2023 YEAR IN REVIEW
2023 was a unique year at Bellevue Towers in terms of sales. Total sales were significantly lower than they were in even in 2020, at the height of the pandemic when many buyers were worried about living with hundreds of other people in a high-rise building and just showing properties at Bellevue Towers was a challenge. Pricing on the other hand did not fall to the same degree as sales (and in fact if you include the sale of the South Tower penthouse, average price and price per square foot hit record highs in 2023).
The explanation for the tepid sales activity last year was all about interest rates. Not surprisingly, high rates affected the ability of buyers to buy due to deteriorating affordability. At the same time, however, high rates also affected the willingness of sellers to sell, due in large part to the implications of giving up their current quite favorable mortgage interest rates. It’s not too surprising then that with fewer buyers buying and fewer sellers selling, sales activity fell both in the broader market and at Bellevue Towers specifically.
With all that being said, interest rates are now improving and buyer demand will strengthen in 2024. While the supply of resale homes may improve only modestly, there will be many new construction condo options in downtown Bellevue to choose from moving forward. If you are thinking about buying or selling at Bellevue Towers in 2024, or have questions about the market or this report, I would love to hear from you.
Have a great 2024!
Sales Volume and Mix
A total of 23 homes were resold at Bellevue Towers in 2023. This marks a substantial drop from 2022 when there were 39 sales. Only a handful of homes actually failed to sell during the course of the year, so the low level of sales was at least as much of a function of lack of supply as it was of weak demand.
Approximately 70% of the homes sold in 2023 were two-bedroom homes or penthouses. This is right in line with the proportion of two-bedroom homes and penthouses in the building (71%), but represents a higher share of sales than we have seen historically (for various reasons related to price point and owner profile, studio and one-bedroom homes tend to turn over more frequently).
Home Types Sold in 2023
Generally speaking, 2023 saw a continuation of pricing trends from the second half of 2022, with rising interest rates exerting downward pressure on prices. The notable exception was the sale of Home 4302, the full-floor South Tower penthouse, for $12,850,000. This set a new record for the building in terms of total price and price per square foot. Even that sale, however, was only $900,000 higher than the sale of the corresponding North Tower penthouse 6 years earlier, showing weak appreciation of only about 1% per year over that period. Nevertheless, as a result of having that sale in the mix, Bellevue Towers did set new overall records for total average price and price per square foot in 2023. If we remove that sale, however, we get a more realistic view of pricing, with average price and price per square foot falling in 2023 back to levels similar to those in 2021 when the market was still recovering from the pandemic.
Time on Market
The average time on market in 2023 rose to 45 days from 25 days in 2022, an indicator of weaker demand over the course of the year. The shortest time on market for any home sold in 2023 was 2 days, while the longest was 145 days.
Bellevue Towers 2023 Outlook
Sales in 2023 largely shaped up as I had anticipated. Interest rates caused pricing to soften somewhat, although I will confess that the fall in total sales was even larger than I had expected. Looking forward to 2023, the demand side should strengthen as rates continue to drift down (in fact, condo market activity was already picking up at the end of 2023 thanks to lower rates). The supply side is much harder to predict. Owners who were holding off selling in 2023 due to the impact of higher rates may decide to take advantage of improving conditions to sell in 2024. Many owners, however, may continue to feel “locked in” by their favorable current mortgage rates and only look to sell in connection with a life change (job relocation or change in family status, for example). Overall, I would anticipate sales and pricing to rise modestly in 2024, barring a significant economic downturn (and/or election-related challenges) later in the year.
In terms of the broader downtown condo market, Avenue Bellevue started closings in the Residences Tower late in 2023 and will start closings in the Estate Tower this spring. While the exact numbers continue to evolve with ongoing sales, by late spring there will likely be in excess of 100 unsold, move-in ready units available across the two towers. Meanwhile another new project, Mari, started selling last year and is on pace to have over 50 units remaining unsold when completed this summer. In this regard, we are likely to see historically high levels of relatively expensive, new construction condominium inventory in downtown Bellevue in 2024.