Real estate expert, Dean Jones reveals surprising facts about today’s market and offers advice

[MUSIC PLAYING] Hi, I’m Jonathan Sposato, owner and publisher of Seattle Magazine.

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Recent consumer data confirmed that 78% of people believe owning a home is a key life achievement.

And 65% credit home equity gains as a key factor for building intergenerational wealth.

The freedom to choose where and how we live is also a core value of American life.

But the options at times can seem finite, especially for those with low and moderate incomes.

Today’s guest is an expert in real estate.

He’s a successful businessman whom I’ve always felt brought a big city ethos to our corner of the country.

Seattle Magazine years ago included my next guest among the city’s shapers.

And Puget Sound Business Journal recognized him among the top 100 most influential leaders.

Having succeeded in real estate in larger cities like San Francisco and Vancouver, BC, he has been heading one of the largest residential sales and brokerage companies in our region.

Please welcome my good friend, Dean Jones of Realogix Sotheby’s.

Hey, Dean.

Great to see you, Jonathan.

So excited to be here with you.

Yeah, yeah.

Thank you for joining me.

This is going to be a fun conversation.

So sometimes I like to start with some fun things, especially with people that I’ve known for many years.

And so we’re going to do some rapid fire questions if you don’t mind.

Oh, OK.

Some fun things.

Bring them on.

Off the cuff here.

What is the best advice that you’ve ever received?

You’ll get through it.

You’ll get through it.

Just the constant pursuit of your goals, whatever headwinds you’re facing, whatever challenges are in front of you.

Sometimes just not to give up.

This is advice from my father who’s been a mentor of mine my whole life.

And we’ve been through a lot of challenges, especially of recent.

And that’s great advice that I just have to remember.

I love that.

I love that.

Yeah, yeah.

And we’ll bookmark those, some of those challenges for later, for sure.

Now, what is the worst advice that you’ve ever received?

Put it into the universe.

You know, I have a lot of faith, and I do believe you can manifest what you believe.

But on the other hand, I also know the harder you work, the luckier you get.

So I would just suggest that you can’t leave things undone.

You have to direct them on where you want them to go.

Very nice, very nice.

And along those same lines, for what in your life do you feel the most grateful?

My modern family, my friends that especially recently become so close to me realizing this is the family that you choose and not the one that you’re necessarily born with.

And so a tight knit group of folks that just we support one another.

Yeah, very good, very good.

And I try to ask this of everyone whose life experience is that I really respect and admire.

So for you also, how has your perspective on the world changed over time?

Certainly more global, you know, with this real estate organization being globalized and pulling myself out of my roots in Vancouver, British Columbia, where I grew up.

As a child, I’ve just had a much broader world view now and seeing how that ecosystem works and how world events can affect your micro market.

So I take that on as a responsibility for my company and for my clients to just see where the market’s going next and try and get there first, realizing just how many macroeconomic and socioeconomic and political influences can affect our industry.

So I need to keep a global perspective.

Yeah, no, that’s one of the things I really love about you as a business leader is that you do– you can synthesize from both the macro and the micro and kind of put sort of a more liberal arts perspective on synthesizing a bunch of different things happening in different segments to kind of net out at something that really impacts the community.

So we’re going to touch on a lot more of that stuff to come in a few more minutes.

Now, if you could live in another time period, what time period would you choose?

I would be thrilled to make it there naturally.

But I think these next 50 years are going to be fundamentally just remarkable.

And you think about how much innovation is in front of us and how quickly things are changing.

But I want to take my time getting there.

But I mean, wouldn’t it be great if we could be doing this again in 50 years and look back at just how much the city has changed and where on the moon we’re living and/or perhaps Mars?

I love it.

I feel the same way.

I don’t want to go backwards.

I look forward to the future.

And I better get my miles in on the treadmill a little bit more.

Stay healthy, my friend.

That’s right.

OK, last one is what is one secret that you are keeping from even your mom?

You know, I think that it would be that we all have our insecurities.

And she holds me in such a proud light.

