Prices in Seattle’s luxury condominium towers fall as housing market cools – The Seattle Times | Region & Cash

Not even panoramic water views, a 24-hour concierge, and on-demand Tesla rentals can dodge a slowing real estate market.

The Emerald, a 40-story luxury condo tower two blocks from Pike Place Market, recently slashed the prices of some of its condos by 10% to attract buyers impacted by rising interest rates and economic malaise.

Nearby, at the Spire in Belltown, shoppers drawn by the rooftop gym or automated parking system can also get a discount. The building offers homeowners association fees and credits of up to $15,000 for closing expenses or purchasing a cheaper rate from their lender for one year.

The deals signal a broader trend in the cold storage market. Fewer people are buying houses and prices are beginning to stabilize or fall.

Among Seattle homes listed for sale Tuesday, 29% of condos and 31% of single-family homes had a price drop, according to Zillow.

“It’s about meeting the market where it is and responding to buyers,” said Josh Nasvik, general manager of Polaris Pacific, which markets the two condos.

Deals are not uncommon in the world of high-rise condo sales. But this year, rising interest rates, lagging tech stocks, and overall economic uncertainty are leading homebuyers to look for cheaper options or ignore them altogether. That leaves sellers — be they condo developers or average homeowners — with less leverage.

“Seattle had one of the sharpest market reversals in the country this summer,” said Jeff Tucker, senior economist at Zillow. “Broadly the housing market is seeing the same thing, so people selling condos are trying to get creative.”

At the same time, “For some buyers, this means that with today’s higher mortgage rates, condos might be the only affordable option right now,” Tucker said.

For every 1% increase in interest rates, a homebuyer can afford about 10% less for a home. The average interest rate on a 30-year mortgage is 5.5%, up about two and a half points from this point last year.

The housing market has seen ups and downs over the past two years as demand and prices for single-family homes have skyrocketed. Some buyers were looking for more space, others no longer wanted to live close to their workplace. While condo demand rebounded from an early pandemic slump, prices never shot up to the level of single-family home costs.

But the broader slowdown is affecting both types of homes.

According to the Northwest Multiple Listing Service, June’s pending condo sales were down 25% in Seattle and 44% on the Eastside compared to the same time last year. The number of condos left for sale at the end of June was up 3% in Seattle and 71% on the Eastside.

Prices fell from May to June; The average condo has sold for $538,700 in Seattle and $622,400 on the Eastside. In downtown Seattle and Belltown, the median price was essentially flat from last year and down 16% from May.

The local housing market was last hit in 2019 when a spate of condos came up for sale.

This year’s price cuts are far less dramatic than 2010, after the Great Recession, when some downtown high-rises slashed prices by 45% to 50%, but they’re also a far cry from the scene where Seattle buyers are camping out to reserve new condos in 2016.

About 70% of the condos at The Emerald and half at the Spire are sold, according to Nasvik.

Discounts are more common for ready-to-occupy buildings, while developers whose towers are still under construction can try to wait for more buyer demand in the years to come, said Dean Jones, owner of Realogics Sotheby’s International Realty.

As the market slows, sales at Koda, a new high-rise in the Chinatown International District, where about half the condos have sold, are lagging behind original estimates.

The developer is now offering price cuts of 5% to 10% for the condos, said Erik Mehr, whose firm is managing the sale of the building. Prices start at around $350,000 for studios, but the high-end units top out at around $1 million.

“We felt that our pricing was fairly accurate and in line with the market, but things have changed in the past few months. So we just tried to adapt accordingly,” Mehr said.

A Denny Triangle tower was completed at Nexus two years ago, where studios start at about $450,000, about 90% sold. With so few condos remaining for sale, the developer is not offering any deals, Mehr said.

Luxury condominium developers aren’t the only ones looking for deals.

Individual condo sellers are lowering prices, offering to pay a year’s worth of HOA fees, or paying to lower a buyer’s interest rate, said Andy Friedman, agent for John L. Scott.

Friedman listed a one-bedroom Ballard condo in April that received an offer within days. When that buyer failed and the condo came back on the market in June: crickets.

Friedman said the condo is already listed at $5,000 below its appraisal.

“We need to adjust to a new normal,” Friedman said. “It’s difficult for sellers who are listed a month or two ago because they still think they won the lottery ticket.”

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