Are Condos in Seattle Coming Back?
June 6, 2019
Why there aren’t more condos in Seattle… yet.
“There’s another condo building going up.” It seems like we hear that all the time. But chances are, that building going up is not really a condo, but a townhome or apartment building. Splitting hairs? Maybe, but the lack of new condos in Seattle is actually an oddity, especially in a city in desperate need of more affordable housing options. Condos are a more efficient way to house people than single-family homes. And ownership likely creates a stronger sense of community than in an apartment building.
For the past decade or so, construction of a new condo building has been a rare thing. First came the recession when some developers found themselves with recently-completed buildings, but with no buyers. In the meantime, updates to the Washington Condominium Act had the unintended consequence of making condos hotbeds of litigation. The law was originally meant to protect condo buyers from shoddy construction — certainly a worthwhile intent. Unfortunately, the vagueness of the law more or less provided an incentive to sue. Not surprisingly, by 2012 condo prices had fallen nearly 50% from their pre-recession peaks and almost no new condos were being built. Why build something when the reward is a lawsuit?
Since 2012, however, condo prices have again been making their way upwards. In part, that’s due to limited supply — itself a result of the lack of condos being built over the past decade. For many people, the appeal of a condo is owning your own home as opposed to renting. And condos are still more affordable than a stand-alone single-family home. For other people, there’s the appeal of downsizing and leaving the yard work and house maintenance projects behind. With rising prices has come more interest from developers to see if condos will pencil out. Anecdotally, some developers have factored in the cost of lawsuits into their pro forma – just part of the cost of doing business.
More significantly, there has been some progress in reforming the Condominium Act itself. In late April, the Governor signed SB 5334, legislation that seeks to find that sweet spot that protects condo buyers from truly bad construction, protects condo-association officers from the threat of personal liability for construction defects, and raises the bar for what condos owners can sue for. All of these changes should lead to the development of more condos. And with that, a greater range of home-buying options.
So, are condos coming back? Currently, there are only about 10 condo buildings under construction in Seattle, with another 6 or so in development. That’s still a small percentage of what’s being built. But in the next couple of years, maybe we’ll see that number blossom. “There’s another condo building going up.” — “Yep.”