I never would want to reveal maybe the weaknesses that you have as an individual.

And we want always them to be happy and proud and supportive of you, right?

So you certainly don’t want to drag them through any of the challenges that you’re having at times.

But on the other hand, I wouldn’t keep that from her if it could help me and help our relationship.

Yeah, no, I like that.

We have a beautiful relationship.

Good, good, good.

I’m glad to hear that.

I feel that it’s only fair that I reveal what would be my secret that I’ve kept from my mom.

And this is the truth.

And I guess it’s not going to be a secret anymore after I talk about it.

Which is that I was raised by a single mom and she couldn’t really afford to continue to raise me.

So when I was three, she sent me to live with my maternal grandparents in Hong Kong of all places, which was like an amazing experience.

And that sorted a secret.

She harbors so much guilt around like, oh, I should have never have left you or sent you overseas.

But my kind of deep dark secret is that I loved it.

Oh, yes.

Oh, my God.

It was so much– I learned so much.

I consider myself really honored to have spent so much time being raised by my grandparents.

How lucky am I that they weren’t abstract figures that would show up only on Sunday nights to have dinner with us.

I mean, I lived with them.

It was really neat.

So I appreciate it.

Well, I think, Jonathan, you have such a global perspective on things because you’re not locked into a provincial mindset of living and growing up in one town.

New York and Hong Kong are now in Seattle.

But I would say that’s similar for myself in that, that living in multiple cities has given me more of a broader view and seeing what potential is even here for us in Seattle.

Yeah, that’s right.

That’s a great segue into the media questions that I want to talk with you about.

So Dean, you and I are both business owners, entrepreneurs, CEOs.

So for you, what’s it like to be the owner of a residential real estate brokerage company right now?

How’s it going?

Well, it’s been a rough ride with these mortgage interest rate increases.

But I couldn’t be more proud of how our RSI, our nation, has performed through the pandemic and innovating and evolving.

We had a couple of incredible years as most of the housing industry did, which was surprise and delight.

But then that was immediately curtailed by Fed decisions to raise mortgage interest rates nine now 10 times.

And as a result through that, really pinched housing demand in general.

A lot of people take in a breath.

So we’re off about 30% year over year for gross sales volumes.

But I’m really proud that we’ve, on other hand, earned the holy grail of performance.

Our 300 real estate advisors are now ranked number one for highest average listing prices sold, buyer prices purchased, sales volumes per agent, most productivity per agents, lowest days on market, and actually the greatest inventory volumes on a per agent basis.

So we believe that that has manifested into the trust that we have earned as our brand has matured.

And we are so proud of the company we keep, the clients we represent, and the results that our agents curate.

That’s fantastic.

And that’s well deserved and well earned.

And the main reason why I think it’s really important for our community of listeners to hear from you, Dean, is that I can count on very few fingers the people who have that ability to have the long view, the synthesis, and a very realistic perspective born out of experience in multiple cities and having seen multiple cycles where you can reflect on what’s happening today and have a point of view about what’s moving forward in the future.

So I’m going to start with something that I know a broad section of our audience thinks about, which is obviously home ownership.

So in a recent report that you turned me on to, the Puget Sound Regional Council reported that the typical rent rate rose 60%.

And at home values, skyrocketed 135% in a broader region since the Great Recession.

So that would be from about 2007 to 2009 to now.

The PSRC research also shows that metro area rents rose from about $1,500 to $2,400 from 2014 to 2022.

And then home values more than doubled from about $332,000 to $781,000, et cetera.

So I guess to put a fine point on it, Dean, what do you think is the answer to the very complex question of affordable housing?

What should we all do moving forward?

Well, what we’re starting to do, even with recent voting and hopefully governor’s signature soon, which is to add density to our overwhelmingly single family zoned communities.

To put it in perspective, over 80% of the city of Seattle is single family zoning, compared to, say, the Bay Area, which is about 38%.

And you know how expensive the Bay Area is, but they have more multifamily and more density per acre, per square mile, if you will.

So we just need more housing.

