Monday, October 22, 2007

Too many condos for sale?

The front page story in this morning's P-I asks, "Will condo wave swamp the market?" http://seattlepi.nwsource.com/realestate/ (Must be a slow news day.) It's a valid question, but in my opinion, not one with many immediate consequences. The article focuses solely on condo construction projects in downtown Seattle. Ironically, that is probably the area of the city where demand is strongest so the "danger" is lowest. Neither does the article give any consideration concerning price points.

Here in West Seattle, both new construction of condos/townhomes (I'm using the terms interchangeably here), as well as condo conversions are happening at an incredible pace, with no signs of slowing. Delridge Way, from the West Seattle bridge, all the way into White Center, has seen particularly heavy development because the land was relatively cheap up until a couple of years ago. You can currently take your pick from literally dozens of brand new 2-3 bedroom condos along that corridor for around $270K. One reason that these will all eventually sell is because condos/townhomes are the new starter homes; they are a way to get into home ownership at a somewhat affordable price point in order to build equity for a future purchase of a larger home. Banks rarely finance the building of small homes any more.

So, are developers building too many condos in West Seattle? Possibly, but that's just one more bit of good news for buyers because the sellers are likely to accept below-list offers.

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