2010: Year of the Condo Auction

"Buyers know that now is the time to get the big home with a view at a price that is hundreds of thousands less than just a couple of years ago, and at an incredibly low interest rate," says West Seattle Redfin agent Dan Mullins. He wasn't talking about condo auctions specifically, but he captures the appeal succinctly.

For real estate market watchers, the auction is also a useful barometer. Over the weekend, 32 condos in the luxury condominium tower Olive 8 hit the auction block, and the results support those dismal few prognosticators who suspected, back in the boom days, that the market was overvalued by some 30 percent.

Keep in mind, while perusing the Olive 8 sales, that this is what a luxury downtown condo goes for. Wendy Leung at Seattle Condo Review gives you a great by-the-numbers breakdown (with more granularity than you'll find in the Seattle Times Olive 8 auction story):

The homes were sold for an average of 66% of the previous listing price, which is very close to the average of the last few auctions (Queen Anne High School, Lumen, Brix, Gallery, and 5th and Madison) since 2009 at 67%.

Leung goes on to separate out high and low bids by condo size, and to work out their price per square foot. While the average discount from list price was 34 percent, a larger two-bedroom went for only 54 percent of list. The units being sold ranged between the 18th and 26th floors in the 39-story tower--the more expensive units above, over 100 unsold, have "price tags from $500,000 to $6.9 million," says the Seattle Times, who also make room for a cheery broker's quote:

While condo auctions have become yet another sign of tough economic times, some see the strong turnout Sunday as proof that things are picking up.

"Where developers are able to meet the market, homes sell," said Jones, whose brokerage represents the developers of six Seattle condo projects, though not Olive 8.

"Compare that to some other markets, where no matter what you do, homes don't sell."

Of course, as Leung points out on her blog, "Each home has an unpublished reserve price, which means that the seller has set a minimum selling price," so it will be "interesting to see how many of these homes will make it to closing."

That said, let's head back over to Redfin's market roundup. They report some 1,331 condos on the market in Seattle this August, with a median sale price of $355. You can see the luxury premium in Olive 8 auction's $462/sq. ft. for one bedrooms, and $415 for two bedrooms, but it seems likely that the net result of the auction is a downward pressure on prices overall, if the new top is less than $500/sq. ft.