Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'construction'

Seattle is #1… In Delinquent Construction Loans

By The Tim on September 11th, 2009 at 6:00 AM · 55 Comments

I posted about this earlier this week on the official Seattle Bubble Twitter account, but I thought it would be worth a post of its own. Via The New York Times: Construction Loans Falter, a Bad Omen for Banks

Even as the economy may be starting to recover, banks across the country are confronting a worsening outlook for their construction loans, an area that boomed for much of the decade.

Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.
…
Foresight’s estimates of the proportion of problem construction loans in the 20 largest metropolitan areas has one surprise: the one with the largest proportion of troubled loans is Seattle, where the recession has started to pinch.

According to the graphic attached to the story, over 30% of construction loans in Seattle are currently in delinquency. Yikes.

In related news, the Mastro bankruptcy is progressing, with the situation becoming seemingly more complicated with each update.

And, speaking of the commercial real estate market, Russell Investments just purchased the 42-story former WaMu Center for close to two thirds off what it cost to build just three years ago. Yowza.

It’s certainly an interesting time in the real estate and financing scene here in Seattle. How far we have come from just a year or two ago when everyone seemed to think that Seattle was bulletproof.

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Stalled Development Map: Over 75 Stalled Projects Mapped

By The Tim on August 10th, 2009 at 9:31 AM · 100 Comments

Here’s another update on the Seattle Bubble interactive stalled / slow development map.

In the month and a half since the launch of the map, readers have contributed 76 stalled and/or slowed residential developments in the greater Seattle area. The Bothell area still has the largest representation, and even months after starting the map, I still spot a new one that hasn’t been mapped yet every week or two.

Again, anyone can contribute to this map, just load it up in Google and add the stalled / slowed residential construction sites (SFH or condo) near you. Below is the current stalled development map. Please feel free to continue contributing new locations and improving the data, especially if you live in an area with currently spotty coverage.


View Stalled/Slow Seattle Construction in a larger map

What amuses me is that there are still people out there claiming that we will be facing a housing shortage in just a year or two. I wonder if Todd Britsch (of Bothell-based New Home Trends) is still holding to his 2008 prediction that “Seattle is headed for a serious shortage that could bring a return to double-digit price appreciation starting in 2012.”

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Poll: Which is likely to generate the strongest downward pressure on Seattle-area home prices going forward?

By The Tim on July 26th, 2009 at 12:05 AM · 27 Comments

Please vote in this poll using the sidebar.

Which is likely to generate the strongest downward pressure on Seattle-area home prices going forward?

  • Bank-owned inventory coming on the market. (33%, 66 Votes)
  • Currently stalled new construction being built. (2%, 4 Votes)
  • Currently vacant new construction hitting the market. (1%, 2 Votes)
  • Tighter financing / down payment requirements. (31%, 61 Votes)
  • Continued layoffs at local employers. (31%, 62 Votes)
  • The expiration of the $8,000 tax credit in November. (2%, 3 Votes)

Total Voters: 198


This poll will be active and displayed on the sidebar through 08.01.2009.

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Seattle-Area Housing Oversupply Still Increasing

By The Tim on July 13th, 2009 at 9:41 AM · 42 Comments

One set of data we like to check in on occasionally is the big picture of local housing supply and demand, measured by comparing the total number of housing units to the total number of households. You may recall the last time we checked in on this data back in March: Local Housing Oversupply Could Disappear by July 2010…

Good news everyone!

The latest population estimates for King County have been released by the Census Bureau, and at the present rate of population growth, we’ll be able to use up all of our excess housing inventory by July of next year…

…if all residential construction across the county completely ceased after July 2008, that is.

Our previous excursions into this data have been based on Census Bureau estimates, which are unfortunately not very timely. However, the Washington State Office of Financial Management keeps its own sets of estimates which are much more current. In fact, their latest release a few weeks ago provides data through April of this year.

Here’s an updated chart of housing supply (total housing units) and demand (total households) for the 3-county Puget Sound region, indexed to 2000:

Puget Sound County Housing Supply & Demand

Across King, Snohomish, and Pierce counties, a total of 147,591 new households have been added since 2000. During the same time, 184,378 new housing units have been built, amounting to an oversupply of 36,787 housing units.

