Urbnlivn - Latest Comments in Year of the condo?

Re: Year of the condo?

jo — Wed, 14 Feb 2007 14:58:46 -0000

Population density means jack on it's own.

I'm originally from Cleveland which has roughly the same density of Seattle...and you can pick up a house for 50k in Cleveland.

Re: Year of the condo?

Chris — Tue, 13 Feb 2007 20:43:08 -0000

Second thought. Find out what marketing firms work with the developers and learn their assumptions on demand. they may not be correct, but when you go to a bank/fund for 100 million in financing, you better have some good marketing studies to back it up

Re: Year of the condo?

Chris — Tue, 13 Feb 2007 20:39:57 -0000

Population density of the city is not helpful, the metro area is more informative. LA and SF Bay have very dense metro areas because of land constraints, which helpls bolster prices. Even that only gets you so far. Run a OLS regression on that. Would be curious

Keep in mind the numbers thrown out are for NEW construction of high-end downtown highrises. Not average across the city or region. The demand of high income individuals relative to supply is the stat you really want Bubble people. Take Seattle's market areafor high end condos - say Alaska to Oregon east to montana, and divide the number of people earning say $200k/year by the number of high-end condos in the market area. Use Fed Reserves Survey of Consumer finances to get the former. Bet you Seattle comes fares well.

Re: Year of the condo?

Ben — Tue, 13 Feb 2007 17:33:56 -0000

The comparison to population densities to major cities is somewhat irrelevant as those are cities with multi-million people population to tiny Seattle. More useful would be to also integrate housing unit supply among other factors. Nonetheless, I'm skeptical about the demand and available buyer pool for the number of higher priced units under construction. Besides Seattle, Bellevue is building upwards of 1000 million-dollar plus units.

Re: Year of the condo?

The Tim — Tue, 13 Feb 2007 16:36:16 -0000

This discussion inspired me to do a more detailed comparison of population, land area, and density for these cities and a few more. You can see my full findings in this post.

Re: Year of the condo?

brain — Tue, 13 Feb 2007 15:48:31 -0000

Land Areas of the cities above (all in km2):

NYC 785
Hong Kong 1,104
San Francisco 121
Tokyo 2,187
Vancouver, BC 114

Chicago 588
Boston 125
London 1,579
Philadelphia 350
Los Angeles, CA 1,215

Seattle 217
Detroit 359
Cleveland 201
Milwaukee 249
San Jose 453

Sacramento 252
Las Vegas 293
Portland 377
Houston 1,558
Phoenix 1,231

Suddenly these places aren't ranked in the same order. And it is amazing to realize how small NYC is compared to some major international cities.

Re: Year of the condo?

brain — Tue, 13 Feb 2007 15:32:13 -0000

Ummm, these stats would be more useful if someone could post the ratio of people to km2, or 1 person per _____ km2.

I can walk across the Boston zip codes in 30 minutes if I get walk signs at all the traffic lights. It would take me all freaking day to walk from South Park to Shoreline.

Re: Year of the condo?

The Tim — Tue, 13 Feb 2007 12:21:43 -0000

That's people per km, by the way.

Re: Year of the condo?

The Tim — Tue, 13 Feb 2007 12:19:46 -0000

Population Densities of a few cities:

New York, NY 10,316
Hong Kong 6,295
San Francisco, CA 6,111
Tokyo 5,796
Vancouver, BC 5,252

Chicago, IL 4,867
Boston, MA 4,457
London 4,761
Philadelphia, PA 4,202
Los Angeles, CA 3,165

Seattle, WA 2,665
Detroit, MI 2,647
Cleveland, OH 2,381
Milwaukee, WI 2,400
San Jose, CA 2,014

Sacramento, CA 1,617
Las Vegas, NV 1,604
Portland, OR 1,533
Houston, TX 1,344
Phoenix, AZ 1,188

Re: Year of the condo?

Bob — Tue, 13 Feb 2007 11:22:03 -0000

I know Seattle isn't as crowded as the other cities. But I am only looking at the prices and what people are willing to pay until they say, no way. There has to be middle class in those cities and they are using more of their paychecks to cover their mortgages.

Re: Year of the condo?

Donna — Tue, 13 Feb 2007 10:40:51 -0000

I'm a non-Seattleite who is in the middle of buying a small downtown condo as a vacation home, so maybe I can provide a different perspective. Although I've been following the commentary in this and other blogs and in the press on the future of the Seattle real estate market, and in particular the condo market, I'm still buying. My reasons are as follows: 1) I want it. Seattle is the nearest big city to me. The price per square foot in Vancouver, New York, San Diego, etc., has no relevance for me, because I can't normally get to those places for the weekend. 2) I can afford it. I make a good living, but I'm not spectacularly wealthy. There are many, many, many people who make more than I do. I'm not buying this as an investment, I'm buying it to use. I'm aware there's a risk that the market will decline, but there's nothing I can do about that. I want a place in downtown Seattle, and I'm willing to accept some risk in order to get it. I could rent, but it just wouldn't be the same. It's a purely emotional purchase, but then most luxury purchases are. I bet there are a lot of people like me.