And the ADUs and DADUs, the attached dwelling units that have become popular and the cottage designed homes, which are just not so big house, are the right way to go.

But with recent legislation, we’re now going to see that throughout our larger cities of over 75,000 population and potentially across the entire state.

So we’re heading in the right direction.

We need more housing.

We have to get out of the way of developers to make that easier to attain through entitlements and through financing and construction, litigation.

Any of those headwinds that are forcing developers back from building ultimately is going to show back up on the market as higher prices.

So more houses, you will have more affordability.

And actually, I think, better for recruiting and retention for our business and our economy as well.

That’s great.

And we’re going to dive into a couple of those things.

So I know from prior conversations– and this is something that I’m oddly fascinated by, the concept of greater density, kind of extracting greater value from the current lot sizes via ADUs.

So there’s someone on my team who just created an ADU on her and her husband’s property.

And her dad lives in this ADU.

And it’s been a fantastic– so they now have this multi-generational sort of little mini compound where everyone’s together.

And they spend a lot of face time together.

And I found myself really digging deep with her about what that’s like.

And so I’m curious to know, how come that’s not happening more often?

What are some of the barriers for most families or people to do ADUs?

I think it’s just their comfort of understanding how to get that accomplished.

I mean, it’s relatively new legislation that’s allowing it.

This is not surprising in other cities that have been a little bit more progressive, perhaps, or let’s just say, harbingers for where we’re heading.

Look at my hometown, Vancouver, British Columbia.

I mean, they upzoned almost all of the major arterials that used to be ringed by duplexes or even single family homes are now all upzoned to 35 or 45 foot multi-family.

So these are townhomes or stacked condominiums or apartments.

But they did that because they needed to create more affordable, more attainable housing in what was otherwise largely single family zoning as well.

So I think it’s just a comfort for the local population to realize that this is where we’re heading.

And I mean, obviously, you’re affecting your property value.

I think you’re investing in your property value by adding income properties to your existing single family home.

And that’s not only good for your investment, but it’s also great for the economy around you because clearly, we need more homes.

And the greatest way to get greater home ownership and affordability is to bring in that inventory.

And it can’t all be done in the urban centers, where the existing zoning is already permissive.

These are high-rise zones, for instance, blocks from where we are in Capitol Hill or in downtown Seattle or in downtown Bellevue.

The opportunity to create new cities where there is dramatic upzones centered around light rail is also very much a potential.

But you can imagine how that would go with the local NIMBs, the Not In My Backyards, as well as political leaders.

It just takes a lot of will and a lot of time to get those kinds of macro changes made.

So I think where we’re heading is exactly where we need to go, which is adding infill housing.

It’s also much quicker to get developed as well because unlike a high-rise condominium that could be– or apartment building could easily be five or seven years from concept to final closing with entitlements and look at how much the world can change in just a year or two.

So that’s a higher risk profile, which is another reason why there aren’t any ground breakings going on right now.

And so that’s an issue.

Yeah, very good because this is a perfect segue to one of the things that I’m deeply curious about.

I know that you have a lot of thoughts here.

As you mentioned, there are just something like five new condominium projects planned in Seattle right now.

I’m not sure if my data is still accurate.

Only two are actually under construction.

As of earlier this year, there have been more projects in a pipeline, but a few have been canceled or deferred.

We think there are only around 700 units to be delivered in the 2023, 2024 time frame.

And so what does that mean to the layperson?

Like what’s happening right now?

How should we take that data?

Simply put, what you see is what you get for inventory.

There are no imminent ground breakings.

There has been far more deferrals or outright cancellations of planned condominium projects, especially in Seattle.

Then there has been on go forward planning.

So we’re on the tail side of that last condo cycle.

And like we experienced after the great recession, although the economic situation is different now, and I think the market is much healthier, than we had experienced during, let’s just call it, the last housing recession when there was a dearth of new supply.

It could easily be several years before we see more ground breakings.

And again, the challenge is the demand can rise much quicker than the supply when you’re talking about high rises.

