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)