Construction outpaces inventory

Aftermath of teardown at E. Newton and 42nd Ave. E.

Believe it or not, in the topsy turvy Madison Park real estate market there are now more houses under construction than there are houses for sale.  And while there’s probably only a tenuous cause-and-effect relationship between these two data points (the majority of the new houses are apparently being built by people who intend to live in them), this high-construction/low-inventory situation is almost certainly unprecedented.

By our recent count there are at least 19 single-family homes in some stage of construction in Madison Park, five of these in Broadmoor, five in Washington Park, and nine in the rest of the neighborhood.  This does not include the several major rehabs underway nor any of the three or more teardown projects that we understand are soon to begin.

At the same time, there are only 17 houses currently listed for sale in Madison Park, according to the Northwest Multiple Listing Service.   This is an inventory level lower than any we have seen in the five years we’ve been covering the territory.  As points of reference, there were 33 houses for sale last quarter, 38 houses for sale one year ago, and 77 houses for sale in the highest inventory month of the downturn, July 2010.  From that high to the present low represents an almost 80% falloff in houses on the market here.  Where there was once too much competition (from the seller’s point of view, at least) now there’s too little competition (in the probable view of most prospective buyers).  Based on last quarter’s run rate for single-family home sales, nine per month on average, Madison Park now has a two-month supply of inventory.

One of three waterfront homes currently under construction (E. Highland north side)

But before we get into the details of homes sold or currently for sale, let’s take a look at the high level of construction now taking place in the neighborhood.  To start with, there are three major waterfront projects simultaneously underway in Washington Park, two of them adjacent to the E. Highland Drive roadend.  On the north side of the road a classic 1940 Cape Cod structure of about 3,000 sq. ft. is being replaced with a much larger, bigger-footprint residence.

Meanwhile, on the south side of the road, two houses, including the onetime home of Joe Diamond (Diamond Parking), were demolished earlier this year to make way for a 9,680 sq. ft. residence that will ultimately sit on this prime 18,000 sq. ft. waterfront site. A boxy, modernistic home is also being built on the waterfront in the “Devil’s Dip” section of 39th Avenue E., just to the south of the Seattle Tennis Club.

New construction on the south side of the E. Highland road end

To the north of E. Madison Street there are several interesting redevelopments underway.  Two particular shabby structures have been torn down in the past couple of months to make way for larger, modern abodes. The notorious dilapidated shack located on the southwest corner of 42nd Avenue and E. Newton finally bit the dust (as shown in the picture at the top) and will be replaced by a townhouse with two living units. This is a follow-on project by developer Isola Homes, which successfully developed a Madison Park spec home last year on a lot previously occupied by the so-called “Rainbow House.”

The back of the notorious shack at Newton and 42nd (before demolition)

Isola is not the only developer currently building spec houses in Madison Park, however.  Chaffey Building Group continues to buy up cottages and replace them with large, full-footprint structures.  The most recent example is 4101 E. McGilvra, where a 3,304 sq. ft. two-story home is replacing a small and rather unattractive dwelling on a lot just across the street from Edgewater Apartments:

The latest in a row of Chaffey-built residences

There are clearly more Madison Park developments in Chaffey’s future:

Isola is also not the only builder that is creating two residential properties on a site where only one previously stood.  Two houses are going in on the north side of the intersection of E. Crockett St. and 38th Avenue E. in Canterbury.  This is a double lot that was subdivided earlier this year and is being developed by Winfield Homes.

Another two-for-one situation at E. Crockett and 38th Ave. E.

While there are only two completed spec houses currently on the market in Madison Park, it appears that of the 19 homes under construction in the neighborhood, five are apparently intended for immediate sale.  All of the Washington Park and Broadmoor developments are intended for the occupancy of the property owners it appears. This includes one house being built as the personal residence of the developer and his family.

Just built and for sale: 2330 McGilvra Blvd. E.

So, as we noted, it’s not the case the most of the current construction is primarily prompted by the lack of inventory.  Nevertheless, developers continue to see Madison Park as an attractive area for investment, which will tend to further increase neighborhood home values.

Here’s the rundown on the current state of the market:

Houses

Listings:  17
Median List Price:  $2,450,000
Median Sq. Ft.:  4,380
Median Price per Sq. Ft.:  $559
Average Days on Market:  128
Percentage with Price Reductions:  53%
New Listings:  2
Pending Sales:  11

Condos/Townhouses

Listings:  4
Median List Price:  $449,000
Median Sq. Ft.:  1,010
Median Price per Sq. Ft.:  $445
Average Days on Market:  95
Percentage with Price Reductions:  50%
New Listings:  0
Pending Sales:  2

The third quarter, during which there was more inventory, had strong sales, a shorter sales cycle, and increasing home values, compared to previous quarters.  This is the overview:

Houses

Sales:  27
Median Sale Price:  $1,295,000
Average Sq. Ft.:  3,155
Average Price per Sq. Ft.:  $465
Average Days on Market:  72
Average Discount from List Price:  4.62%

Condos

Sales:  13
Median Sale Price:  $465,000
Average Sq. Ft.:  1,148
Average Price per Sq. Ft.:  $485
Average Days on Market:  60
Average Discount from List Price: 4.38%

Also worth noting is that the average discount from original list prices continued to decline.  There were six houses and seven condos sold for list price or higher during the quarter.  If two outliers (with discounts of 20% and 17% respectively) are excluded from the calculation, Madison Park house sellers experienced only a 3.5% discount from their original listing prices, on average, over the three-month period.  Not bad considering that discounts were averaging in the low-to-mid-teens in those bad years for the market, 2010 and 2011.


[Thanks to Laura Halliday of Windermere Real Estate for her help in compiling the sales data.  Listing data courtesy of Redfin, using information from the Northwest Multiple Listing Service. Thanks also to Dominique B. for the demolition photo at the top.]