So we are going to be, I believe, a remarkable renaissance in the city over these next two or three years, at a time that we would actually have much greater demand for that housing, but it simply won’t exist.

The only projects that are delivering in the near future are ones that started construction several years ago.

We’ve got the graystone that we represent, which is the only high rise condominium that’s delivering in the city of Seattle this year.

There’s one condominium tower that’s delivering in 2024.

Jonathan, there are zero delivering in 2025.

And unless we break ground soon, there won’t be anywhere after that.

So we went through four or five years of no supply after the Great Recession.

And it all comes down to developer risk profiles, construction litigation concerns.

There’s supply chain issues.

And frankly, they just don’t pencil.

And so that’s the reason why we’re going to go through a dearth of supply for quite a while.

I see.

So kind of the layperson’s interpretation– forgive me if I have this sort of wrong, but the way that I’m looking at is that there’s a combination of variables here that are in play.

One is that we have a dearth of supply.

Another one is that perhaps demand will accelerate faster than the supply can be created.

So it kind of seems like now is a good time to buy.

Or how much is that sweet spot sort of mitigated by higher interest rates?

Like how do you net out all of those things?

Well, I can only speak from experience.

An active project right now– let’s just take gravestone condominiums.

It’s just a few blocks from us here on First Hill.

We have been patiently delivering that building for occupancy by July of this year.

We have taken our time to reintroduce the product to the market, given all of the stresses on the local housing market.

Certainly we’ve had some competition, some price adjustments, and just general the sense of the renaissance of downtown Seattle with the May 1 requirement for large employers like Amazon to say, come back to work, please, at least three days a week.

We were waiting for that.

But look, we had to mark to market.

There has been a decline in meeting home prices for the in-city condominiums through the pandemic.

I would say the in-city market was the only market that experienced declines.

And we actually had a net loss of population in downtown Seattle, according to the Downtown Seattle Association, by the end of 2020, we lost 5,000 residents.

And this was part of that work from home trend.

And everyone seemed to depart the urban center off to a salmon stream somewhere and remote in.

For about six months in a year.

But I got to tell you, that’s changing now.

I just drove over from Mercer Ireland.

And I could tell you I-90 was packed with cars.

And the city is filling up again.

But it is a great time to acquire a condominium now in the city, because we have a very clear view of the pipeline.

And that pinched pipeline means that there will be upward pressure on pricing ahead.

However, these developers are eager to move that inventory.

So in the case of the Greystone, they reduce the pricing one third from its prior presale values.

So building like that is averaging, let’s say, $1,100 a square foot.

But the replacement cost of that building would require more than $1,500 a square foot.

So until the prices will float a $1,500 a square foot average during presale, it is unlikely developers will go forward with additional condominium inventory.

Oh, I see.

So really what you’ve got to do is you’ve got to buy the bottom.

Your point about interest rates are well heard.

We have gone through a meteoric set of increases with mortgage rates.

The Fed’s meeting now and intended to increase the bank rate another quarter point.

We think that’s probably the last of the increases.

And then we’ll probably head into a declining interest rate environment.

My advice to our listeners and to my own agents is remember, you’re dating the rate, but you’re marrying the price.

So the date is temporary.

But that price, that strike price is with you forever.

You get that benefit ongoing.

So the strategy is to use the leverage you have right now as a negotiation.

Take advantage of some of these sharper prices.

Put that purchase and sale together.

Start living that lifestyle.

And then simply refinance in a year or two.

Developers are getting smart too, like back to the Greystone.

They’re offering what we call a 2-1 buydown, which is effectively buying the mortgage interest rate down 2% in the first year and then 1% in the second year.

So that effectively gives us a mortgage rate for the buyer, averaging just over 4% today.

Wow, that’s cool.

I mean, it’s been too long since I’ve really bought anything and it’s really interesting to hear some of the sort of out-of-the-box thinking on how a buyer can be advantaged to do something at this time.

No, everything that you said, gosh, Dean, it sure sounds kind of familiar.

And I’m of a certain age that I’ve kind of seen several of these cycles.

