![]() Seattle and Vancouver, B.C., have very different markets, so it’s not always useful for Seattle to try and achieve what Vancouver has. Meanwhile, single-family homes, increasingly a scarce resource as the population grows and the stock of single-family homes shrinks, dramatically increase in value because some people are willing to pay for that lifestyle. ![]() Because after all, if someone had a little money socked away to buy, they could likely afford rent increases. Here’s how this works: When people cannot find affordable homes to buy, they stay in the rental market, which drives up rents further. The inevitable result of our failure to build densely enough is gentrification, Young says. Greater density is needed - and yet with greater density comes greater risk to the developer. Young said it’s not possible to build densely enough to meet demand by building only townhomes where single-family homes used to be. In those cities, the housing market is highly elastic and can respond to changes in demand very quickly.īecause this region cannot sprawl, it must grow denser to meet demand. Young said many cities use cheap suburban housing to meet market demand quickly (we’ll save arguments about the long-term costs of sprawl for another day). Washington State’s Growth Management Act, while successfully protecting farms and forests around the Seattle metro area, prevents sprawl. Here are some other reasons the Washington Center for Real Estate Research’s James Young says condos are rare and expensive: He said creating more condos could help more people escape the rental market so they can stop sending payment to their landlord and start investing in home ownership instead. James Young said it’s worth it to try to encourage condo development with new laws. The answer, like most things in real estate, is complicated. We began this story looking for reasons why condos are so rare and expensive. So it’s unclear if this developer made the right bet. “People started going crazy, sharing photos online.”īut with interest rates rising, people can now afford even less home than they could a couple months ago. “It was the end of the event and the sun came out shining and this place looked miraculous – there were rainbows – I’ll send you a picture – double rainbows,” he said. A couple weeks ago, there was a party to celebrate the building’s progress. “In some ways, the consumer protection under the Washington Condominium Act works so well, it scares developers away from taking the risk, which results in a relatively undersupplied market and higher housing costs,” he said.īorrero hopes that his company’s condo building will time the market just right. And that’s important.īut Borrero said shifting all the risks onto developers is a tradeoff that results in higher costs. ![]() Here, the law prevents consumers from losing more than 5% of the cost of a condo unit, should the buyer decide not to go through with the purchase.Īll these laws were created to protect consumers from fraudulent or irresponsible developers. ![]() He adds that, in cities like Miami and Vancouver, B.C., consumers take more of the risk themselves, putting up massive deposits of 20% to 50% that the developer can use toward development costs.ĭean Jones of Realogics Sotheby’s International Realty said such deposits become part of a developer’s “capital stack” (investment portfolio), which decreases their financial risk and the amount of money they have to borrow with interest.īorrero and Jones said those massive deposits are illegal in Washington state. “So you’ve got all of your costs up front, but there may not be a market when you’re done - and you’re gonna get sued,” Young said.īack at the Graystone, Borrero said those risks, along with the difficulty of getting financing for condos, make them more expensive. Legislators have attempted over time to limit the scope of what’s covered by the warranty, but in practice, James Young said many condo developers today still end up making expensive repairs for minor defects. Single family homes and townhomes don’t come with four-year warranties, Harer said. It may be the threat of lawsuits that forced developers to improve their procedures. Later, the problem was an exterior foam insulation panel system, that leaked and caused water damage when installed improperly. The problem was that, as materials became more modern, some contractors did not immediately understand how to properly install the new materials, explains Ken Harer of the Condominium Law Group in Seattle.įirst, Harer said the problem was vinyl siding, improperly installed. The intent was to protect condo owners from shoddy workmanship, which was on the rise in the 1980s. In the 1990s, Washington state lawmakers decided condominiums should come with a four-year warranty.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |