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 'Tacoma'

Tacoma Condo Project Foreclosure Auction Reveals Grim Reality

By The Tim on August 24th, 2009 at 9:00 AM · 44 Comments

How bad is the condo market in Tacoma? Pretty bad.

Recall this article from June: Tacoma Luxury Condo Project Headed for Foreclosure

The Esplanade, a nine-story condominium on the west side of the near-downtown Thea Foss Waterway, has until Aug. 21 to escape from the imminent foreclosure, said sources close to the project who were not authorized to speak publicly.

Just 10 of the 162 housing units in the building at 1515 Dock St. have been sold, and none of the retail spaces on Dock Street or facing the waterfront walkway has been leased.

According to the the Notice of Trustee sale filed with Pierce County (pdf), the developer (Thea Foss Holdings, LLC) has outstanding obligations of $48,532,793.62 on the project.

Saturday, the Tacoma News Tribune reported that the “winner” at Friday’s courthouse auction was the bank: IStar Financial wins Esplanade

…when the short bidding was done, the lender for the eight-story Esplanade condominium, IStar Financial Inc. of New York, emerged the auction’s winner with a price of $7 million.

Some two dozen spectators watched as attorney Greg Fox read the lengthy auction documents in a light rain outside the second-floor entrance to the government building and then began the auction process about 10:15 a.m.

The sole outside bidder, Northwest businessman Chuck Tomas, halted his bidding at $6.1 million as the bank successively topped each of his bids.

Take a minute to let that sink in…

There was one bidder. The maximum bid was $6.1 million. In other words, the true open market value on this condo project is roughly 87% lower than the outstanding debt. Of course, with over $48 million debt owed on the project, the bank refused to sell for what the market was willing to pay, and bought the project back themselves.

The units that have sold so far went for an average price of $532,350. An open market value of $6.1 million for the whole project puts the average value of the 151 remaining units at just over $40,000 each.

Yowza.

In somewhat related news, Mike Mastro agreed over the weekend to move into Chapter 7 bankruptcy (previous Mastro stories) which most likely means that the dozens of projects his company has fallen behind paying for will not end up in a similar public foreclosure auction situation, thus continuing to mask their true market values.

(John Gillie, Tacoma News Tribune, 2009.08.22)
(Puget Sound Business Journal, 2009.08.21)

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Tacoma Luxury Condo Project Headed for Foreclosure

By The Tim on June 25th, 2009 at 11:01 AM · 15 Comments

Regular readers may recall this post from last October: Construction Defaults Over 10%, Tacoma Condos Empty.

Tacoma News Tribune: Downtown condo sales at a crawl

How’s the market for condominiums in downtown Tacoma?

“What market?” says Judy Mayfield, head of sales for The Esplanade, the 162-unit project on the Foss Waterway, now nearing completion.

After two years of extolling the virtues of the nine-story luxury project, Mayfield and her staff have yet to close a deal on a single unit.

Translation: “We were really counting on suckering 162 flippers into buying luxury condos in Tacoma on the false hopes that they could sell them for a profit in the perma-hot housing market. Now that the market has cooled and everyone realizes that nobody wants to actually live in luxury condos in Tacoma, we’re screwed!”

Apparently they were even more screwed than we might have guessed. Here’s a story from yesterday’s Tacoma News Tribune: $80 million Esplanade project faces foreclosure

An $80 million Tacoma waterfront condominium project, caught in the financial whirlpools of the recession, faces foreclosure by late August unless the developer can find new sources of funding.

The Esplanade, a nine-story condominium on the west side of the near-downtown Thea Foss Waterway, has until Aug. 21 to escape from the imminent foreclosure, said sources close to the project who were not authorized to speak publicly.

Just 10 of the 162 housing units in the building at 1515 Dock St. have been sold, and none of the retail spaces on Dock Street or facing the waterfront walkway has been leased.

