skip navigation
Support KUOW
April Kauffman of Schnitzer West shows off a new two bedroom condominium to Lauren Weber and Jay Wyatt. The unit, at Brix in Seattle's Capitol Hill district, is one of more than 80 that will be auctioned this weekend in Seattle.

April Kauffman of Schnitzer West shows off a new two bedroom condominium to Lauren Weber and Jay Wyatt. The unit, at Brix in Seattle's Capitol Hill district, is one of more than 80 that will be auctioned this weekend in Seattle.


Condo Glut

Deborah Wang

It's a buyers' market for a lot of things these days, but especially for condominiums. Thousands of condo units have come online in the Seattle area in the past year, and many remain unsold. Developers are slashing prices and offering big incentives to lure buyers. This weekend, one developer is auctioning off more than 80 condos in hopes of clearing some of its unsold inventory.


On a recent Saturday, the sales center at a brand new condo building on Seattle's Capitol Hill is packed with potential buyers. The building, Brix, is having a fire sale of sorts. This weekend, 40 units are up for auction and the minimum bids are typically less than half the listed price.

Lauren Weber and Jay Wyatt are 23–year–old recent college graduates. They're currently renting in Seattle's Madrona neighborhood, and Jay says they are looking to buy their first home.

Wyatt: "The auction sale prices were definitely attractive to us. The new building, and it's gorgeous, so yeah, saw some online pictures, had to check it out."

Salesperson: "Isn't that amazing?"

Lauren and Jay walk into an 1,100 square foot, two bedroom flat with big, open, floor–to–ceiling views. The unit is listed at $585,000, but at auction, bidding will start at a mere $295,000. Lauren says it's kind of hard to resist.

Weber: "At least for us, you know, we were thinking of buying in a year or two years, but when things like this arise, we kind of feel like we should take advantage of them."

Prospective condo buyers are being lured by pretty amazing incentives these days. That's because there is a veritable glut of brand new condominiums on the market. A few years ago, it seemed, every parking lot in downtown Seattle was being turned into condos. Many of those projects are coming on line now, during the worst real estate market in decades.

At Brix, which completed construction late last year, two thirds of the building's units are still unsold.

Young: "The condo buyer is gone, for right now, or on the sidelines."

David Young is Managing Director of Jones Lang LaSalle in Seattle. He thinks Seattle and Bellevue have 2,000 to 3,000 more brand new condo units than the market can absorb.

Young: "The problem with that whole cycle was that money was cheap, it allowed developers to, as developers do sometimes, get out over their skis and build a bunch of towers and it all came up within the same five year period, and all these buildings got built. Supply was there, demand diminished, and that's the kind of problem we are in right now."

One company that's made a big bet on the condo market is Seattle–based Schnitzer West. It's the company behind Brix and its one of the largest real estate companies in the region.

Schnitzer West used to have a portfolio of mostly office and industrial buildings. But in the past few years, its broken ground on four major condo developments in addition to Brix, Equinox in South Lake Union, Gallery in Belltown, and high–end residences at the Bravern in Bellevue. Together, they account for more than a thousand units.

Dan Ivanoff is the company's founder. He says there's always a risk in building condos.

Ivanoff: "I mean, it's a very speculative product type, and when people catch the market right they can really do very, very well, and when you catch the market wrong, you can have to sell stuff at certain discounts, and have to move through your inventory."

Despite slashing prices and offering financing assistance, Ivanoff says the market is still frozen. So the company has decided to offer more than 80 units in two buildings at its huge auction in Seattle this weekend. Ivanoff says it's meant to get the market moving and give buyers a sense of how much the condos are worth. Also, after more than 50 percent of the units in a new building are sold, FHA financing becomes available, and Ivanoff says that could bring in more potential buyers.

Ivanoff: "I guess the way I would say it is, it's like selling seats on an airplane, and you have some that are great seats and some seats that are not so great seats, but you got to fill up the whole airplane, and so that's the same way we look at moving condo."

The company is also taking one entire building off the market. Sales were so sluggish at Equinox in South Lake Union the building is being turned into luxury apartments instead. Construction is just finishing on that building, and Ivanoff says he didn't want it to cannibalize demand at his other developments.

As to whether all these moves will pay off for Schnitzer West, it's hard to say. Buyers are pretty spoiled for choice these days.

Horvath: "I've seen Escala, and Olive 8, and the Gallery, and Veer lofts."

Steve Horvath has looked at a lot of condos over the past month.

Horvath: "Most of the downtown, the high–rises, all those kinds of properties I've seen."

He and Sarah Pentland are thinking about relocating to Seattle. But like many prospective buyers, they are really taking their time.

Pentland: "We can wait. There is nothing forcing us."

Horvath: "And there's still more construction happening, people are still losing their jobs. So I think there's a lot of time to decide on a place. But the good deals can't last forever."

The condo auction happens this Sunday at the Grand Hyatt Hotel in Seattle.

I'm Deborah Wang, KUOW News.

© Copyright 2009, KUOW

Editor's Note: : Transcript has been edited and differs from the broadcast version. The condo auction is Sunday not Saturday. (9/25/2009)

Related Links

KUOW does not endorse or control the content viewed on these links as they appear now or in the future.