“Condo Weekend” Round-Up – The Realogics Perspective

This is an email Dean Jones of Realogics blasted out last night. Yes, the guy needs his own blog, but he’s old school in his marketing. In the meantime, he kindly granted permission for us to share it.

It was certainly an exciting weekend in our marketplace despite competition from sunny skies and a Seahawks game. Of course, the much-anticipated auctions by Schnitzer West for Gallery and Brix occurred. And we kicked off some initial promotions for Condo Bulk Buy by offering advance previews for two participating projects – The Decatur and 1111 East Pike. Last (but certainly not least), we hosted a unique open house and art walk at Fifteen Twenty-One Second Avenue, which followed a series of events at that property.

Here’s our take on all this activity:

SCHNTIZER WEST AUCTIONS

  • Impressive sell-through of the strategic unit release followed (no doubt) by additional sales at similar (or higher) pricing over the coming weeks
  • In aggregate, units sold at 30-32% below previous list prices (higher than most anticipated)
  • Accelerated Marketing did a great job facilitating the auction with successful bids averaging 150% of the minimum bid amount (one of their better results)
  • Tom Vetter (principal of Accelerated Marketing) was gracious to host several of our Realogics executives for this demonstration
  • Several hundred participants attended today and more than a thousand prospective buyers visited their two sites over the last month – so it would appear that demand is constant
  • Buyers still feel like “first responders” in this marketplace and want a deal to pull the trigger (they got one)
  • I’ll be interested to follow the unsuccessful bidders in the coming weeks – the supply has just become much more finite and the incentives for buyers are present today but not indefinite (no new inventory has entered the market for two years and won’t for a while)

CONDO BULK BUY (www.condobulkbuy.com)

  • Thinks are heating up – our alternative to auctioning inventory is making sense to prospective buyers and we’re garnering very positive feedback so far
  • Our sellers acknowledge their likely auction results and are willing to provide that discount now in bulk (provided they are successful in selling the majority of their release)
  • Buyers love the notion of “The More We Sell, The More You Save” – prices start out great and get even better
  • With Nov. 30 quickly approaching (and the discontinuation of first-time homebuyer tax credits), buyers want to be confident in their home and their value – there’s a risk at auctions (ask those that missed out tonight – now what?)
  • We’ve had more than 100 prospective buyers register in the last week alone

THE DECATUR (www.OwntheDecatur.com)

  • About 60 buyer groups registered this weekend in response to impromptu ads and recent media attention
  • Agents say “multiple” buyers will make a reservation this week – just as soon as price ranges and agreements are firmed up by the seller
  • Buyers noted that average discount offered at recent Seattle-area auctions range from 25-30% off previous list prices – the bulk sales approach offers up to 35% off
  • Unit prices on average are still more than $100K less than Brix’s reset auction prices and price per foot basis is 20% lower using the bulk approach
  • Watch for website updates this week

1111 EAST PIKE (www.1111EastPike.com)

  • Several dozen “preview” tours this weekend – full marketing push coming soon with building completion pending
  • Upon touring, buyers to recognize the significance of the “original” Tom Kundig design concept versus more production-oriented development (it’s all about the design and details)
  • First release bulk pricing averages about $430 per sq. ft., which is less than a 10% premium to the average Brix auction price (not a bad investment considering the preferred Pike St. location and “collectable” design)
  • Watch for website updates this week

FIFTEEN TWENTY-ONE SECOND AVENUE (www.fifteentwentyone.com)

  • Several hundred folks came through the model homes and the Canlis Glass penthouse art installation over this past week and weekend
  • More than a dozen were identified as “A” or “B” prospects (signaling their intent to buy soon)
  • At least one qualified offer was presented this weekend (more sales anticipated this week)
  • Buyers are starting to feel more urgency where there is limited inventory for preferred price points or floor plans
  • The opportunity to “sleep on it” was provided to a number of prospective buyers, whereas a completely furnished, two bedroom guest suite is offered for overnight stays to experience the unique lifestyle at the property

There’s certainly some excitement in the air. The next few weeks will likely be the harbinger of the fall condo sales season. I personally feel that many buyers will jump off the fence and pick a seat over the next 60 days. Most projects that are in need of a reset (and not all are), will be reset. And with the appropriate incentives in place, preferred selection, low interest rates and perishable tax credits may have more to do with “timing the market” than waiting around for lower prices still.

