Seattle Condo 2010 Appreciation Rates

Contrary to conventional wisdom Seattle’s annualized citywide median condo value rose in 2010 to $285,000. That’s up a respectable 2.2% over 2009. The average condo price also increased 1.2% above 2009 to $364,035.

The number of units sold in 2010 was 1,783, just 10 fewer than in 2009. Given the nominal difference in units sold and the increase in citywide value, I don’t think I’m going out on a limb stating that the Seattle condo market reflected stability in 2010. With that said, results varied widely depending on location, condition, age and price points. A number of areas saw declining values and reduced sales.

Neighborhoods that realized the greatest increases were Alki, Fauntleroy, Leschi and Wallingford. Leschi was the only neighborhood that experienced increased median prices over the past three years. On the flip side, more neighborhoods saw median condo values drop rather than increase. The biggest declines were reflected in downtown Seattle, Maple Leaf, North Beacon Hill and Madison Park. Also turning in noticeable drops were Belltown, Magnolia, the University District and the Admiral/Junction area of West Seattle.

While hindsight and statistics suggest the Seattle condo market stabilized this past year, the outlook may be a bit more challenging going forward. Notably, unlike 2009 and 2010 there aren’t any tax credits to spur sales activity this year. The lingering effects of the 2007 market crash, the struggling economy and liens/lawsuits have affected numerous condominiums, making them essentially unavailable to most buyers as a result of stricter mortgage guidelines and weary lenders. For instance, many lenders have backed off financing mortgages on buildings with high HOA default rates, underfunded reserves or with too many rental units, an effect of loan defaults and foreclosures.

But, not all is gloom. In 2010 more condos at higher price points sold compared to 2009. For example, sales of units priced under $300,000 shrank 3.9% while sales of condos priced $500,000 and above increased 17.8% last year. The $1 million plus level was even more striking with sales up 29.5% compared to 2009. So, there are well-qualified buyers who are eager to purchase and/or see value in a Seattle condo. We’re also likely to see more purchases by foreign investors. Mortgage interest rates continue to linger at historic low levels making borrowing relatively inexpensive. However, rates are expected to rise, which may either deter or incent buyers to act as their buying power diminishes.

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