According to the Notice of Trustee sale filed with Pierce County (pdf), the developer (Thea Foss Holdings, LLC) has outstanding obligations of $48,532,793.62 on the project. If I’m reading the document correctly, it looks like their financing required them to pay in full on February 1st. Apparently they thought they would have sold enough units by then to cover their costs. Obviously after having sold just just six percent of the units in over two years, they came up a little bit short.

(John Gillie, Tacoma News Tribune, 06.24.2009)

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Foreclosure / Short Sale Mess in Tacoma

By The Tim on January 19th, 2009 at 7:45 AM · 72 Comments

We’ve seen plenty of these kinds of articles and news reports about the foreclosure situation down in southern California, but I don’t think many people ever would have expected to see such a piece written about the Seattle area: Foreclosures mean work for “trash-out” specialists

Contractors who specialize in cleaning and maintaining the nation’s growing inventory of bank-owned properties are finding gold in the rising foreclosure rate.

They’re busy handling so-called “trash-out” projects to prepare these homes to sell for institutions often based far from the homes they’ve repossessed in foreclosure.

“It’s the busiest I’ve seen it in 25 years,” says Tim Rogers, owner of Tim Rogers Construction in Tacoma, which handles trash-out gigs in Pierce County and South King County. “There are so many jobs to deal with, I can hardly keep up.”

And on a related note, I thought this letter to the editor of the Tacoma News-Tribune was interesting:

Re: “Few in mood to buy a home” (TNT, 1-7).

My husband and I are fortunate enough to have the ability to buy a second home. What we have found is that all of the homes we looked into are short sales. This is a nightmare for buyers. You have to wait up to 60 days before you find out whether your offer is accepted.

We refuse to make a full-price offer on most of the homes we have seen. Most of these short sales are in major disrepair and would never sell at those prices in a normal market. The houses we have seen have been purposely destroyed by the owners taking out their anger at this whole mess.
…
We are very disenchanted with the whole house-buying market. The weather did not keep us from looking, but there is nothing new on the market, except short sales. This is why few are in the mood to buy a home, in my opinion.

Have those of you that are currently actively searching for a home noticed the same thing?

(Jane Hodges, Seattle Times, 01.17.2009)
(Sherri Rice, Tacoma News-Tribune, 01.18.2009)

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Construction Defaults Over 10%, Tacoma Condos Empty

By The Tim on October 10th, 2008 at 8:28 AM · 64 Comments

A few more articles from this week about how dramatically the local real estate market has slowed.

Puget Sound Business Journal: Construction defaults rise in Seattle area

The latest data on local new-home sales and construction-loan delinquencies illustrate the market forces underlying the growth in mechanics’ lien filings.

Delinquencies of single-family construction loans in the Seattle/Bellevue/Everett marketplace have risen to 11.4 percent of outstanding loan balances during the second quarter, according to data from Oakland, Calif.-based consultant Foresight Analytics.

That’s only slightly better than the median delinquency rate of 11.6 percent among the nation’s 100 largest metro areas. The Tacoma market is even more distressed, with 15.6 percent of single-family construction loans delinquent.

With respect to commercial and condominium construction loan delinquencies, both the Seattle/Bellevue/Everett (5.6 percent) and Tacoma (8.7 percent) vicinities fared worse during the second quarter than the top 100 markets combined (4.9 percent).

Falling new-home sales and values underlie much of the construction loan foreclosure activity.

Over 1 in 10 residential construction loans have gone delinquent? Yikes. So much for Seattle-area builders learning from the lessons of Florida, where they went through this same mess two years ago.

Tacoma News Tribune: Downtown condo sales at a crawl

How’s the market for condominiums in downtown Tacoma?

“What market?” says Judy Mayfield, head of sales for The Esplanade, the 162-unit project on the Foss Waterway, now nearing completion.

After two years of extolling the virtues of the nine-story luxury project, Mayfield and her staff have yet to close a deal on a single unit.

Tacoma’s condo market has suffered even more in the mortgage meltdown than other sectors of real estate.
…
Condominium developers and brokers remain convinced the condos are a good deal – in fact, they say, what with low interest rates and high inventory, they are a better deal than ever.

The problem, they say, is getting people to commit in such uncertain times.

