Thornton Place Throws in the Towel on Condo Sales

Anybody remember the Thornton Place condos at Northgate?

Free front page ad for Thornton Place

Thornton Place’s 109 condos have been on the market since last summer. None has sold, and now the complex is nearly finished.

“We were looking at what would get people off the fence,” said Jeff Cook, president and chief operating officer of Stellar Holdings, one of the companies building Thornton Place. “We think there’s a pretty big pent-up demand for housing.”

Well, that didn’t work so well. Recall this story from earlier this year: A year later, Northgate condos still all unsold

No units have sold despite more than a year of marketing. A month ago developers Stellar Holdings and Lorig Associates suspended sales efforts indefinitely.

Stellar and Lorig had the misfortune to bring them to market in the midst of the worst housing downturn in decades. Even a much-publicized layoff-protection offer a year ago — you lose your job, we’ll pay your mortgage — didn’t attract any buyers.

So Stellar and Lorig cut prices, and by late last year they had 18 of 34 condos in the project’s first phase under contract — just enough to meet the Federal Housing Administration’s requirement that 50 percent of a project be presold before the agency will insure buyers’ mortgages.

FHA approval is almost a prerequisite for sales in this tough market.

But in mid-December, Ainge says, he noticed a suspicious half-inch gap between the wallboard and flooring in one unit. That touched off a chain of events that led engineers to conclude by mid-January that part of the project had a settling problem.

It afflicts 20 of the 109 units, Ainge says. They share a concrete base with Thornton Place’s parking garage, and apparently December’s cold snap caused the concrete to contract, leaving cracks and gaps in spots.

The developers notified the 18 first-phase buyers of the problem Jan. 26, Ainge says. Then, three days later, they learned the FHA had denied Thornton Place’s application for approval, concerned the project had more nonresidential space than agency rules allow.

After that one-two punch, Ainge says, the developers decided to give the buyers the opportunity to back out of their contracts. The FHA reversed itself and approved the project a few weeks later, but by then most of the buyers had rescinded their offers, Ainge says.

He doesn’t know when sales will resume. First the settling problem must be fixed, he says, and he’s not sure how long that will take.

Today, thanks to Urbnlivn, we learn the answer: Sales will not resume. The entire complex has gone apartment.

The condominiums at Thornton Place are now available… for lease!

Creekside Apartments, as these homes are now called are located in private, three-story buildings along lush Thornton Creek. The homes have great outdoor space: decks or patios for weekend lounging, grilling and watching the world go by. And, four-legged residents can move-in too – Fido and Hello Kitty are both welcome to join in the fun.

Here’s what I had to say in March 2009 when they launched the “lose your job” marketing stunt:

I think it’s interesting that developers and real estate professionals still don’t get the fact that there is little to no “pent-up demand.” During the bubble years, the industry borrowed demand from the future by offering ridiculous dangerous financing. Now the future has come, and that demand is gone because most everyone who may have qualified for a house in 2009 already bought one in 2006.

…I think it’s going to take more than a $15,000 backstop incentive and some free advertising in the Seattle Times to move these pads. Good luck with that.

Here’s what I’ve got to say today.

  

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.

18 comments:

  1. 1
    Cheap South says:

    Obvious; but here it goes.

    Next headline: “Lose your job, they pay your rent”

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  2. 2
    Lurker says:

    I’ll give this to them, they have great titles in their rental listings on craigslist

    Rate this comment: Thumb up 0

  3. 3
    . says:

    talking about pent-up demand without specifying a price is not useful.

    demand (and pent-up demand) is a function of price.

    there’s always pent up demand at a low enough price point. if you made the condos free with no strings attached they would be sold out in seconds.

    there’s just no pent up demand at a price that makes the condos profitable.

    Rate this comment: Thumb up 0

  4. 4
    Notorious ART says:

    Hehehe….My sister wanted to stay in northgate as a renter. I told her to just wait – the Thorton Creek will start leasing because they won’t be able to sell. Initially, they said some will be rented out, but we all know at Seattle Bubble that wasn’t going to be the case. She’s been there 2-3 months now. I believe they gave her a month free rent to entice her, too. I’ll be stopping by tomorrow to see her place…..

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  5. 5

    By . @ 3:

    there’s just no pent up demand at a price that makes the condos profitable.

    Profitable at the price they paid for the land. For most construction (not necessarily that piece), that’s has a huge impact on possible pricing. The people who probably made the biggest killing in 2007 and a couple of years prior were the people with developable land who managed to unload it prior to late 2007 or so. Developers who bought land at that time were probably took a beating if they couldn’t get their product on the market quickly.

