Urban Condos Shaking Off Covid-19 Effects

Last week two new listings appeared in my Urban Condo list and two units went pending for a net inventory gain of zero. It seems that urban condo buyers aren’t too worried about this pandemic as they are continuing to snatch up condos that are well priced.

This is good news for both buyers and sellers as pricing seems to be flat at a time that we could have seen declines. I have mentioned in other posts, my anecdotal observations are that for every buyer eliminated by the COVID-19 restrictions / economic loss, a seller has decided not to sell. Really the only people getting stung by this pandemic are Realtors® because the market has much lower volume overall so the 2000 or so agents working Clark County have about half as many clients to fight over during this pandemic. But it seems to be equally distributed among the supply side and the demand side and that is keeping pricing stable. If our government continues to extend the severe economic restrictions however, the market will quickly fall apart and sellers will be the biggest victim.

I’d like to keep the good times rolling for all of us so let’s just hope we get this virus under control so we can get back to some semblance or normal.

A new condo came available this week that offers a ground floor unit with dual residential and some commercial possibility as well. There are few of these in Vancouver so contact Rod Sager at 360-737-4600 if you have questions.

What is a “Condominium” anyway?

Condominiums are a bit more complicated than traditional houses or even attached town homes. Although houses and attached town homes often have an HOA (Home Owners Association), they have a very traditional ownership structure in which the owner of the property owns the structure and the ground underneath it as well as any defined “yard” on the legal lot. The homeowner is responsible for all maintenance and repairs inside and out as well as most if not all of the yard work. In single family detached neighborhoods that have an HOA, the HOA is often an enforcement entity enforcing CC&Rs (deeded covenants, conditions and restrictions) for the neighborhood and maintaining common areas like a park. Many home buyers try to avoid neighborhoods with an HOA because of concerns they will be limited in how they use their property. HOAs in detached neighborhoods are a blessing and a curse, but in urban properties it is much more a blessing than a curse.

Condos have a special if not somewhat unique ownership structure. Dating back to 1960 in Salt Lake City, the first condominium project was built. And over the years laws have been put into place to regulate the industry. Every state is different but in general the broad idea spans the nation. A condominium owner has two types of ownership. The interior space is wholly owned in fee simple like any other property. The owner is fully responsible to maintain everything inside the unit including interior plumbing, fixtures, interior electric, appliances, flooring, paint etc. The owner further has complete control of the interior to use as they see fit aside from any activity that threatens the structure or the rights to use of other units. Secondly the structure itself, often a multilevel building and any land underneath the structure and/or grounds are jointly owned by all the homeowners collectively. This is where the HOA comes in. Typically the HOA is run by an elected board often consisting of individual homeowners.

In many cases urban condos in high rise buildings often have the HOA run by a management company as high rise urban buildings tend to have more complex HVAC systems and plumbing sometimes collective systems for the entire building. The HOA is funded by home owners that pay a monthly fee (sometimes quarterly or even annually, but in urban condos typically monthly). That fee is used to provide the regular maintenance of all common areas such as a lobby, workout room, pool or any other common areas collectively owned. Some of those funds will be kept in a reserve account designed to pay for expensive long term maintenance such as replacing siding, roof, or other high cost long term repairs and maintenance. The HOA also pays for fire and hazard insurance for the structure, but the homeowner typically pays to insure the interior space and the contents within.

Condos provide homeowners with the advantages of equity ownership and the convenience of an apartment. Although interior maintenance is the homeowner’s responsibility, the exterior and structural is maintained by the HOA. This eliminates a fair amount of homeowner maintenance in both cost and time.

Buyers should be mindful of how well run the HOA is. Information about the HOA and its financial standing are available to prospective buyers and should be closely examined before making a purchase. Should a significant repair be needed that the HOA is unable to fund, the homeowners will likely be assessed either a substantial lump sum or an steep increase in periodic dues to offset the shortage.

Here in Vancouver there is a fair bit of mixed used buildings some of which include housing. Two notable condominium projects downtown are sitting on top of office buildings. Viewpoint at Vancouver Center has four floors of luxury view condos sitting on top of a seven story class A office building. Likewise the Frontier Block at 500 Broadway has two floors of luxury condos sitting on top of four floors of class A office. These multi use buildings have some additional complications to the HOA structure, but often to the benefit of the homeowners as the office building is usually owned by one entity that handles the bulk of building maintenance. The office section tends to be the majority of the structure in these building arrangements. However close examination of HOA documents is always well advised.