“The timing couldn’t have been worse,” Mayfield said. “Had the market not turned in the past year and a half, we would definitely have sold out by now.”

Translation: “We were really counting on suckering 162 flippers into buying luxury condos in Tacoma on the false hopes that they could sell them for a profit in the perma-hot housing market. Now that the market has cooled and everyone realizes that nobody wants to actually live in luxury condos in Tacoma, we’re screwed!”

Seriously. Who sat down at the drawing board and said “one hundred and sixty-two luxury condos in Tacoma—sounds like a great plan!” Perhaps it was the same sage that decided a good plan would be to build an 86-unit townhome complex in Kenmore, then market it with pictures of sandy beaches and palm trees.

Does anyone out there still think the rental market will be tight as a growing number of these completed condo and townhome projects switch to rentals after attracting no buyers for months on end?

(Brad Berton, Puget Sound Business Journal, 10.03.2008)
(Rob Carson, Tacoma News Tribune, 10.10.2008)

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RE Bust Leads to 16% Capital Fund Deficit in Tacoma

By The Tim on September 3rd, 2008 at 9:48 AM · 24 Comments

The Tacoma News Tribune reports on a $7.2 million shortfall in the city budget, thanks to a 36% drop in expected real estate taxes:

The City of Tacoma may have to delay or slow construction on some projects in order to patch a projected $7.2 million shortfall from real estate taxes this budget cycle.

The shortfall represents a 36 percent drop from what the city expected to generate from real estate taxes: Officials budgeted for about $19 million of the $45 million fund from real estate taxes this biennium, but now project only about $12 million will come by the end of the year.

The drop comes because of a slower real estate market: Taxes collected from real estate sales are lower than expected, meaning there likely won’t be enough money to cover the projects slated for this biennium.
…
On the list of possible cuts, according to City Manager Eric Anderson: deferring maintenance on City Hall, and eliminating $400,000 for major repairs to city buildings and seismic upgrades to fire stations around the city.
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Anderson told the City Council during an August study session that the city could also buoy the capital budget with funds from other areas, but that could be a dangerous proposition if the market doesn’t bounce back.

Hey no worries. It’s probably a safe bet to assume things will bounce back any day now. I hear we’ve been at the bottom since February or so.

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A surge in “pent-up supply”?

By deejayoh on July 30th, 2008 at 4:59 PM · 31 Comments

I have a couple of RSS feeds from real estate sites that I use to monitor listings that might be of interest to me.  They are targeted at a couple of neighborhoods, and focused on homes that are likely to be mid-century modern.  Over the past couple of weeks, I had noted that the volume of new listings had really dropped off.  I mean, there was almost no activity. I attributed it to the market slowing down – figured it was just a late summer phenomenon.

Then I checked them this morning, and was surprised to find five or six new listings on each.  What was going on?  So I headed over to Redfin to check to see what Seattle had in the way of new listings overall (side note:  what did we ever do before Redfin!?).  What I found there was pretty interesting:

  • There were 108 new listings in Seattle yesterday, versus 123 in the last three days and 350 in the last week.  The rate of new listings was double the average of the last three, seven, or fourteen day period!

Seattle Surge

  • I figured this might be some sort of statistical anomaly – so I checked Bellevue too.  It looks almost exactly the same:

Bellevue Surge

Checked Tacoma too. Same story:

Tacoma Surge

I’m not sure what might be going on.  I thought that listings were more likely to come on to market early in the month, not late in the month – but they seem to have exploded on the last day of the month.  I see three possible explanations:

  1. It’s normal.  The drop off just reflects the fact that homes sold.  (I don’t personally think this makes sense.  Homes aren’t selling all that quickly, and I don’t think it would explain the big difference between the one and 3 day average)
  2. There was some sort of glitch in the feed from NWMLS and new listings didn’t get posted for a couple days
  3. What I initially surmised:  that sellers had been waiting to see what happened with the Housing Recovery Bill and decided that since it was signed,  it was a great time to jump back into the market.

What say ye?  Any other perspectives?

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