Am I kind of hearing that– is it sort of history repeating itself here?

It is, absolutely.

But for different reasons.

We’re always going to see supply and demand fluctuate approximately over a 10-year period.

This has been a good run.

In the city of Seattle, we were the fastest growing, large city in the last decade.

We added 27,000 housing units within walking distance of where we are.

And the challenge, though, Jonathan, is 93% of that was purpose-built for rent and not for sale.

So condominiums, the opportunity to own, is a relative rarity.

The last time we saw a collection of condominium towers pencil and get delivered was between 2005 and 2006 with the Center City Plan, if you recall.

Mayor Nicol, we were behind that as well with the first project that went forward with a tall and slender zoning, which was now allowing for more density in downtown Seattle.

But that condo cycle came to a halt with the credit crunch during the Great Recession.

And the last project that got financed was actually in September of 2008.

And so those buildings delivered a couple years later, and then there was nothing behind them until 2015.

So this time, it’s not so much the credit crunch that’s stopping the condominium developments.

It’s just the economics of the replacement cost, the challenge with entitlements, supply chain you’ve heard a lot about, and just the risk profile of condominiums.

And frankly, that’s another area we need to work with our legislators on is the condominium act, which is a good thing.

It’s consumer protection.

But the consumer protection works so well, it scares developers.

And so this is the idea where you only have 5% earnest money at risk and effectively can walk away from your purchase and sale agreement if you choose not to occupy or close on your condominium several years later.

Yeah, yeah, I get it.

I get it.

This is really a fascinating conversation, a sense that I just realized that despite that you and I have known each other for a number of years, we have two ends of the spectrum in a sense that I’ve always created the things that I’ve created out of nothing, out of thin air, as a tech and media entrepreneur.

And whereas I think real estate is about the most tangible, hard, concrete, literally and figuratively manifestation of some of the market forces that are in play.

And so you touched on the city.

Let’s talk about the city itself.

Seattle certainly has had its challenges lately.

And so where do you see things as they stand now?

And I guess the two specific areas that we can touch on is how downtown is doing.

Your outlook with regards to this working from home versus return to the city.

Yeah.

I hope the worst is behind us.

I mean, certainly we’re seeing more vitality downtown.

It’s great to be in the city.

We’re here in Liz Dunn’s beautiful project.

That’s right.

I mean, this is an ecosystem representation of what the whole city is and what it can become.

Sure is.

We innovate.

We come together.

We will find uses for the real estate.

So yeah, there’s been challenges in retail.

There’s certainly challenges with the commercial reoccupancy.

I think Amazon’s doing their share with 15 million square feet saying, please come back to work at least three days a week.

And other businesses are following.

That’s going to be a good thing for the support system, retail and hospitality and just general security and livability of downtown getting on its feet again.

But it will take some time.

I think that the worst is behind us.

I certainly am seeing more positive indications between our city leadership and the police department with changes within intervention and enforceability of some laws that have been challenged, not to get political.

But if it’s not safe or you don’t feel safe to be downtown, then that’s not going to be your preference.

But just as quickly as the light dimmed, that light can brighten.

And we will recover.

I would not bet against Seattle.

We will be a different version of ourselves on the other side of this pandemic.

And there is this sort of social reawakening.

I would compare it to perhaps 100 years ago with the roaring 20s after the Spanish flu and just how people wanted to come back together.

Remember that?

We weren’t around for that.

No, we weren’t around.

But I’ve seen the movies.

Yes, of course.

I mean, it looked like a pretty good time.

So I do think that the city will reinvent itself that there will be increasing demand to come work together again that these apartment buildings and condominiums will populate completely.

And we will have a more vital downtown.

Yeah, that’s great.

And you mentioned our good friend Liz Dunn, who is behind Chophouse Road and some of these other iconic properties on Capitol Hill.

And Liz and I go way back to the days when we were at Microsoft.

But one of the things that I love about both you and Liz is that you sort of bring a more international and big city sensibility that both of you have been inspired by doing work and having successes elsewhere.

