Stalled Development Map: Over 75 Stalled Projects Mapped

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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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

101 comments:

  1. 1
    Ryan says:

    What is more amusing than this map is how pointless the data is. The 2 locations off 228th in Bothell (sundquist and harvest run) are not stalled or even really slowed projects unless you assume that all new construction has to be built as fast as possible. I know this doesn’t jive with Tim’s doom and gloom dreams but if I can spot two dots on this map that are selling consistently and at more or less the same prices over the past year; what exactly is this exercise supposed to be teaching us? Oh yeah, I think it is more safety in numbers and allows the renters to feel good and hopeful about all of the soon to be on the market 3000 sq/ft homes for 200k.

  2. 2
    The Tim says:

    RE: Ryan @ 1 – If you think today’s prices are supported by economic fundamentals, why don’t you actually make your case with some actual data? All you ever seem to do is drop in with some occasional name-calling and empty assertions. You’re pretty much the definition of a troll. But please don’t leave, because we’ve had a depressing lack of comedic relief around here since most of the angry trolls disappeared when it became obvious last year that the price correction was not just a seasonal dip.

  3. 3
    Ryan says:

    Classic Tim, hiding behind mountains of statistics to show that his view is the only one. What data would you like for me to provide to make my case that both Porter’s landing and Harvest Run seem to be building and selling at a reasonable pace? They are certainly not selling at a 2005 pace but they are certainly not stalled projects that are languishing like your chart would lead people to believe (I know you didn’t put those locations on there).

  4. 4
    Scott Weitz says:

    Ryan-

    You, like many real estate optimists, never seem to make real arguments (based on facts) on how things are improving. I for one echo Tim’s sentiments and would love to hear a well crafted argument on why we are not headed for more trouble.

  5. 5
    Slumlord says:

    RE: Ryan @ 1
    One way of looking at stalled projects is whether they meet the business plan objectives of the developer. Suppose that for a 30-lot subdivision the expectation was to build three houses a month and sell out in 10 months. If the rate slows to 1 house per month and it takes 30 months to build out, then the finance costs incurred by the developer would be much higher and the profit margin much lower. Today, many, if not most, projects are progressing so slowly that the developer is actually losing money. For evidence, look to the large number of recent bankruptcies in the development community as well as the ever-growing amount of land that developers are giving back to banks through foreclosure. This is because they will never be able to make money at the prices they paid for the land. Also keep in mind that this is just looking at the financing costs, and does not look at the final sales prices which are often much lower than originally expected.

    Yes, development will eventually pick up and prices will recover, however, there is strong evidence that recovery is still several years away. I don’t know the projects you are referring to on 228th, but another Sundquist development, di Moda, near Mill Creek is a perfect example of what I mean by a slowed development. Construction started there in 2006 and the project is only about a third built. Houses are still going up, but it looks like it will 6-10 years to complete. Whatever the initial building targets were, Sundquist is certainly not meeting them today.

  6. 6
    Kary L. Krismer says:

    RE: The Tim @ 2 – Before reading any comments here my thought was that probably every project is at least slowed, with the exception of perhaps some multi-family dwellings.

    I’m actually surprised when I see some projects moving forward. For example, there’s a project in Kent where the foundations were poured over a year ago, but they’re now slowly building on them. Maybe they were slowly building all along in a part of the project I can’t see from the road, but I think the project was stalled and is now merely slowed.

    But I truly doubt there are any projects where the land was bought in the last 18 months and they’re proceeding to subdivide and build SFR on it. If there are, that would probably be more interesting than the slowed (but not the stalled).

  7. 7
    singliac says:

    Yeah Tim. Stop hiding behind those pesky numbers already!

  8. 8
    Justin Louie says:

    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.”

    I feel like the “double-digit price appreciation” is too committal of a statement, but I do believe that the nation is headed for a housing shortage. Okay, I know this is shameless (since it’s our website), but Incolo (us) went to Berkshire’s annual meeting. Here’s what Warren had to say (he’s a buddy, we got to say hi to him =):

    http://www.incolo.com/warren-buffet-outlook-on-the-real-estate-market/

    The idea is all these stalled projects and lack of building naturally lowers the numbers of houses available on the market, and yes, purchasing is slowed, but it’s far from dead. Nor, did purchasing drop to the levels that builders have slowed in building homes. Sooner or later the supply will run low and demand will pick up.

    To say we will have double digit growth, yeah that’s definitely too committal, but hey we’re all entitled to our opinions (including you Ryan).

  9. 9
    Ryan says:

    RE: Scott Weitz @ 4

    Scott-

    i never said we weren’t headed for more trouble (at least not today); I merely pointed out that this chart is misleading b/c it infers that all of the points on the map are holes in the ground that are going belly up which is not the case. I don’t need to put any facts behind what I said above because I walk through those developments every week when I walk my dog. I see the price sheets, I talk to the people in their yards, and I see the foot traffic that go through the model homes.

  10. 10
    Kary L. Krismer says:

    RE: Justin Louie @ 8 – Construction always has been a boom or bust industry–at least as long as I can remember.

    Realistically, I suspect any recovery will required probably at least one big developer and dozens of little ones going under. And a ton of subs.

  11. 11
    jon says:

    By Scott Weitz @ 4:

    Ryan-

    You, like many real estate optimists, never seem to make real arguments (based on facts) on how things are improving. I for one echo Tim’s sentiments and would love to hear a well crafted argument on why we are not headed for more trouble.

    The rate of job losses having dropped substantially from their peak losses. Losses continue at a lower rate, but that is a lagging indicator. House construction has hit bottom, so further losses there are unlikely. Housing inventory is near pre-boom levels. Non-housing inventories are near bottom. All that is why the stock market had its huge rally, because we are near or perhaps already at the point of no further contraction.

