Condo Odds & Ends

I’ve collected a few random condo odds and ends over the last couple weeks that I felt like sharing, so that’s what I’m about to do.

First is a condo currently on the market in Belltown, spotted by the astute WestSideBilly, and featured in a New York Times article titled What You Get for … $500,000

2929 1st Ave #1001 Seattle, WA 98121

I’m just going to go ahead and let that one speak for itself.

Next up is a pair of photos I took of 1521 Second a couple weeks ago, standing in the middle of the fabulous One Hotel and Condos.

1521 2nd Avenue

It’s the disappearing condo!

Here’s a little tidbit that I found amusing. You recall the ongoing saga of the flailing downtown luxury condo Escala, right? As I was listening to Pandora the other day, it played me a song by a group named Escala titled “Requiem for a Tower.” How appropriate.

Finally, here’s a question I received via email this morning:

I have a friend of mine that cleans some of the super high end downtown condos. Places that are similar to 1521 Second or Escala. Their are several of these super high end projects in the Pike – Pine corridor towards capital hill. How the hell are these developers financing these projects? I really don’t understand how they can have so many seemingly empty buildings without prices dropping or something dramatic happening. Are these loans bundled into synthetic securities like CDOs and if they are how are they valued. They must be using some accounting trick. I’m really at a loss.

Unfortunately, I haven’t the foggiest idea how the developers are staying afloat, but hopefully some Seattle Bubble readers have some relevant knowledge on this situation and can shed a little light on the situation.

That’s all I’ve got for today, and probably all I’ve got on the subject of condos for at least another month or so.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

28 comments:

  1. 1
    The Tim says:

    Get it? “Odds” and “Ends”? That first condo is the “Odd” and the requiem is about the “End.” Wocka Wocka Wocka!

  2. 2

    Its Hard to Find Domestic MSM Takes On This Issue Tim

    Try Googling it, you come up mostly nada….I wonder why….LOL

    But Great Britain MSM news has a possible reason for unsold bank-owned home inventory piling up at out-rageous price tags, they [the banks] simply refuse to issue credit at reasonable/qualified offers.

    The Seattle area short sale offers that fizzle out from rejections by lenders, documented in SB the last year, prove out this theory too.

    http://www.independent.ie/business/personal-finance/property-mortgages/banks-we-are-not-refusing-mortgages-for-lowcost-homes-1863124.html

  3. 3
    Dirty_Renter says:

    haha..I’d have to have 911 on speed-dial if I lived in that glass condo.

    Anyhoo…re: the letter questioning the sustainability of condo financing w/ few sales – I can only speak for the condo in which I reside. I only know this because I am a stockholder of the bank which owns he note. Last year, they converted the construction loan(usually 6-12 month maturity) to a loan w/ a 3 year maturity, to give the owners more time to sell the units. They did not specify if they had reclassified the loan to impaired status. I think these big condo projects are on a case by case basis and you’d have to be a regulator or the head of RE of a bank to know the real deal. For example, Synovus, which recently sold the bankrupt Sea Island resort, has not yet told the shareholders(yes, the effing owners) how much they had provisioned for the upcoming charge-off or any other details.
    It’s a jungle out there……

    There is, however, one thing I am sure of…Puget Sound real estate prices are still too pricey.

  4. 4
    Flotown says:

    In many cases it’s not their money in play. Developers can be paid in many different ways and have different risk profiles. Many shift the market risk to their capital partners if the partner is hungry enough for the deal to agree to it. Everything is relative, but a developer many only have a couple million in the deal or may in some cases work for a straight fee and have no equity position.

  5. 5
    One Eyed Man says:

    That mirrored place looks like a cash flow machine to me. I’m pretty sure they shoot porn there. I know I would if it were mine. If I lived there I’d be at Hooter’s this afternoon doing a little casting and handing out cards that say Looking Glass Productions, Executive Producer. If you go to the open house look for the sign that says “don’t open the trash compactor.” Its filled with used underwear.

    Sorry Tim, your site deserves more decorum than that but I couldn’t help myself.

