Seattle City Buzz

Last night at the Benaroya Hall was the inaugural Downtown Seattle Realtor Symposium + New Construction Condo Showcase. Sponsored/organized primarily by Urban Condominiums and Realogics, the event featured presentations & panel discussions by representatives the Seattle Times, Windermere Onsite, HomeStone Mortgage, Weber+Thomson, Downtown Seattle Association, The Justen Company, Gardner-Johnson and a few others. The Seattle-PI wrote an article about the event titled Booming development set to change Seattle’s look.

The reception featuring free wine and appetizers by Wolfgang Puck, provided Realtors, investors, developers and media an opportunity to mingle and view models of the various downtown projects including a 3-D model of downtown showing where the new projects will be located (similar to Vulcan’s South Lake Union model).

The Condo Showcase presentation was a bit bland in that very little information about the new projects were provided. Mainly, they just mentioned the expected construction and occupancy dates, location and number of units. Some of the speakers detailed design and building features. Most were tight-lipped or simply stated…”go to our website”. For such a hyped event, it was a bit anti-climactic.

There were bright spots and I found some of the speakers and topics about the future housing market for the downtown area fascinating. Keep in mind, the presenters are from the real estate, building, financing and marketing industries so naturally the view points may be a tad biased.

Where to Build?

A vast majority of the future projects will be constucted in the Midtown and Denny Triangle areas north of the downtown core. Available land and changes to the city’s zoning make the northend attractive to developers. Realogics and Weber+Thomson presented a nifty 3-D animation of the area and the Seattle-PI posted it on their website (note, it’s a large PDF file).

In the Year 2010

One speaker I found to be the most objective and knowledgeable was Matthew Gardner of Gardner-Johnson. Mr. Gardner whose background is economics, discussed the future housing outlook for the downtown areas and interest rates. By 2010 most development experts are asserting nearly 10,000 new housing units will be built in the downtown, Midtown, Belltown and Denny Triangle areas. Gardner provided a more realistic number of approximately 6,500 to 6,800 units will be added, noting there are forces that may constrict construction. These forces include rising labor and land costs, consumption of building materials (post-Katrina rebuilding and China’s rise) and lack of available labor and cranes. Apparently, there is a finite number of cranes and Seattle is in short supply.

Gardner touched on the “bubble” topic as well. He mentioned that Seattle should be able to absorb about 2,000 to 2,400 new units per year, but with the external factors noted above, housing supply will be constrained with only about 1,500 units available per year for the next 4-5 years. This combined with job growth and decrease of short term interest rates that’ll reduce rates on 3 and 5 year ARMS, Gardner predicts the downtown housing market will remain strong.

(On the job market, there are some shifting already going on, that will increase workers in the downtown core. Washington Mutual is completing it’s new office tower (retaining employees in downtown), Starbucks is building a new facility, and Safeco is relocating over 1,000 employees from the U-District & Eastide to downtown. Also, Amgen is adding 550,000 sq ft to it’s Pier 89 site potentially doubling it’s workforce).

Mortgage Rates - Where art thou going?

Another interesting speaker was Keith Tibbles of HomeStone Mortgage. Tibbles mentioned that on June 28th the Federal Reserve Interest Rate is likely to rise another .25% to 5.25%. Which, theoretically doesn’t bode well for housing sales. He did explain that the past 4 Fed cycles lasted 9 months each and at the end of those cycles, mortgage rates were cut. He suggested we are now overdue for a mortgage rate adjustment.

He also spoke about the yield curve inversion, stating that when long-term interest drops below the short-term rate, the economy tends to slow down, thus sparking the Feds to adjust rates to stimulate the economy. This writer doesn’t know very much about yield curve inversion, but a brief tour of Google suggests this is an oft debated topic.