I know Liz spent a lot of time in Paris and New York and things like that.

And she’s brought some of those ideas to this very location here at Chophouse Road.

So do you feel like that right now, what are some ideas that have really worked out in other metropolitan areas that you wish that Seattle did more of?

Well, we were late to the game with light rail.

So clearly that’s going to be a game changer.

I think we could have started earlier with our waterfront and celebrating it, moving from a working waterfront to something that might be more hospitable for guests, visiting as well as the residents and businesses.

Certainly, I would say Vancouver, BC, and San Francisco are two cities I’m very familiar with and very fond of.

But both carry that card, which is being a world-class waterfront city.

Both have also invested in the vitality and the residential occupancy of the city.

That was something that the city of Seattle adopted in 2006 with the Center City Plan, with that upzone that we talked about earlier.

So I think we’re doing a lot of what needed to be done as the city was maturing and moving from more of a provincial mindset to that of a global city on the rise.

And what we know is going to happen is the real estate values are going to follow.

And this is why I have great confidence in making, as you say, the concrete investment into owning a slice of that city, whether it’s a business or it’s a retail operation or a condominium itself.

These cities will not fail.

They have been through worse.

They have been bombed.

They have been through economic recessions.

And if we were just to take your hometown of New York, a great quote by Nicky Field, who’s one of the top real estate agents there in Manhattan with South of East International Realty, she was the first to coin its beyond back.

The repopulation of the city has made an abundant return.

It might be priced sharper.

It might not always feel good for those that had to make a move during a time of correction.

But the demand never went away.

Right, right.

And by the way, I still am really loving a statement that’s echoing in my mind right now that you made earlier, which is that you date the rate, but you marry the price.

Yes.

So that’s really an important thing to focus on.

Let’s go a little bit further on this as it relates to Seattle.

How would you advise anyone to be part of the solution and not be on the sidelines or only complain?

What would you advise people to do more of?

Well, take advantage of some of these legislative changes that are before us.

And talk to your realtor.

Talk to your wealth manager.

Look at your investment profile and say, hey, is this a good move for me to look at developing on my single family lot?

Or is this a good time for me to sell and downsize from a larger single family home into a single level lock and leave condominium, for instance?

These are trends that I’m suggesting.

And just pay attention to the trends.

And just because the headlines are saying, oh, home prices are dropping, sales are approximately 30% lighter year over year right now.

So the volumes of sales are down, which has a lot to do with the mortgage rates.

Well, does that mean that it’s a poor time to buy?

It’s actually the other way around.

It’s a great time to buy because you’re going to get a better deal.

And you’re going to have the benefit of that lower strike price forever.

You can refinance in a year or two.

So my advice would be to look at the silver lining in all of these challenging times.

And there is always going to be real estate investment opportunities.

And you need to be well advised.

And that requires a conversation.

So– OK, kind of a selfish question.

Where would you buy right now?

Where would you– if I said, hey, Dean, I’ve got X number of dollars, I’m kind of a believer.

I’m kind of sensing, again, as someone who’s kind of seen these cycles come and go, history may repeat itself here.

Where would you advise me to buy to look?

Well, it’s always going to be the rarefied asset classes, like Waterfront, for instance.

I mean, it’s literally a liquid asset, right?

I mean, we’ve got a Waterfront report coming out actually here– Oh, is that right? –a couple of weeks.

And we’re going to launch into our annual Floapen House, which is our floating open house for anyone that might be inclined to join us on the boat.

Yeah.

Actually, if I can interrupt you for a second, that sounds fascinating.

Level set our listeners to exactly– why did you say that Waterfront’s rarefied?

Of course, we understand inherent reasons why they’re rarefied.

There’s just not that much of them and all that.

But are there some fundamentals or some numbers that you can provide that makes them truly a rarefied asset class?

They are few and far between in terms of ever coming onto the market for one.

So we’re doing as many off-market transactions as we are on market.

Our largest one in the last couple of years was $60 million and it was off-market.