Where HOAs in suburban detached home neighborhoods have advantages offset by disadvantages, urban properties in high rise buildings really don’t have as many negatives as the lifestyle is more apartment like and the exterior uses limited anyway. Condo’s offer the equity advantage of home ownership with the convenience of an apartment; for many this is an ideal situation.

This week the listed condo inventory contracted slightly with two closed units and no new listings. There were two minor price reductions.

Latest Activity Report

This past week saw two pending sales, one closed and one new listing in Vancouver’s urban condo market.  That is a nice contrast to the +11 inventory that I reported last Monday.

Take note that the data on Vancouver’s urban market can have wild swings due as much to the smaller total inventory as actual market activity. The total inventory including all units for sale or not is only about a thousand so the data pool is pretty small. In general inventory for urban style condos is trending tight.

I have no real news about upcoming developments as the city agencies and most construction is on a COVID-19 pause. I would imagine that the new Kirkland Tower project will experience a delayed opening due tot he shut down, but hopefully the units will still be ready by this time next year or earlier. Kirkland Tower will feature 40 luxury units right on the water and will tap into the hotel services for homeowners. This is a unique arrangement here in Vancouver, although it is not a novel idea.

If we can get the virus locked down in the next 30 days and start to ease back into positive economic growth, we should see a robust return to prosperity. One local developer seems to be optimistic as the Columbian reported earlier today that Ryan Hurley and Ten Talents construction submitted a pre-app to the city for a companion office tower to the Hurley Tower completed earlier this year. Let’s hope this virus pandemic ends soon.

All Quiet on the Urban Front

The governor issued a stay at home order last week reversing his position from the previous week. Although it may turn out to be a wise decision it does lead us to some difficulty in transaction real estate. The initial order stayed realtors but exempted construction. The governor clarified the order a few days later and limited construction work to essential projects only but allowing real estate transactions some flexibility to operate. This is good news for buyers and sellers of real estate.

The urban condo market was very quiet this past week with one failed sale back on market at Shorewood and a new listing in Northwynd. With no new pending sales or closings, the week ends up at +2 inventory. Downtown had no change in inventory.

Inventory is still rather tight for those looking to be downtown but for those looking for an urban condo along the riverfront to the east, things are looking good from the buyer’s perspective. Northwynd is a series of townhouse style condominiums at Columbia Shores. This neighborhood features McMenemins on the Columbia and Beaches restaurant right on the Columbia River. Northwynd has a fair number of units listed right now and with a general slowdown in showing activity, sellers are likely to be anxious and willing to cut a deal to get sold.

Columbia Shores is less than a mile to the new waterfront and the drive or walk is short with no cross traffic or stop lights between the two neighborhoods. Just a lovely stroll or cruise along the riverfront park.

For people already living in Vancouver’s urban core you have the advantage of close proximity to a variety of restaurants and pubs that are still offering walk up take out or delivery so the urban living does still have its perks even in this COVID-19 lock-down environment we find ourselves in.

This is a good time for buyers to assert themselves as sellers may be more anxious due tot he uncertainty of the sales environment. Is this a 30 day deal or longer? Unknowns always tend to create anxiety in the market but savvy buyers can capitalize.

Pandemic Effecting Urban Market

This COVID-19 pandemic is creating a significant economic interruption. The effects are visible in the numbers for this week. 11 new active units against zero pending or closed leaving the inventory of urban condos at +11 this week. 3 of these “new” active units were pending units that are back on market at least two of which were the result of buyer’s losing jobs. This is the first time in a long while I have seen more than +10 units. Part of this could be the spring season which typically sees an increase in listing activity across the broad real estate market. The real test is how many buyers come to play amid this Corona Virus pandemic.

I did have several positive indicators over the weekend. I have a listing in Cascade Park that got massive response with a consistent flow of showings all day long on the first day of the listing. This also resulted in multiple offers above asking. Another client, a buyer, offered on a clean home in 4th Plain Village and that one had multiple offers well above asking as well.

So the real estate market will weather this storm, but the extent of the “collateral damage” due to the pandemic will ultimately depend on how long containment takes. Businesses cannot survive long under a shutdown. There is positive news in China: they have started to return to a more normal level of production. If this cycle pans out for the rest of the infected areas around the globe, containment may only take 90 days of which we are already 14 days in.

This week I saw some price reductions on units across the spectrum and that means opportunity for buyers in an otherwise tight inventory Downtown. Parkview has multiple units available including a ground floor unit which can be used as a live-work business. There is also a decent inventory at Northwynd in Columbia Shores.

