Seal needs a blue place to live (8)
I believe the answer is:
bungalow
'place to live' is the definition.
(type of residence)
'seal needs a blue' is the wordplay.
'seal' becomes 'bung' (bung can mean a seal or stopper).
'needs' means one lot of letters go next to another.
'blue' becomes 'low' (both can mean sad).
'bung'+'a'+'low'='BUNGALOW'
(Other definitions for bungalow that I've seen before include "One-storied house" , "A blowgun (anag.)" , "One-storeyed house" , "Single storey house" , "One-storied dwelling" .)