So there’s a lot of global wealth coming to our region, a lot of that being made here as well.

And it seems to be the asset class that’s most in demand from a lifestyle perspective and also from a portfolio perspective.

So generally speaking, it seems like the wealth wants to head towards the shoreline.

And we can take microclimates like Hunts Point or Medina or Mercer Island or we could jump out into Bainbridge Island or up into the San Juan Islands.

We actually have a condominium development called Infinity Shore Club Residences, which is right on Alki Beach.

And that’s the first of its kind too, being a condominium estate.

And it’s trying to go with that same genre of super prime trophy property, but do it in a condominium format.

I see.

And the confidence to build a property like that stemmed directly from seeing the trends elsewhere along Lake Union and Lake Washington.

So generally speaking, the view is preserved.

There is always inherent demand, light supply, a lot of real estate is being handed down through the generations, which is one of the reasons why there’s lighter inventory.

And so for that reason, supply and demand floats your boat.

I love that.

And as the builder of my own house told me many, many years ago now that if you can be near to water, have a view of the water, can kind of smell the water, it can add years to your life.

So there’s an incalculable value to that.

It’s something we actually do have a relatively high level of supply.

It doesn’t come on the market often, but if you look at how many homes ring these beautiful lakes and waterways, and I’ve been to your beautiful home, and you certainly enjoy that view of Elliott Bay and the Olympic Mountains.

But that is the gift of the Pacific Northwest.

That is something that can never be taken away from us due to pandemic or geopolitical issues or otherwise.

I mean, this is a beautiful place to live.

And we have been discovered.

Global wealth has descended onto our cities, onto our shorelines.

And we are still a relative bargain compared to other West Coast gateway cities.

What do you think, Dean, is the most– to someone who is an international buyer from outside of Seattle, and you’re considering these different cities, I’m harboring a belief that sometimes it’s how others view us that can inform back on our own worldview of ourselves.

So this is the question about what makes Seattle more attractive than, say, San Francisco or New York or Miami?

Taxes.

Taxes.

Oh, yeah.

A lack of an income tax for certain.

I think the general propensity for us to grow, not just in our economy or in our median home prices, but just our cultural community as well, the Seattle metro area really does deliver on the lifestyle proposition as well as the investment prospects.

So when you compare, to say, Vancouver, San Francisco, which are both much more expensive, not just for real estate or for business operations, but from a tax perspective as well, you start to scratch your head and you wonder, I mean, how much more growth can come to a market that is already feeling so expensive?

And then you compare that to our median home prices and our average incomes of the Seattle metro area.

And you can clearly see the runway that we have in front of us.

There’s a lot of propensity for growth and expansion here.

And I think that that’s the promise of the Seattle metro area.

What projects are you most excited about right now that you’re working on?

Well, I’m very proud of a project that we did with Terrene Holmes in the Total Lake area called Jade Conominiums.

We have sold out.

So there’s a great example of light inventory.

And the Greystone Conominiums just blocks from us here on First Hill.

We are reintroducing that actually this month with homes being offered at one-third lower prices than they were during the presale effort.

And that is the last of its kind for several years.

What do you mean by that?

What makes that project so unique?

We have a great sense of timing given that we are uphill from downtown Seattle.

I mean, there’s been lighter demand in the true urban center given the last couple of years and some of the renaissance that we’re now experiencing in the city.

So what’s nice about First Hill is trees and squirrels and cobblestone streets.

And it’s just walking past there earlier this morning.

And there’s a lawnmower.

And it feels residential.

It feels like the Upper East Side.

I was just going to say, when I’m on First Hill, there’s like an Upper East Side vibe to it.

You can hear birds kind of tweeting.

And like you said, squirrels.

And yeah.

It’s just more residential.

It’s unique in the sense that there is no commercial development on that block.

We have a parklet instead of a subway store or a retail or of another sort.

So it just is decidedly residential.

I’m very excited about that.

And it makes the investment prospect a little easier to understand because there’s nothing coming up behind it.

Only apartments are being developed in that area.

