Yeah…sure…more marketing/advertising.

    That’s the ticket.

    It’s not like there hasn’t been enough of it over the last couple years.

    I guess advertising is OK if you want to try to sell me a nice cheeseburger…but a home? Get real!

    It kind of reminds me of the quote by Stephen Leacock I believe…

    “Advertising: The science of arresting the human intelligence long enough to get money from it.”

  • expat

    He is like the realtor that told my old landlord in a ‘significant’ belltown condo building in June 2008 that the market was ‘hot’. We laughed and moved on when she offered to let us live there in the ‘3 weeks it would take to market, sell and then close’ on her place…into a place in Greenlake that was listed at 850k but somehow it was ok to rent to us for 2750/mo with a short term lease. They then put up a ‘SOLD!’ sign in the front steps as if we were dumb enough to pay full price.

    The kicer was when my neighbor asked if we had received the letter about the lien from the contractor…no I told him, we rented :)

    Now our original place in Belltown is still for sale, after a big price drop and now it is well below the price she originally paid for it in 2006…oops. I feel bad b/c she was so nice…

  • expat

    He is like the realtor that told my old landlord in a ‘significant’ belltown condo building in June 2008 that the market was ‘hot’. We laughed and moved on when she offered to let us live there in the ‘3 weeks it would take to market, sell and then close’ on her place…into a place in Greenlake that was listed at 850k but somehow it was ok to rent to us for 2750/mo with a short term lease. They then put up a ‘SOLD!’ sign in the front steps as if we were dumb enough to pay full price.

    The kicer was when my neighbor asked if we had received the letter about the lien from the contractor…no I told him, we rented :)

    Now our original place in Belltown is still for sale, after a big price drop and now it is well below the price she originally paid for it in 2006…oops. I feel bad b/c she was so nice…

  • The MD

    Dean, you don’t REALLY believe what you just said, do you? I mean your firm ALREADY has had a few “5-star” buildings back down and out of the market. Why do you think that is? I’d LOVE to hear your feedback. I mean, Seattle is GREAT, right? So “GREAT” and “SAFE” that developers are starting to walk away from their original plans.

  • The MD

    Dean, you don’t REALLY believe what you just said, do you? I mean your firm ALREADY has had a few “5-star” buildings back down and out of the market. Why do you think that is? I’d LOVE to hear your feedback. I mean, Seattle is GREAT, right? So “GREAT” and “SAFE” that developers are starting to walk away from their original plans.

  • http://www.realogics.com dean

    Matt – the market operates on active supply and current demand so if a project is no longer selling condos (for whatever reason), they’re not supply. I appreciate the argument that some projects have reverted to apartments (i.e. Expo 62, MODA and possibly now Domaine). Be it due to market acceptance or other economics it’s a reminder that developers are affected by numerous influences – buyer demand is just one of them. Consider rising construction costs (up about 40% in the last two years), delayed deliveries and of course, the unavailability of construction financing. With the credit crunch, developers are required to pony up much more equity; must post more presales; must sign recourse loan commitments; and must pay higher interest rates along with many other onerous terms that simply won’t pencil new construction at this time. And this assumes you can even find a construction lender… what’s been played out in the media more recently has actually been affecting credit committees since last summer (’07). The result? No new condo project has been financed in more than a year, and yes, this unfortunately includes several projects we’ve been representing. The pipeline will dry up and demand will eventually create pressure for more new construction on whatever terms. Meanwhile, we acknowledge the market has slowed – it’s understandable that many buyers are sidelined in concern given the national housing market, the economy and their borrowing capacity (purchase power). The investor contingent, which was about 25-40% of the market has withdrawn as developers now discourage “flippers” with one year resale restrictions, prequals, etc. (this is a good thing – look at the damage done in other markets). At the same time, mortgage industry guidelines and rates change daily, which could affect some buyers from performing on their presale contracts (at least using their original assumptions). This was likely one reason that MODA reverted back to apartments but I suspect another compelling reason was comparing their modest presale revenues to their final construction costs. And while sales were sluggish at EXPO 62 – it ultimately made sense to sell to an apartment operator at the prevailing cap rates (remember that developers are in the business of selling real estate in whatever way pencils). The irony? We’ll likely see these as condo conversions by 2010 when there’s no new construction deliveries. Don’t you find it interesting that the market is always positioned as “the sky is limit” or “the sky is falling”? In reality the market is neither – it’s just floating back in forth somewhere in between.