Cheers.
Dean

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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.

  • Eric

    I'm curious about the reference to the Pike/Pine corridor as a “preferred location” when compared to the area near the Broadway Market. Is this proven statistically or opinion? I just ask because I've always thought of the area closer to market as a far superior location. Am I alone in that viewpoint?

  • Strike

    A translation for the non-condo delusional:

    “the supply has just become much more finite” = they sold 40 of the 1000+ empty condo's in downtown Seattle.

    “full marketing push coming at 1111″ = the building that started a full marketing push for a year ago and still haven't managed to sell (aka yet another overpriced MDF condo).

  • RS

    There is another large QFC at the corner of Pike and Broadway, 2.5 blocks from 1111. It's also closer to Trader Joe's and Madison Market.

  • Jason

    1111 E Pike is right in the middle of a very busy strip of restaurants and clubs. I wouldn't expect to get much sleep until early in the morning Saturday and Sunday. Sure, it's close to everything, but that's because everything is beneath you. If you want to live in that area, I'd consider anything on or just east of 12th to be a lot quieter.

  • vladcole

    I live at 11th and Pike (in the Monique). Sleep isn't an issue with well-insulated windows (which the Kundig building has) and a little bit of white noise (fans).

    The 11th and Pike location is “preferred” because it's in the epicenter of Capitol Hill's restaurant, nightlife, gallery, and boutique food vendors. There's been an incredible and insistent drum beat of new, high-end businesses that have opened here even as the Broadway area has lost businesses as a result of the light rail development. Cupcake Royale, Molly Moon's, Quinn's, Via Tribunali, La Carta de Oaxaca, Vermillion, Grey Gallery and Lounge, Oddfellows, etc. Throw into this mix the significant new investments made along 12th Ave and up and down the surrounding blocks on Pike and Pine and it's clear that this portion of the Hill is ascendant like no other micro-hood in the whole city of Seattle, let alone Capitol Hill.

    When the light rail is finally completed, the center of gravity will be pulled towards Cal Anderson/Broadway, but that area is so dominated by rental housing, community college facilities, and government facilities (light rail) that the premium condo real estate will still be predominantly located to the south-east in the pike-pine corridor between 14th and 10th.

  • vladcole

    I should also add that the Satellite Lounge (across the street from the Kundig building at 1111 E. Pike) just got shut down and that the next tenant in that location is likely to be somewhat more upscale. Furthermore, the proprietors at famous lesbian bar Wild Rose have been very cooperative about keeping their patrons from revving their massive motorcycle engines.

    PS: I made an error above. The Mexican restaurant's name is Barrio, not La Carta de Oaxaca. Oops. =)

  • GoCougs

    I can't believe that the press actually takes this guy seriously…or that he can make these comments without laughing.

  • flotown

    “incredible and insistent drum beat” and “ascendant like no other micro-hood in the whole city of Seattle”

    my money says vladcole = dean jones

  • http://twitter.com/mattgoyer mattgoyer

    I know both vladcole and Dean Jones. They are definitely not the same
    person!

  • vladcole

    Don't know who Dean Jones is. Sorry.

    I'm guessing he's an agent or developer? I'm not in the RE biz, but I'm not a dispassionate outsider either. I own in Capitol Hill and love the neighborhood.

  • Name

    I was asked;

    Subject: Dean Jones

    Whayt do yu think of his Condo Bulk Buy idea?
    —————————————–

    It is simply a new way to say “30% off original list prices” They spin it as a discounted block of units that all agree to close at the same time. They probably lead the developer to believe it to be a one-time shot and an opportunity to sell a chunk afterward they can go back to their original pricing. In this market everyone is looking for “the bottom” if an auction sells at 30% off, bulk buy sells for 30% off, and projects that sell are priced 30% off, it is pretty hard for the public to believe they should pay any more.

    The reality is 25-30% off 2008 Performa pricing is the new market. They can spin it anyway they want, I call it the new reality. Buyers don't care what we call it. Reduce prices 25-30% and they will come.