  6. 6
    CCG says:

    What the hell is that first picture? A new Toys in Babeland store?

    “I really don’t understand how they can have so many seemingly empty buildings without prices dropping”

    Amerika: Death Before Price Discovery ™

  7. 7
    hoary says:

    By One Eyed Man @ 5:

    Sorry Tim, your site deserves more decorum than that but I couldn’t help myself.

    With that many mirrors how can you stop you mind from immediately jumping to titties and blow!

  8. 8
    Scotsman says:

    RE: One Eyed Man @ 5

    Along the same lines, I can just imagine a party with my red-neck friends in the “crystal condo”- a keg on the table, drunks trying to maneuver between the clear furniture, walking into the mirrors, and, ummm, having their way with the “white lady,” both real and reflected.

    As Mikal says, I’m a bit of a rube. Are those chess sets, or sex toys?

  9. 9
    CCG says:

    By One Eyed Man @ 5:

    That mirrored place looks like a cash flow machine to me. I’m pretty sure they shoot porn there. I know I would if it were mine. If I lived there I’d be at Hooter’s this afternoon doing a little casting and handing out cards that say Looking Glass Productions, Executive Producer. If you go to the open house look for the sign that says “don’t open the trash compactor.” Its filled with used underwear.

    Sorry Tim, your site deserves more decorum than that but I couldn’t help myself.

    “Looking Glass Productions” LOL

    I could go even farther and say that with your handle you could find plenty of work there, but no, I shall refrain ;-)

  10. 10
    One Eyed Man says:

    RE: Scotsman @ 8

    Huh. I’ve got to get new glasses or a laptop with a bigger screen, I didn’t even notice the chess set. I bet the set included its own lubricant and special cleaner.

    Boris Spassky shocks the crowd with a daring New York, New York move, Knight to Queens Tunnel.

  11. 11
    Jillayne says:

    The first pic looks like it was decorated based on Patrick Bateman’s condo from the movie American Psycho.

  12. 12

    […] For a few choice comments on the place check out Tim’s post on the place. […]

  13. 13
    CCG says:

    By One Eyed Man @ 10:

    RE: Scotsman @ 8

    Huh. I’ve got to get new glasses or a laptop with a bigger screen, I didn’t even notice the chess set. I bet the set included its own lubricant and special cleaner.

    Boris Spassky shocks the crowd with a daring New York, New York move, Knight to Queens Tunnel.

    Now people are looking over here wondering what I’m cracking up about. It’s only a matter of time before one of us finally says something that Tim has to delete.

  14. 14
    Matthew says:

    I didn’t know Liberace lived in Belltown!

  15. 15
    Matthew says:

    And look, you also get a nice view from the deck of the man-boy love statue at the Belltown sculpture park. How I miss Seattle already!

  16. 16
    LA Relo says:

    “How the hell are these developers financing these projects?”

    Thanks to helicopter boy and his crony banking friends they in essence are NOT funding these things.

    Thanks to bailout after bailout we are.

  17. 17
    Cheap South says:

    They should use that condo in a Windex commercial.

    $521/month HOA fees (includes hot water, LOL)

  18. 18
    Scotsman says:

    RE: Cheap South @ 17

    “$521/month HOA fees ”

    Yeah, but you should see the way the maids dress. . .

  19. 19
    Pegasus says:

    RE: LA Relo @ 16 – They are now here to rescue the idiot developers and bankers at our expense!!! Coming soon to the Seattle area!

    “Weren’t FHA loans supposed to be a form a welfare for ‘poor people?’ Not since the Expanding America Home Ownership Act of 2007.

    And it appears this is one ‘reform’ that can’t be blamed on ‘the liberals’ and Obama. Crony Capitalism is not a political party, it’s a way of life in which power and greed are the measure of all things.

    Well, some of the New York real estate developers are poor, relatively speaking, compared to an investment banker or a trader pulling down a fifty million dollar annual bonus for packaging fraudulent financial instruments. But they are all rich in their well connected friends in the government.

