Amid all the residential development on Capitol Hill in recent years, practically none of it has been geared towards condos. That could be turning around.
The first condo building to be built on First Hill since 1982 is holding its grand opening this month. Soaring 24 stories high, Luma brings 168 high-end condos to the neighborhood. Meanwhile, just across I-5 from Capitol Hill at Howell and Minor, the massive 374 unit Nexus condo building is already 80% reserved and developers have not even broke ground. Luma Condominiums is a CHS advertiser.
Another sign condos may be making a comeback is a slight uptick in condo conversions. Conversions of rental apartments to condos practically came to a halt around Capitol Hill in 2008, but earlier this year a small building near Prospect and Broadway E converted five units to condos, according to city data.
Seattle has had nine total units converted to condos in 2016, the most since 2009, also the year the last condo conversion happened on Capitol Hill. In 2006, just before the housing market went bust, there were 2,338 condo conversions citywide.
Underlying those indicators are condo prices, which are quickly on the rise on around the region. Condo prices in King County jumped 12% from last year to $335,000, according to September data from the Northwest Multiple Listing Service. John Deely, a managing broker at Coldwell Banker Bain, told NWMLS that entry-level housing in Seattle is the most in demand, fueled by the steady stream of young tech workers.
As an example, he said a recent open house for a condo listing in the South Lake Union area drew more than 100 visitors in a single day. Tech workers continue to dominate the primary buyer demographic, he said, adding that a significant number of their parents are relocating here to purchase properties close to their children.
Condo production is impacted by outside market fluctuations just as much as any other commodity. The 2008 housing market crash appears to have had a stifling effect on condo conversions as well. In 2007 1,626 Seattle apartments were converted into condos in 79 different buildings. In 2009 only 19 units were converted in two buildings.
Apartments are still by far the product of choice for developers. In July, Seattle topped the list of major U.S. cities with the fastest rising rents. Average rent in Seattle skyrocketed 9.7% over the past year, beating out San Francisco.
One interesting wrinkle in the previous condo slowdown are covenants on many new buildings that prevent condo conversions for five years. The covenants, well-known to developers but perhaps less known to those outside real estate, mean developers can avoid a costly additional layer of inspections that goes along with new condo construction. With some of Capitol Hill’s most intense construction occurring within that time frame, it is possible some of those buildings may convert.
It is an often heard refrain that increased homeownership in a neighborhood is desirable as residents are more likely to be involved in their community and invested in its upkeep. Capitol Hill EcoDistrict recently began pushing back on that narrative with its renter power initiative, which seeks to organize renters around key political issues in the city. The EcoDistrict’s is holding a renter power summit September 24th.