WHY SEATTLE BUILDS APARTMENTS, BUT VANCOUVER, BC, BUILDS CONDOS
Why all those high rises are apartments.
Author: Margaret Morales
On August 14, 2017 at 6:30 am
When it comes to condominium development, Cascadia’s two largest cities couldn’t be more different. Last year nearly 60 percent of new housing starts in the city of Vancouver, BC, were condominiums; meanwhile, Seattle saw no new condominium buildings open. And that’s not changing anytime soon: less than 10 percent of all building slated for downtown Seattle in the next three years will be condos. What’s the difference—why the blossoming of condominium construction in one city and the almost complete dearth in the other?
The short answer is economics. In Vancouver, apartments are saddled with an unfavorable tax code, making condos the more lucrative multi-family housing investment even despite high rental demand. In Seattle’s skyrocketing rental market, one that’s climbed even faster than the condo market in recent years, apartment buildings are much more financially attractive, while condos come with bigger risks and, typically, lower returns. Compounding this profit difference is the fact that Seattle condominiums have to comply with quality assurance standards more demanding than those for any other type of home in Washington. As a result, condo projects require additional insurance coverage, which makes development more expensive. It’s unclear how much this additional insurance adds to project pricing, and how much of Seattle’s slow condo market is simply due to the competitiveness of apartments.
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http://www.sightline.org/2017/08/14/why-seattle-builds-apartments-but-vancouver-bc-builds-condos/
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