Re: Year of the condo?

EconE — Tue, 13 Feb 2007 03:12:10 -0000

Per Wikipedia...the population Density of Vancouver is 5252/sq km.

Re: Year of the condo?

mattgoyer — Tue, 13 Feb 2007 01:24:37 -0000

Also of interest is this SocketSite (they're a SF real estate blog) that talks about condo inventory in SF: http://www.socketsite.com/archives/2007/02/sock...

They have a lot of available inventory coming online too. I'm thinking more and more it's time to get out of the market and instead rent a condo.

Re: Year of the condo?

mattgoyer — Tue, 13 Feb 2007 00:50:31 -0000

What cities do have similar population densities? What's the population density of Vancouver? Do you have a source with more info?

Re: Year of the condo?

The TIm — Tue, 13 Feb 2007 00:39:33 -0000

In case anyone was actually wondering, but too lazy to look it up, here are the population densities of the aforementioned cities:

New York: 10,316/km
Tokyo: 5,796/km
Hong Kong: 6,295/km
London: 4,761/km

Seattle: 2,665/km

One of these things, is not like the others,
One of these things, doesn't belong...

Re: Year of the condo?

Matthew — Mon, 12 Feb 2007 21:54:46 -0000

Comparing New York, Tokyo, Hong Kong and London to Seattle is ludicrous. Do you realize what the population density of those cities as compared to Seattle?

Re: Year of the condo?

Chris — Mon, 12 Feb 2007 19:17:14 -0000

"Whats changed so quickly?"

The pipeline for debt financing. Unless you're bringing in a pension fund/hedge fund, etc, financing is becoming really difficult. In seattle, the change seemed to occur around the summer from what I gather from bankers and mortgage brokers.
the fundamentals haven't changed all that much, but underwriting standards follow the domino effect

Re: Year of the condo?

Bob — Mon, 12 Feb 2007 18:56:38 -0000

Whether there will be a condo crash depends on supply and demand. But I just think the prices haven't reached the point where most people think are absolutely ridiculous. When I look at the prices in New York, Tokyo, Hong Kong and London where new apartments can routinely fetch $1500 per sqft, Seattle still isn't that expensive but it is getting there.

Don't underestimate the determination of people who want to own something, no matter how misguided you think they are. It is not impossible to save enough for a down payment before the age of 30. Earning an average of $40k from the age of 21-30 is already enough and many in technology earn much more.

Re: Year of the condo?

brain — Mon, 12 Feb 2007 15:18:12 -0000

I don't see how one can claim that $1m is the low end of the market. The more I read real estate articles in Seattle (and also the NY Times and Boston Globe) the more I realize that any statistics being bandied about vary from "somewhat accurate" to "no idea where that number got pulled from". This of course happens all the time in other venues, but I feel as though it is far more dangerous economically to be guilty of cloudy numbers when it comes to real estate.

Re: Year of the condo?

Ben — Mon, 12 Feb 2007 14:34:00 -0000

Just a comment on 2200 - Many have been on the market for awhile, some with several price drops, and they will be there for some time to come as long as sellers expect to realize up to a 60% return which the market won't support. If agents & sellers were more realistic, perhaps 2200 resales would be fairing better. I suspect more developers may turn away from high-end condos...the commercial market is tight at the moment.

Re: Year of the condo?

EconE — Mon, 12 Feb 2007 13:31:26 -0000

Construction costs did rise when building was at it's peak last summer. Copper, Steel and Concrete prices increased dramatically. Last June...Copper was trading for close to $4 per pound...today it is around $2.50.

In addition...warehouse stocks for both short and long term are between 2x and 4x the levels that we saw during 2005-2006.

What does that mean? Construction material prices cost less now. Going to HD or Lowes and telling me that copper pipe and sheetrock are still the same price is a futile argument. The big boys aren't shopping at Lowes. They don't get the department store prices...they get something more in line with "world prices"

Will 2007 be the year of the condo downtown.

If we are honest with ourselves I think that we can say no...it won't be...and quite possible some drastic falls. It is just like the 500k+ condos that are out there that you mention.

I feel that the number of investors was underestimated but only time will tell. All one needs to do is look towards the 2200 westlake project as a barometer that shows how all these condos just aren't selling...nor renting for the prices being asked. I think that this will become a trend. The MLS does not accurately represent the units that are for sale...and it also doesn't reflect the large amount of builders that have units coming on line soon.

Will 2007 be the year of the condo?

Lets see what happens when funny money loans dry up and what near term actions are taken globally after this past weekends G7 meeting.