  • http://www.realogics.com dean

    Matt – the market operates on active supply and current demand so if a project is no longer selling condos (for whatever reason), they’re not supply. I appreciate the argument that some projects have reverted to apartments (i.e. Expo 62, MODA and possibly now Domaine). Be it due to market acceptance or other economics it’s a reminder that developers are affected by numerous influences – buyer demand is just one of them. Consider rising construction costs (up about 40% in the last two years), delayed deliveries and of course, the unavailability of construction financing. With the credit crunch, developers are required to pony up much more equity; must post more presales; must sign recourse loan commitments; and must pay higher interest rates along with many other onerous terms that simply won’t pencil new construction at this time. And this assumes you can even find a construction lender… what’s been played out in the media more recently has actually been affecting credit committees since last summer (’07). The result? No new condo project has been financed in more than a year, and yes, this unfortunately includes several projects we’ve been representing. The pipeline will dry up and demand will eventually create pressure for more new construction on whatever terms. Meanwhile, we acknowledge the market has slowed – it’s understandable that many buyers are sidelined in concern given the national housing market, the economy and their borrowing capacity (purchase power). The investor contingent, which was about 25-40% of the market has withdrawn as developers now discourage “flippers” with one year resale restrictions, prequals, etc. (this is a good thing – look at the damage done in other markets). At the same time, mortgage industry guidelines and rates change daily, which could affect some buyers from performing on their presale contracts (at least using their original assumptions). This was likely one reason that MODA reverted back to apartments but I suspect another compelling reason was comparing their modest presale revenues to their final construction costs. And while sales were sluggish at EXPO 62 – it ultimately made sense to sell to an apartment operator at the prevailing cap rates (remember that developers are in the business of selling real estate in whatever way pencils). The irony? We’ll likely see these as condo conversions by 2010 when there’s no new construction deliveries. Don’t you find it interesting that the market is always positioned as “the sky is limit” or “the sky is falling”? In reality the market is neither – it’s just floating back in forth somewhere in between.

  • uwp

    Does reading that BS make anyone else ill?

    I mean, seriously? Was that written with a straight face?

  • uwp

    Does reading that BS make anyone else ill?

    I mean, seriously? Was that written with a straight face?

  • Anonymous

    “the market operates on active supply and current demand so if a project is no longer selling condos (for whatever reason), they’re not supply.”

    That’s exactly like saying that people who are out of work who have stopped even looking for a job are no longer “unemployed.”

  • http://americandigest.org Vanderleun

    “the market operates on active supply and current demand so if a project is no longer selling condos (for whatever reason), they’re not supply.”

    That’s exactly like saying that people who are out of work who have stopped even looking for a job are no longer “unemployed.”

  • buying soon

    Dean,
    I liked your insight. It sure is a different approach compared to how negative everyone is here, lately. I mean, people – we know how bad everything in the economy is, but why do you feel like you need to exacerbate all the issues? No one is saying that the market is great here – there are definitely slow downs. But the sky is falling ? Why do you feel you need to cause Panic?? You all sound like Bush advisors to me. Make it seem as bad as you can to make people believe it.

    Full disclosure: I am not a real estate agent or connected to selling properties.

  • buying soon

    Dean,
    I liked your insight. It sure is a different approach compared to how negative everyone is here, lately. I mean, people – we know how bad everything in the economy is, but why do you feel like you need to exacerbate all the issues? No one is saying that the market is great here – there are definitely slow downs. But the sky is falling ? Why do you feel you need to cause Panic?? You all sound like Bush advisors to me. Make it seem as bad as you can to make people believe it.

    Full disclosure: I am not a real estate agent or connected to selling properties.

  • Sabzi

    Original post — “Demand is high, and it’s going to stay that way, Jones says.”

    Latest post — “..we acknowledge the market has slowed..”

    As Jon Stewart might say, Dean seems to be having a difference of opinion with himself.

  • Sabzi

    Original post — “Demand is high, and it’s going to stay that way, Jones says.”

    Latest post — “..we acknowledge the market has slowed..”

    As Jon Stewart might say, Dean seems to be having a difference of opinion with himself.

  • jo

    Why in the world would you count bulidings such as Expo62 and Moda as available inventory when they’re apartments? Sure they were at one time codos but aren’t anymore. I was once a 4:30 miler but that doesn’t mean I’m still a 4:30 miler. :(

    I have a feeling Dean could say the sky is blue, yet you guys would argue that it’s red. Some people like to argue just for the sake of arguing.

  • jo

    Why in the world would you count bulidings such as Expo62 and Moda as available inventory when they’re apartments? Sure they were at one time codos but aren’t anymore. I was once a 4:30 miler but that doesn’t mean I’m still a 4:30 miler. :(

    I have a feeling Dean could say the sky is blue, yet you guys would argue that it’s red. Some people like to argue just for the sake of arguing.