King County Condos appreciate strongly; studios lead

How much do Puget Sound-area condominiums appreciate compared with single-family houses?
Are they significantly more affordable than houses?
Which size condo is a better investment around here: a studio or one with two bedrooms?
Questions like these have long intrigued condominium buyers, but no comprehensive answers were available because there had been no in-depth analysis of condo appreciation and supply.

Some of the condo results are surprising.
Take appreciation. Lore relegates condos to default housing, if you will, for people who can't quite swing a house purchase. But buyers apparently don't feel that way.
Demand has caused condos to appreciate handsomely, thank you.
Since 2000, King County condominiums have outperformed single-family houses two out of five years. And even when they haven't, their appreciation has been strong.
In 2005, for example, the county's single-family houses appreciated 16.3 percent per square foot. Condos climbed a healthy 13.5 percent.
Here's the kicker: Last year, the median price per square foot for condos in King County was $211 — or $4 more a square foot than houses in the county.
In the first six months of this year, condos in King County have appreciated 21.9 percent a square foot compared with the same period in 2005. That's slightly faster than the 19.7 percent that single-family homes appreciated in the first half of this year.
Who would have thought it?
And would anyone have thought that one-room studios would appreciate faster than every other condo size?
Last year condominium sales accounted for 25 percent of King County's total home sales, up from 22 percent in 1999.

Having all of downtown Seattle as an amenity obviously resonates with many owners. Last year, the area with the second highest appreciation — behind the Central District/Madison Park — was Belltown, where condos appreciated 23.2 percent.
But look at the annual average appreciation trend over the past five calendar years, and there's a surprise: Some areas south of the city — places people wouldn't necessarily think of as having a lot of condos — have appreciated significantly.
Among them are Burien (9.5 percent) Des Moines (8.3 percent) and Federal Way (8.7 percent).
That's on par with single-family houses in Bothell, Issaquah/May Valley and Seattle's Magnolia neighborhood, which all rose at an annual rate of 8 to 9 percent a year over the past five years.
Half of the eight cities in the southern portion of Snohomish County saw condos post double-digit appreciation last year. The leaders were Mukilteo (23.8 percent) and Edmonds (20.7 percent). Condos in those towns appreciated more than neighboring single-family homes.

Roughly three quarters of the region's condos are in King County. They run the gamut, from older, recently converted apartments to upscale downtown high-rises, such as One Lincoln Tower adjacent to Bellevue Square, which typifies a new trend: a hotel — in this case, the Westin — topped by condominiums.
Several such projects are among the 49 condo projects planned for downtown Seattle. Their units are expected to be priced from the $200,000s to more than $5 million.
The neighborhoods that now have more than 3,000 units each are Belltown, Kirkland, Federal Way and Capitol Hill/Montlake.
Those with less than 800 each are Kingsgate, Burien, Mercer Island and Kenmore/Bothell.
Belltown can boast the highest median condo price last year — $359,990 (for all size units combined). That was roughly the cost of a median-priced single-family house in Lake Youngs or North Greenwood last year.

But make no mistake: 2005's condominium prices were far cheaper, in general, than single-family prices, giving a boost to middle-income buyers in affordability-challenged King County.
A Times analysis of King County detached-home sales found that just nine of 86 areas throughout the county and one within Seattle were affordable last year to buyers earning $59,718, the county's median household income. Virtually no neighborhoods on the Eastside or in North Seattle were within reach.
Contrast that with condos.
Buyers whose household income matched the median could afford the median-priced condo in 32 out of the 41 areas in the Times analysis. Among them was Magnolia.
To afford that pricey neighborhood, buyers needed to earn $55,622, which supported the median-priced condo purchase of $245,000. For a house (median price: $578,500) the household income required was $131,336.
Condominium data for Snohomish County could not be closely matched with single-family home data because the geographical areas differed.

In the Seattle area, there are three main categories of condo owners: first-time buyers, often singles; empty nesters ready to downsize; and investors. They'll have a lot more to chose from in the coming years.

There is significant condo construction in Bremerton, Bainbridge Island, Everett, Federal Way, even Bellingham. Downtown Seattle is expected to add more than 8,000 units over the next four year!!!