The silver lining in the dark cloud of this economic situation is that opportunities to acquire an urban condo at a reduced price is occurring right now. If this pandemic turns out to be brief and some indications are that it will, this opportunity could be rather advantageous to buyers in the next 60 days.

Keep checking back to see the latest updates on urban projects in Vancouver and the urban condo market updates will continue every Monday.

Corona Virus May Help Urban Development

The COVID-19 world-wide outbreak has led to a strong instability in the stock market. Some $12 TRILLION has navigated away from the equities markets over the last few weeks amid fears that the virus pandemic will weaken the economy.

The underlying economic conditions remain solid in the US with low unemployment, strong jobs activity, and up until just recently, excellent consumer demand.

It is important to remember that the money that exited the US equities market did NOT go away entirely. Investors simply sold off shares of stock and exchanged it for cash. The first week of the sell-off exchanged about $6.5 trillion in market value for probably around $5.5 trillion in cash. As the stock prices tumbled some of that market value is gone but I would estimate that 80% of it was exchanged for cash value. Full disclosure, I am guessing on the cash percentage based on the current value of the market versus the value before the sell off, could be higher or lower depending on exactly how many shares were exchanged before prices fell.

That cash has to go somewhere. Cash investments in the last decade have not paid well at all. So those panicked investors have to park the cash somewhere they feel comfortable. Mortgages and bonds are the typical landing spot for cashed out equities in an uncertain market. Strangely, much of this cash did NOT end up in those traditional spots. Even gold went soft. So where is all that money?

Some of it went to cover margin calls for investors that borrow against stock portfolio value. But some of it is quite possibly in private equity. That suggests money is available to borrow for big projects like what we have on the Waterfront here in Vancouver. Now could be an excellent time to tap that cash. Developers like Gramor, Summit, Cascadia, Hurley, and Killian Pacific may have an opportunity to get some of these proposed projects funded. I’d love to see Killian Pacific do something with the vacant Library Square. The Carr Cadillac dealer left near 20 years ago and that spot remains unused. Perhaps Summit can pull the trigger on Timberhouse for Block 3.

This week we had a few new listings for urban condos and a few that went pending or closed. It was a neutral week. Jackson Square properties got the tower crane up and operating for the Block 20 project, “The Columbia.” Things continue to move along nicely.

We Need More Urban Condos! There is Plenty of Money!

There is a robust level of construction activity in the urban core these days and so far it shows no signs of slowing down. Much of the residential construction is focused on high density apartments rather than adding to our tight supply of urban condos. As of this morning, there are no active listings for condos in the Downtown area. Not one! They are all pending sale or sold. We need more units for homeowners. Of course the Kirkland Tower will be complete sometime Q4 this year or Q1 next. That will only bring 40 units to bear and those are going to be rather pricey. Something along the lines of Parkview would be amazing for Downtown and maybe even the waterfront.

Dow Jones Year To Date

I mentioned in the title there is plenty of money. Well my friends there is plenty of investment cash in play right now. Much more today than two weeks ago. Investors, spooked by the Corona Virus last week and further exasperated by an oil war between the Saudis and Russia, have liquidated nearly 18% of the stock market since the first of the month. With a nationwide market capitalization at the end of February being around $38 TRILLION, this past 6 days produced about $6.5 trillion in invest-able assets.  Stock market losses are caused by a sell off, that means stock investors CASHED OUT of stocks and that money is sitting around waiting to be reinvested elsewhere. Investors detest idle cash. Real Estate has often been the beneficiary of the market sell off scenario. Local developers should be on the phone calling every capital improvement financier in the Rolodex. ‘Thar be money to be lent’ if you’ll pardon the pirate parlance, developers ought to be pillaging that fresh cash.

Gramor has plans for an 80 unit, 14 story condominium tower on block 16 at the waterfront but this project is just a plan at the moment and no pre-app submittal has appeared at city hall yet. These will likely be spendy as well, since the tower will be right on the water.

Even higher end condo units in the city center tend to move quickly. There is a strong demand for the sustainable and walk-able lifestyle that is available in urban cores areas like Portland’s Pearl District and Vancouver’s Downtown.

What if Summit Development could have a wing of condominiums in the Timberhouse project slated for block 3? That project will be off the water and have some partially blocked views due to the size and scale of the Kirkland Tower and Indigo Hotel buildings. That means there is room for some affordable units on the lower levels.

Vancouver’s new Waterfront Gateway district nestled between City Hall and the Waterfront could also be a candidate for owner occupied properties. Builders should consider getting ahead of the curve on millennial buyers. That generation was a little late to the housing market eschewing ownership responsibilities for the flexibility of rentals. But now that the economy has seen some muscle flexing and millennials are reaching the “stable years” they are flocking to real estate in larger numbers. Many of them still like the urban lifestyle, but now they want to own that lifestyle.

Vancouver USA is much tighter on mid-rise and high-rise condo inventory than Portland. The Pearl District currently has 102 active condo listings in the MLS ranging from a 527 SF studio unit at $215k to a 2700 SF 21st floor penthouse unit listed at $3.2 million. They have had 20 closings in the last 30 days along with 27 current pending transactions so the market is healthy but not real tight.

Vancouver’s Esther Short neighborhood which encompasses the entire Downtown and the new Waterfront has ZERO active listings, 3 pending sales, and 2 closed in the last 30 days. But those little numbers are due to a lack of inventory not low demand.

So let’s get cracking local developers, and grab that idle cash before someone else does!

How does Vancouver Compare?

How is all this new ‘urbanity’ in Vancouver elevating our ‘city’ status against other Washington cities? The skyline of our fair city has definitely seen a tremendous transformation. It is not so much how tall the buildings are as much as it is about a sheer volume of new projects. As of now in Downtown, Smith Tower remains the building with the most floors at 15 and 805 Broadway remains the tallest building at 165 feet. There has been no change in the rankings of the tallest, yet the skyline has quite literally doubled in size from the perspective of view west of the interstate bridge across the river from Terminal One. A couple of months ago I showed a comparison of Vancouver on my ‘Couv’ Life blog showing this transformation over just two years.

There is a massive change. Several more mid rise structures are going to be topped out in 2020 and a few high rise projects will likely break ground topping out sometime next year. If you follow the link to ‘Urban Pipeline’ you can see that much more is on the way. There is only one building proposed that might change the status of tallest and that is the “Trestle” project for Block 14 which is planned at 16 floors and 185 feet tall. But tall isn’t necessarily the thing that is making Vancouver look and feel more urban, it is volume of projects. Our downtown and the new waterfront are filling in the density. The more people and services in the Downtown core the more walkable and sustainable it becomes.

Comparing Vancouver USA to any city in Oregon not named Portland leads to a crushing defeat of the Beaver state challengers. Eugene has a great walkable Downtown, but Vancouver USA with that shiny new waterfront is just too cool 😉

How about the Evergreen State? Washington has 4 cities with more than 150,000 population and Bellevue is just shy of that. Clearly #4 Vancouver isn’t in the same weight category as #1 Seattle, but #2 Spokane, #3 Tacoma, and #5 Bellevue are.

Spokane is the center of influence for the “Inland Empire” and as such it feels bigger than it is. It is the regional heavyweight. Spokane however lacks the close connection to a major city like Seattle or Portland. if you can’t find it in Spokane you got a 400 mile ride ahead of you! Vancouver is a more of a cross between Tacoma and Bellevue.

Bellevue has a ridiculously huge urban skyline with 40 story skyscrapers. I wouldn’t be surprised if Bellevue is the king of mid-sized cities as far as urban skylines are concerned. Seriously, there are MAJOR American cities with inferior skylines to Bellevue a city of just 145,000 people! But Bellevue’s urban high rises are all newer structures. You won’t find a high rise built in the 1960s like you will in Tacoma and Vancouver. Bellevue lacks of historical buildings. It’s core area is also a bit bland. It is however, very nice, super clean, and even quite ‘ritzy’. You can eat of sidewalk in Bellevue. It’s just not really very exciting. Bellevue is a bit stuffy what with all that Microsoft cash in the local economy. Bellevue is only a 10 mile drive to Downtown Seattle, which is nearly as close as Vancouver is to Downtown Portland (7 miles). Another negative in the Bellevue equation is the need for billionaire grade levels of cash to live there.

Tacoma is only marginally larger in population than Vancouver but it is the seat of government for the second largest county in the entire Northwestern US. Pierce County (Tacoma) has a larger  population than Multnomah County (Portland). Tacoma has somewhat steep streets in the Downtown area so that impacts the walkabilty a bit despite Tacoma’s efforts to bring residential and retail to the core. Tacoma is a city that feels much larger than it is. It also has a bit of a reputation as a “tough” city and that can be a hindrance to attracting quality businesses to their waterfront. Tacoma is also a bit of a haul to get to the “big city” as Seattle is 34 miles away on the notoriously congested I-5. In fact Tacoma’s local traffic is awful compared to Vancouver.

