"When they are hot, they're hot, when they're not, they're not"

This best describes the history of condominiums in the Puget Sound region.  Since the Horizontal Regimes Property Act was enacted by the Washington State Legislature in 1963 (Condominium Law) and revised and rewritten, there have been about 69,000 units recorded as condominiums in the five county Puget Sound Region. Seventy seven percent or about 53,500 have been recorded in King County, with the remaining 23 percent distributed between Snohomish, Pierce, Thurston and Kitsap Counties.

Although some of the projects which have filed a recording declaration have been taken off the condominium rolls over the years, here are the estimates as of Jan. 1, for the four county condo market.

• King County, 53,500 units, 73.36 percent;

• Snohomish County, 9,100 units, 13.16 percent;

• Pierce County, 4,580 units, 6.62 percent;

• Kitsap County, 1,980 units, 2.86 percent.

In King County, about 20 percent of units recorded are located in Redmond. Another 20 percent of the units recorded are in the city of Seattle, including Capitol Hill, Downtown, Madison Park, Queen Anne, University, Sand Point and Green Lake. About 37 percent of the units have been built or converted east of Lake Washington from north Renton to Woodinville, while 38 percent are located within the city of Seattle and north King County. The remaining 25 percent were distributed throughout all of south King County.

In Pierce County, about half of the recordings were in south Tacoma and about one sixth were in the Gig Harbor and in extreme north Tacoma.

In Snohomish County, about 70 percent of the activity has occurred in the southern part of the county in the cities of Edmonds, Mountlake Terrace, Lynnwood, Mill Creek and South Everett.

Kitsap County has had the most activity in the Bremerton and Bainbridge Island region.

To demonstrate the cyclical nature of condominiums in this region, it should be pointed out that for the first 10 years, there were only 1,676 units recorded; in the next five years (1974 - 1978) there were 5,487; between 1979 and 1984 there were 27,199 and in the past 12 years (1985-1995) there were 17,992.

Source: Seattle Daily Journal of Commerce

"Eighty percent of the condo conversions occurred during the period from 1977-1980. That was a phenomena which was brought about by an extreme housing shortage during a period when an average of 200 people per day were moving into King County. Under normal conditions, that many people would be creating a demand for an additional eighty housing units per day.

Apartment owners, capitalizing on the extreme housing shortage, converted their rentals into condominiums. In turn, that created a tight rental market with vacancies hovering between 0.5 percent and 1 percent, causing rents to escalate, which encouraged public pressure to have cities and counties enact conversion ordinances to protect apartment residents.

When conversions were hot, it was not uncommon for apartment buildings with more than 200 units to be converted. As a matter of fact, at one time in 1979, we had 10 such developments with more than 200 units, including one with 750. Over the past year, in the five county area, we have had a total of 19 buildings being converted containing about 600 units for an average size of 31 units.

The present activity in condominiums conversions is relatively subdued for the following reasons:

1. During the late 1980s and through mid-1995, owners and developers, in an attempt to overcome objections of earlier conversions, constructed their apartments to "condominium" standards, that is units with about 10 to 15 percent more square footage, better sound control, garages or covered parking, upgraded appliances and better design.

    

   Conversions today, for the most part, do not make economic sense. Apartment building owners simply want too much money per unit, to make the conversions work. When the professional converter adds in the upgrading costs, the legal and engineering fees, the selling, closing and marketing costs, there is typically no room for profit and risk.

    

2. Another recent fear has been lawsuits. When converting an older building, sophisticated converters can see the potential of things going wrong in older developments.

Source: Seattle Daily Journal of Commerce