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  6. 6
    LA Relo says:

    I’m waiting for a gov’t reinvestment plan that pays my mortgage if I quit my job AND collect unemployment.

    That’s when I’ll buy.

    Rate this comment: Thumb up 0

  7. 7
    racket says:

    I wonder if you can rent your house to yourself and collect sec8 money.

    Rate this comment: Thumb up 0

  8. 8
    Drone says:

    I had a couple of friends renting there in the non-condo section. Nice enough place, if a bit small. They got a good deal with a month or two of free rent, but just moved out when the incentives expired. They weren’t willing to pay the full rents on an ongoing basis. I wonder how much churn is needed before it becomes cheaper to offer retention incentives rather than new-customer incentives?

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  9. 9
    D. in Ballard says:

    RE: Kary L. Krismer @ 5 – True. The owner of Leilani Lanes and the Sunset Bowl had impeccable timing.

    Rate this comment: Thumb up 0

  10. 10
    David Losh says:

    The project is also built into the buffer of Thornton Creek. Simon Properties saw an opportunity to develop that dirt so they took it. It makes no difference if they sell or not. It is something for nothing.

    It’s a shame that parcel couldn’t have been used for some thing positive, but the city wants tax dollars at any cost.

    In time we can only hope North Seattle Community College is condemned as an environmental blight along with these worthless apartments.

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  11. 11
    Erik from Seattle says:

    To top it all off, “The homes have great outdoor space: decks or patios for weekend lounging, grilling and watching the world go by.” — bogus. One of the reasons we bailed out of apartment in Seattle city limits was that the fire marshal has banned grilling on apartment decks. Of course, another reason we got out of the apartment is for fear of our neighbors burning down the apartment building with idiocy… I’m more pointing out the bad promotional angle than criticizing the fire marshal!

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  12. 12
    Mel Torme says:

    RE: Cheap South @ 1 – How about: “Lost your rent check, we’ll find you a job.*”

    *fine print: ” … fixing our drywall and picking up the teeth that Little Gino (from “Corporate”) knocked out of your mouth.”

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  13. 13
    ChefJoe says:

    Erik from Seattle:
    Apartment grilling bans were discussed in 2004 but they were never enacted in Seattle. My landlord’s lease document now has all sorts of inane provisions (a check for hitch-hiking bedbugs amongst backpacks, shoes, and clothing after visits to friends or family, theaters, or after using public transportation) and they’d probably remind me of a grill ban.

    http://www.seattlepi.com/local/177586_bbq12.asp
    Balcony barbecue ban gets decked
    Council quickly douses the proposal after taking heavy fire

    http://www.cityofseattle.net/fire/pubEd/brochures/Outdoor%20Grilling.pdf
    Use in Apartments & Cndominiums
    The use of barbecues in apartments, condominiums and single family homes is not regulated by current Washington State law. The Seattle Fire Department recommends the use of one-pound propane cylinders as the least hazardous fuel source, particularly on decks of multi-family residences. However, apartment building owners and condominium associations, through lease agreements and owner’s association rules, may still prohibit or restrict use of barbecues.

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  14. 14
    ella says:

    Oh special. I went to their web site and could not find the prices of the rental units. It seems as though everything is a secret in this town.

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  15. 15
    cutienoua says:

    RE: ella @ 14
    they do have it listedHome Type Rent Range Square Footage
    Studio $1,150 – $1,195 490 – 682 sf
    1 Bedroom / 1 Bath $1,195 – $1,695 588 – 785 sf
    1 Bedroom + Den / 1 Bath $1,795 808 – 857 sf
    2 Bedroom / 1 Bath $1,750 -$1,995 808 – 994 sf
    2 Bedroom / 2 Bath $2,150 – $2,250 884 – 1326 sf
    2 Bedroom + Den / 2 Bath $2,495 1048 – 1261 sf

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  16. 16
    Ron Nelson says:

    seriously… Thats So High

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  17. 17
    Macro Investor says:

    Just another seller, and now landlord, in denial. They’re hoping their marketing makes it sound so good you won’t care what it costs. Hello marketing, meet reality.

    I’m glad nobody bought it before the cold weather exposed their shoddy construction. Thanks to other readers who have cautioned not to buy new construction… let it break in a few years.

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  18. 18
    Erik from Seattle says:

    Thanks for straightening me out there ChefJoe, apologies for passing bad info — I’m disappointed in my old apartment managers/owners for laying off their ban (I’m sure they added it to the lease) and blaming it on the city.
    I guess if I paid what they are asking at Thornton, at least I could have a grill on the balcony!

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