Here’s a look at the raw number of housing units and households that were added to the region each year:

Puget Sound County Housing Supply & Demand

Only 2004 and 2005 had people moving here faster than new housing stock was coming online, and 2006 more than made up for the discrepancy in short order.

Here’s the indexed chart for King County only:

King County Housing Supply & Demand

In King County, we’ve added 65,443 households and 90,157 housing units over the past nine years, for a total oversupply of 24,714 housing units.

Here’s the year-by-year chart for King County:

King County Housing Supply & Demand

Here in King, only 2005 saw a larger addition of households than housing units. Even between 2008 and 2009, 3,304 more housing units were added than new households.

So it would seem that rather than working through our local housing oversupply, we’re still adding to it.

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Stalled Development Map Update, Developments in Foreclosure

By The Tim on July 9th, 2009 at 10:50 AM · 42 Comments

Just a quick update on the Seattle Bubble interactive stalled / slow development map.

So far readers have contributed 48 stalled and/or slowed residential developments in the greater Seattle area. The greatest concentration by far is in the Bothell area, which may be due primarily to the fact that that’s where a few especially prolific contributors live (including myself).

Again, anyone can contribute to this map, just load it up in Google and add the stalled / slowed residential construction sites (SFH or condo) near you.

In related news, Eric Pryne over at the Seattle Times has a story up today about one of the larger stalled developments in the Bothell / Kirkland area that has been foreclosed on: Seattle-area homebuilder losing projects to foreclosure .

One of the Seattle area’s most prominent homebuilders has lost most of one new Eastside housing development to foreclosure, and expects to lose another big property.

Most of Conner Homes’ upscale, partly built Bentley subdivision in Bothell was sold at auction last month after the company defaulted on a $24.8 million loan, county records indicate.

Another auction has been scheduled in October for 35 acres Conner owns and once planned to develop in North Bend. The builder hasn’t made loan payments on that land since at least December, according to a foreclosure notice filed with the county last week.

For anyone interested, I pulled the foreclosure notices off the King County Records website. Here’s the foreclosure notice for the Bothell / Kirkland development (pdf), and here’s the one for North Bend (pdf). I guess someone forgot to tell Conner Homes that the bottom was in February.

Below is the current stalled development map. Please feel free to keep adding to it. FYI, I’m planning on doing a bit of a redesign to the site in the not-too-distant future, after which features such as this map will have a more accessible permanent home.


View Stalled/Slow Seattle Construction in a larger map

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Spec Builder Spectacularly Miscalculated Market

By The Tim on June 26th, 2009 at 9:14 AM · 15 Comments

KIRO radio ran a mildly interesting piece about a spec builder in my neighborhood with especially poor timing: Local spec homes sit empty, cheap.

What started as a fun project turned into a nightmare for a builder in Kenmore.

Ken Youch, with Kenmar Construction, is happy to give tours of any one of the million dollar houses he has built in Kenmore.

“They’re absolutely beautiful homes that we built when the market was booming. This is my very first attempt at spec building,” he said.

It is also his last. Like many builders across the Puget Sound, Youch is losing a lot of money on these three sister homes. All were priced over one million dollars and now they’re going at about $500,000 lower.

7320 NE 150th St Kenmore, WA 98028The houses in question are 7320, 7328, and 7332 on NE 150th St in Kenmore, for which the builder is asking $674k, $679k, and $699k, respectively (as a side note, KIRO clearly has a different definition of “cheap” than I do). Cumulative days on market for each of the three properties is in excess of 440. He purchased the lots in April and July 2007 for $262,500, $265,175, and $267,200.

July 2007. If that rings a bell to anyone, it might be because it was the peak month for Seattle-area home prices. Granted, we only know that thanks to the benefit of hindsight, but even at the time the writing was on the wall for anyone paying attention.

Are we supposed to feel sorry for this builder for getting caught up in the mania and failing to do his research before jumping in head first to an expensive and risky venture like this? That seems to be the angle of this piece, but to be honest, I’m not feeling it.

At least he hasn’t gone into foreclosure yet, so he must have the financial strength to stand behind his risky move. Also, he doesn’t appear to be angling for a bailout, so while I question his business sense, I respect his apparent willingness to take responsibility for his decisions.

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