That’s the only condominium in many, many years on First Hill.

So if you’re looking for ownership, your options are actually quite slender.

What about the other end of the market?

What about if we do still have a problem with housing being difficult for a segment of folks who have modest incomes, what are some good answers there?

There are some progressive developers that are building cooperative housing.

My own agent, Eddie Chang, is working with a developer for the Ulex at Othello Square, which is 68 units of affordable residential development.

Right on a light rail line, it is income restricted for qualification.

But it provides similar benefits of home ownership and flexibility.

But at a price point, that competes directly with rent.

And we need more of that.

Jumping back to the Greystone with the markdown of pricing, we now offer Studio and Urban One Bedroom Format Homes from the mid to high 300,000s with recent Fed decisions encouraging first time home ownership.

We’re actually offering mortgage interest rates that can be 5/8 below that of a conventional mortgage for first time home buyers with lower FICO scores.

And then when you add on top of that the 2-1 buy down that the developer is offering, we are talking about very attractively priced condominium mortgage interest and monthly payments.

And the developer also said for good measure, we won’t charge HOA dues for the next year.

So collectively, that provides you the opportunity to buy into a $350,000 or $400,000 condominium brand new with 3% down and total monthly payments that look more like rent.

Wow, that’s great.

That’s really encouraging here.

So one of the themes that I’m picking up on in this conversation is that this is really about encouraging everyone to not bet against Seattle.

What else would you like our listeners to know about this notion?

That we are working through market cycles.

And one thing is for sure in real estate, the highs are always higher and the lows are always higher.

So there is clearly a general trajectory of growth and benefits for home ownership.

And even though we have a bruise on the brand of Seattle right now that we’re working through, it’s a phenomenal time to acquire that future, knowing that we are in a renaissance, knowing that the supply is dramatically declining quickly.

And my concern is as we futurecast into 2025 and we look around at a time that will be through this selection, will be through this renaissance, will be well past this pandemic, I believe will be in our new version of the Roaring 20s.

And we’re going to see the demand increase, but we don’t have the supply to satisfy the demand for home ownership.

I have concerns about the rental population, which is continuing to increase.

We now have for the first time in decades, more renters in the city of Seattle than we do have home owners.

And that’s a concern of mine because eventually the opportunity to acquire your own real estate that you own is going to get further and further from attainability.

But now with this new legislation, with ADUs and DadDos and developing duplexes or fourplexes on single family lots, I do think we’re going to see new formats of housing that’s going to bring and balance to that supply and demand challenge that is very concerning.

But no, I would not bet against Seattle, we’ve got this back to the wise words of my father going through challenging times, you will get through this. – I love that.

And Dean, if the curious person wants to find out even more and dig a little bit deeper into the data, where should they go? – Well, we just published our 2023 forecast report and we provided our own perspective, but that as well of local economists and appraisers and other opinion leaders from the president of downtown Seattle Association, the president of downtown Bellevue Association.

And collectively created a barometer of where we think the market is going with this sort of vision 2025.

And you can check it out on our website on the blog, rsir.com, it’s the 2023 forecast report, you just register and download it and it’s all yours. – Wonderful, excellent.

Dean, I want to thank you.

I feel like that you’ve shifted my own mind about where things are.

You’ve given me a lot of inspiration and optimism about the city, which is what we at Seattle Magazine always aspire to do with our community of listeners and our readers.

And so I thank you.

This has been just an incredibly comprehensive, thoughtful, informed conversation about the state of not just real estate, but really what’s happening in our city and the overall robustness of it.

So I thank you deeply.

So everyone, I would encourage you to look for more about this topic on seattlemag.com and thank you for listening.

Thank you for listening to the Seattle Magazine podcast.

You can always find us on seattlemag.com.

Look for new episodes approximately every two weeks on our website.

A special thank you to the entire Seattle Magazine staff and to podcast producer Nick Patrie.

Contact Lisa Lee at [email protected] for partnership opportunities.

Until next time, let’s keep celebrating Seattle. (upbeat music) [BLANK_AUDIO]