    The kleptocracy never sleeps; crony capitalism knows no bounds…”

    http://jessescrossroadscafe.blogspot.com/2010/08/fha-to-extend-government-loan.html

  20. 20
    Sniglet says:

    How the hell are these developers financing these projects?

    I know that the FDIC is telling many developers of stalled projects that it controls (i.e. since it seized the lenders who had funded the work) to go ahead and complete the work. The FDIC thinks it can make more money by selling the completed buildings than half finished complexes.

    Who knows if this theory will work, but this is what the FDIC is doing.

  21. 21
    Pegasus says:

    RE: Sniglet @ 20 – More extend and pretend. The FDIC is bankrupt and so are most of the banks that they supposedly regulated. They can’t afford to close them all down so they allow phony evaluations of underwater properties.

  22. 22
    DB says:

    The condo financing question is fairly simple. Either the financing bank extends the terms of the financing, or they take control of the project from the developer and auction it off cheap. We haven’t seen too much of the latter in downtown Seattle compared to cities like New York and Miami. The only high-end downtown condo auctions I can think of recently are 5th and Madison and Gallery, and the average discount there was in the 30% range, so someone still made a profit.

    Several Seattle condo’s have seen their financiers and developers go bust and still managed to survive. Escala’s bank went bust a few years back, but they have managed to avoid an auction and seem to be doing OK with their new pricing strategy if you look at the King County records. 1521 was an Opus Northwest deal that got sold off recently but doesn’t seem to be in any distress and claims to be 70% sold.

    There was a rumor on the PI condo blog last week that Olive 8 is heading for an auction, which would be the first of the true ‘luxury’ downtown condo’s to go. They have sold less <25% because they are still asking for 2007 era pricing.

    In short, financiers who spend $200m+ on a condo development are going to do anything they can to avoid selling for cents on the dollar, even if that means waiting for many years and paying a small army of cleaners minimum wage in the meantime.

  23. 23
    DB says:

    The comment above assumes that these construction loans would need to be rolled into a synthetic collateralized debt or the like. A synthetic CDO is a derivative, and not much better than a wager. Construction loans on prime downtown real estate may have suffered, but it’s pretty tough for them to go completely underwater in Seattle at this point.

    The bank is only underwriting the cost of real estate and construction. For a Seattle concrete and steel highrise that’s an average of $300 sq ft for a development which originally was priced out ranging from $600 sq ft up to $1000 sq ft for penthouse space. Most of the Seattle developments managed to sell at least 20% before the crash at higher prices.

    Even if the market price of such a building was cut in half and you could get a 1000 sq condo downtown for $300k, the debt value still doesn’t exceed the value of the property. The developer may not make any profit but the bank still gets paid.

    The only place I could see a condo go underwater in Seattle would be Bellevue which seems to have a glut of absolutely empty buildings e.g. Bellevue Towers and Bravern have sold less than 10%, primarily due to the fact they arrived on the market later than the Seattle developments. The remedial action there is to convert them to apartments, although I’m not sure how feasible that is given the sheer number of empty buildings.

  24. 24
    mike says:

    [totally inappropriate – deleted by The Tim]

  25. 25
    ChefJoe says:

    The Redfin link shows that even the bathroom is a cave of mirrors. I’m not sure which would be more annoying – being annoyed with trying to find a non-fogged mirror after you shower or getting a view of myself on the toilet nomatter where I looked when doing a number 2.

  26. 26
    Courtney says:

    Wow, yeah, look at all those mirrors! I’d like to [insert unimaginative misogynistic comment here]!

  27. 27
    Willy Nilly says:

    RE: Courtney @ 26

    I definitely welcome a more gender balanced participation here at the Seattle Bubble.

  28. 28
    WestSideBilly says:

    For what it’s worth, there are several other units in the same building that are also for sale that are a lot nicer. The all glass thing seems to have been the handiwork of an eccentric individual, not a wacky developer.

    5th floor 2 bed 1.75 bath, same price:

    http://www.redfin.com/WA/Seattle/2929-1st-Ave-98121/unit-519/home/14540

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