October 7, 2004

Downtown housing has a bright future in Seattle

Emerging housing opportunities can be found in the Stadium District, International District, SoDo and Pike Place Market neighborhoods.

By JÓSÉ HIDALGO
Countrywide Home Loans

Rendering by Weber + Thompson

The demand for downtown condos is strong, as evidenced by the Cristalla, which is halfway into construction but already 90 percent pre-sold.

Imagine that you live in the center of a world-class city.

Condominiums and town homes are just steps away from a wide array of restaurant choices, coffee shops, marinas, stunning architecture, purveyors of local delicacies and produce, travel opportunities, art museums, parks, and unsurpassed views of the water and the mountains.

Everything is within walking distance. Toss your car keys and tune in to the weather report instead of the traffic.

Now, open your eyes. Look around you. This is Seattle in 2004.

I recently bought into downtown living. I enjoy the same lifestyle as friends and family in cities like New York, Miami and San Francisco but at a fraction of the cost. I found a building with construction quality, architecture and design layout that was as appealing a space as I've seen anywhere.

My connection to the finance industry, to top-notch real estate professionals and builders, and my knowledge about new loan products made the search less daunting for me than for many of the other homebuyers in the Seattle market this year. In the process, I learned about the broad range of high end and affordable upscale options geared toward modern homebuyers seeking a sophisticated, convenient lifestyle. Seeing these properties first-hand rather than on paper and loan documents was a pleasant surprise, and a sign of more great things to come for our city and for Countrywide's expanding business in the area.

Urban opportunity

Investing in urban Seattle is smart on paper and on the street, in my view. There is a lot of volume moving downtown. To that point, the most recent condo project to come online, Cristalla, is pre-selling now at $540 per square foot and is somewhere in the range of 90 percent pre-sold. And Cristalla is just past halfway in construction.

According to First American Real Estate Services' Marketrac, Seattle is a $7 billion purchase market (in new construction and resale homes). The consumer real estate opportunity in the downtown region alone is now just shy of $1 billion, up $100 million in the first six months of this year in comparison to 2003.

I think 2004 could likely reflect the largest housing market increases we've ever seen. Houses this year have already appreciated nationwide by 17 percent, due to affordability of interest rates and new loan products. This double-digit appreciation increase is astounding as compared to the average home appreciation of 4 percent nationwide year-over-year for the past 20 years.

Current projects in development, and the rehabilitation of buildings and condos in key areas continue to increase Seattle's residential density and draw businesses to its urban areas. In the very near future, Pioneer Square area rehabilitation and development in the Stadium District will likely result in a surge of business activity and new residential opportunities. These projects and predictions may clearly be good for the economy, property values, entrepreneurs and urban dwellers.

Loan opportunity

Today, interest rates remain low and borrowers and investors have more choices from a variety of cutting-edge loan products that expand their buying power and flexibility. Combined with current appreciation levels and the growing population and demand for the land downtown, a primary or investment property in urban Seattle makes a lot of sense.

In my case, I knew that the time was right to purchase a unit in a premier building downtown. And because I financed it using a new flexible interest only loan, I am paying 23 percent less per month than I might have paid just a year ago for the same amount borrowed under another type of loan.

Of the many newer loan products available, a favorite of mine, an option ARM loan, works particularly well in this market. We all know that Seattle draws entrepreneurs. Self-made business leaders should not have to wait years to own their dream properties. And loan products such as option ARMs open more doors.

Countrywide's PayOption ARM allows more control over monthly finances by offering low minimum monthly payments with up to four different payment options and a low start rate. Other benefits of this product include stated income and stated asset options, loan amounts up to $6 million, and investment properties and high-rise condos are eligible.

Affordability downtown

A myth about living downtown is that there are no affordable properties left. Many borrowers fail to fully research options in urban living because they assume there is nothing available in their price range. This is simply not the case.

Value is still out there in downtown neighborhoods like First Hill or Beacon Hill, and there are emerging opportunities in the Stadium District, International District, SoDo and the Pike Place Market neighborhood. In a recent search, we found more than 300 central Seattle properties listed under $275,000. At this level there are even more affordable loan products to talk about.

For people who have dreamed of living downtown but feel priced out of the market, lenders have a number of innovative solutions. For example, we are offering a low down payment loan that is the result of a two-year, $100 million mortgage underwriting experiment sponsored by Fannie Mae. Currently, the loan is available to qualified homebuyers in Seattle and a handful of cities across the country.

The loan rewards people who rely on mass transit. And the result is increased buying power for the borrower, who can qualify more easily for a home loan on urban properties that are generally higher in value because of their proximity to local services.

Because of increased demand and opportunity in downtown Seattle, we are opening two new offices locations downtown, including our new office at Fifth and Jackson where there will be 25 employees, including 15 loan consultants, to service the expanding urban market. Our second office location will be announced in early 2005.

We all enjoy living in a world-class city with a quality of life that is the envy of the nation. Another bonus to Seattle's urban living is that it boosts the use of public transit, encourages patronage of local businesses and cultural amenities, reduces energy consumption and improves local and regional air quality. If you haven't thought about it before, now is the opportune time to consider a move into the center of Seattle.

Jose Hidalgo is the Seattle area manager for Countrywide Home Loans, a national leader in residential finance.

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