  • Sabzi

    The retail in the Pike/Pine corridor may be ascendant but all those places cited are still only a few blocks walk from other parts of Capitol Hill so unless you really choose to be right on top of the action, I think it's a stretch to say the location is “preferred”.

  • The MD

    Finally! Some commen sense writing (the excerpt above). Kudos and thank you for the sanity.

  • vladcole

    Sabzi – it's more than a “few blocks” difference. It's 10.5 blocks (about .8m) from Brix to 1111 E. Pike. When it's drizzly and cold outside and you want to pop down to Boom Noodle or Quinn's, that's a long walk that you simply won't make.

    A mile is a very long distance in real estate terms. In cities all over the world, a mile is the difference between living on the right side of the tracks and the wrong side of the tracks. Crime rates, real estate values, and quality of living all fluctuate wildly within the span of a 10-block walk in Manhattan. Just three blocks from the heart of the uber-expensive Tribeca neighborhood is a pedestrian wasteland.

    So don't underplay the distance factor, especially when we're talking about a part of town that likes to travel on foot.

  • Sabzi

    Exactly. For a part of town that likes to travel on foot, .8 miles is no big deal. So for people who don't want to listen to all the bachelorette parties from Bellevue (OMG! There's Slats!) walking beneath their windows on Saturday nights, they will prefer a quieter location that is still walking distance from the action.

  • vladcole

    But Sabzi, your theory of the market doesn't hold for *any* market. In every city, a mere .8mi of distance means big differences in property values, crime rates, walkability, beauty, and so on.

  • Sabzi

    True enough, vladcole. I'm speaking specifically about Capitol Hill (the subject of this thread after all) and my opinion is that the most desirable addresses in this particular neighborhood are a block or two off the arterials — relatively quiet neighborhood streets yet around the corner from all the amenities.

  • Paulo

    The problem is that 30% off is still insufficient to move much of the unsold Seattle inventory because there is a finite amount of buyers and banks are reluctant to lend on condos. This is exactly the same situation seen in other big cities a year ago. First it's 30% discounts, then 50% when desperation sets in, then foreclosure for cents on the dollar, screwing everyone who bought on the way down. The triple whammy is the weak rental market, which takes that option off the table for both developers and condo owners. I hear that both Olivian and Aspira apartments are already sucking wind and way below their targets.

  • Name

    The 30% has been proven to the current market. Proven by QA High, Decatur, Brix, Gallery, Press, among others. The market could fall further, that’s speculation, but today…. it's 30%. The future will depend greatly on job growth or lack thereof. It's a big game of poker, ya gotta know when to hold and fold. I for one think tomorrow will be sunnier skies. I prefer to look up not down. Sometimes it costs me but generally I’m more happy than sad.

  • http://www.gethomesolutions.com Buy House

    I love this stuff. Thanks for your post. I hope people realize how valuable this kind of information is.

  • Logic

    30% isn't proven by a long stretch. How many hundreds of unsold condo's does Schnitzer still have on their hands at Gallery and Press? Decatur only just went back on the market at discounted prices so that is not proof. QA High was six months ago, and only thirteen units, so it's hardly a useful data point either.

    30% is the 'we hope like hell this sells' discount, and it's not the end of the discounting. I also like to be positive but I refuse to play six figure poker with my life savings in a condo right now.

  • dildough

    whatever. The Harvard exit, a decent coffee shop, and cool coffee shops and more hot young snizz than you can shake a stick at is within a block of the Brix. besides, those condo projects may herald a resurgence of that end of Broadway, although people way overpaid for them. I do agree it is a long walk to the cool center of the action, but its also closer to a quieter mellower scene that includes Volunteer park and million dollar real estate which means police enforcement. Plus, Broadway is not a manhattan wasteland.

  • dildough

    whatever. The Harvard exit, a decent coffee shop, and cool coffee shops and more hot young snizz than you can shake a stick at is within a block of the Brix. besides, those condo projects may herald a resurgence of that end of Broadway, although people way overpaid for them. I do agree it is a long walk to the cool center of the action, but its also closer to a quieter mellower scene that includes Volunteer park and million dollar real estate which means police enforcement. Plus, Broadway is not a manhattan wasteland.