The bottom line is this: Vancouver is one of the best urban living opportunities in the Northwest, providing a city centered walkable lifestyle with some of the best city traffic around, decent parking, and very close proximity to a major city and the associated services such as airport, transit, events, etc.

Urban Development Update

The local urban condo market saw a mix of status changes nearly equally spread between new listings, pending sales, and closed sales over the last week. Overall the market remains a tight inventory downtown, but a tad more to choose from at Columbia Shores, particular in Northwynd. Those looking for the modern sustainable and walk-able lifestyle will find the selection slim Downtown but units in Parkview remain reasonably priced.

Last week the City Center Redevelopment Authority had a longish meeting, perhaps due to the fact they did not meet in January. The Port had a lengthy update on the Terminal One project primarily center around the landscaping for the connection of the Renaissance Trail from the Interstate Bridge through the Terminal One project to the new waterfront. Notable that the replacement of the 108 year old Terminal One dock was discussed with costs estimated in the $50-$60 million. Funding will potentially be a limiting factor and the time estimate for the dock and public market is out around 5 years. The port does intend to have the remains of the Red Lion Hotel that currently sits atop the dock early next year. After that is cleared they intend to make use of the dock for events, food carts, and other public uses while the funding for the new dock is secured.

The city went over the parking ideas for the new Waterfront Gateway development zone between City Hall and the BNSF railway. They went over options for parking to support upcoming development, including a future expansion of the Convention Center. There are continued discussions about connecting this new development zone to the Terminal One project via a bridge over the BNSF right of way.

On the Waterfront, Block 20 is about to erect the tower crane that will support the project as it rises up out of the giant “hole in the ground.” At this point they are likely waiting for the concrete slab to cure then a tall crane will go up. You can see the steel base already in place.

2020 should see a flurry of new cranes to support several new projects nearing the end of the permitting process.

Angelo continues to push upwards on their new building at Mill Plain and C Street. Our city is chugging along with new urban development across the use spectrum from Residential to Commercial.

 

Entry Level Downtown Condos are HOT!

Vancouver has a short supply of urban condos in the downtown core across the broad range of pricing. The entry level price ranges under $300k are in desolate supply. Parkview and Academy Square are about the only affordable buildings, those units sell instantly in this tight market. Locally the inventory tightened again this week for urban condos Downtown and along the Columbia River. A 1 bedroom unit came online yesterday in Parkview and instantly went pending.

I would love to see a developer pickup one of the available under-used lots downtown and build a new mid-rise affordable condo tower. There are two parcels at Columbia and West 9th just across the street from Riverview Tower that are currently privately held and used as surface parking. One or both of these could easily be developed into a project similar to the one Cascadia Development Partners is building on West 6th called Aria. Aria is an apartment building but I believe a similar sized condo project with smaller and modestly equipped units in the $250-$350k range would sell well and as long as the project stays in the 5-6 floor height range it can be built cheaply enough to be profitable.

There is an increasing demand for a downtown sustainable living style where the need for a car is marginalized and a walk-able lifestyle is possible. Over the last several years millennial buyers have been transitioning from a rental mentality to a more traditional ownership mentality at least locally. With interest rates near historic lows, the ability to buy an urban condo for a median income earner continues to improve. Millennials have been a little late coming to the home owner market, but they have definitely become a force in the real estate market recently.

A few years ago many reports showed that potential home buyers in the Millennial generation preferred the flexibility and mobility of renting versus the seemingly restrictive ownership path. Some of that hesitation to buy was attributed by economists as fear generated by the recessional housing conditions in 2009-2012. Whatever the reasons, they are coming around and many of them still want the same urban lifestyle they sought when renting apartments.

Vancouver has a fair number of parcels that are no where near the highest and best use and could easily be used to build middle class market rate affordable condo units. The Waterfront will bring condos in reasonable numbers over the next few years but those Waterfront properties are expensive and not likely to produce affordable units. Bringing a mass of middle income earners Downtown is good for local businesses that rely on consumer spending as well as businesses looking to hire entry level and mid level employees.

Vancouver has shown a willingness to streamline the bureaucratic process for urban infill developments, so I’d like to see more developers proposing condo buildings in the Downtown area on some of the more affordable under used parcels. How about it? Cascadia, Prestige, Holland, Hurley, Kirkland, Gramor, anybody… Bueller 😉 I have a map showing potential building sites in the Downtown area right here. Let’s do this!