    It looks like Seattle is 3 months away from NWMLS YOY price change being about zero. That will be another signal to people who are still staying out of the house buying market because of falling prices to get back in. Low rents are great, but inevitably population will catch up with supply and rents will rise until they are high enough to trigger new construction, which means that rents will eventually be far higher than they are now.

    Currently the Fed is printing money to counteract falling asset values. Soon the stimulus programs will start pumping vast sums of money into make-work projects. Those will reduce unemployment without creating new products and services, and that will drive up prices. That will be a strong motivator for people to buy houses.

  12. 12
    Kary L. Krismer says:

    By jon @ 11:

    It looks like Seattle is 3 months away from NWMLS YOY price change being about zero.

    I don’t make predictions, but if I did, I wouldn’t make that one. I think if there would be such a month it’s more likely to be February or March, when we were deep into the post-Paulson statement doldrums. And by saying “more likely” I’m not making that prediction either.

    But something just occurred to me. Wasn’t Ardell’s bottom call in February? [Edit: It was February 9 in the P-I so probably the 8th on RCG.] If so, and if February is the first YOY positive month, would that make her right?

  13. 13
    Markor says:

    RE: jon @ 11

    Low rents are great, but inevitably population will catch up with supply and rents will rise until they are high enough to trigger new construction, which means that rents will eventually be far higher than they are now.

    I doubt rents will increase before employment increases, more population or not. Where will the jobs come from? Americans have been over-consuming, binging on easy credit, including having more kids. Now that they can’t over-consume, many of those jobs are gone indefinitely. The kids will probably have to accept a lower standard of living. Just look at other countries to see that a lower standard of living is the norm in the world. Seattle could have 120% of today’s population and lower rents. Rents depend on the income of the rental population, not that population per se.

  14. 14
    Slumlord says:

    RE: jon @ 11
    It does appear that construction is happening at a slower pace than population growth and this will eventually eat through the oversupply of housing and land under development. Your estimate that prices will stop dropping in about 3 months seems optimistic because the factors that leading to economic stabilization are temporary. Obama’s stimulus and bank bailouts seem to have put a bottom under the economic freefall, but they will, or already are, leading to major currency imbalances, which will eventually snuff out the apparent recovery.

    My expectation is that currency (debt) issues along with diminishing oil supplies will lead to a period, perhaps decades, where recessions are more frequent and severe than in the last 70 years. I would not be surprised if the overall trend is for the economy to contract during this time, if not in absolute terms, at least on a per capita basis.

    On the big picture, the government cannot afford to maintain the current bailouts and tax breaks. Once the effect of the bailouts and stimulus passes, we will fall back into recession. The temporary make-work jobs you cite are great for people who need employment, but they do not provide the same wages that the lost jobs offered. House prices will need to drop further to match the new income realities.

  15. 15
    Markor says:

    RE: Slumlord @ 14

    My expectation is that currency (debt) issues along with diminishing oil supplies will lead to a period, perhaps decades, where recessions are more frequent and severe than in the last 70 years. I would not be surprised if the overall trend is for the economy to contract during this time, if not in absolute terms, at least on a per capita basis.

    Add in all the mega-$trillions of unfunded obligations. Americans have spent much of their future already. The point is near where no more can borrowed at low rates. Meanwhile resources are being exhausted far faster than being found.

  16. 16
    jon says:

    RE: Slumlord @ 14 – “House prices will need to drop further to match the new income realities. ”

    The construction that is going on is for smaller houses. That’s how price will drop. Long term, inflation will keep prices of existing houses up, and being larger than the new small houses, existing houses will be attractive to families with multiple wage earners, i.e. families with adults living with their parents.

    Short term, the SFH price in Seattle has been stable or up slightly since March. If prices continue to be stable through October, the large drop in price that occurred last fall will roll out of the 12 month window and the YOY will be about zero.

  17. 17
    Markor says:

    RE: jon @ 16

    Short term, the SFH price in Seattle has been stable or up slightly since March.

    I wouldn’t base a long-term prediction on a short term change. I suspect the $8K credit had a lot to do with that, esp. since it could mean $8K new cash–I’ve seen people counting on that to buy furniture. If the credit gets extended or enlarged, then prices could well go up for a while as more fools rush in.

  18. 18
    jon says:

    RE: Markor @ 17 – When it gets close to running out they will pass an even larger one. Eventually it will be a permanent entitlement. Until we can borrow no more and print no more money.

  19. 19
    Markor says:

    RE: jon @ 18

    Could happen. Obama’s expending a lot of political currency though. My bet is that the stimulus borrowing will stop within a year. In any case I won’t be risking my financial future on indefinite federal borrowing, so if the heavy stimulus continues I’ll keep renting.

  20. 20
    Slumlord says:

    RE: jon @ 18 – There may be a larger housing entitlement in the short term, but I cannot see how this will last over the long-term. The government has taken on so much debt that the future will almost certainly see both higher taxes and lower services. It will not be one or the other, but some combination.

  21. 21
    Pndscm says:

    Does anyone know the story behind the old KFC on the corner of Bellevue way and Main? I’m only assuming that someone bought that lot to develop it and then couldn’t get funding. Anyone have a clue? I’m always amazed to see such decrepit weedy POS just a couple blocks from Bel Square.

  22. 22
    singliac says:

    By Ryan @ 9:

    I don’t need to put any facts behind what I said above because I walk through those developments every week when I walk my dog. I see the price sheets, I talk to the people in their yards, and I see the foot traffic that go through the model homes.

    Right on! Facts are so overrated. Foot traffic is the official metric of the housing bust.

  23. 23
    dogwood says:

    RE: Ryan @ 9
    Hey, don’t forget the palpable sense of pent-up demand. That way more informative than a mountain of statistics!

    BTW, my wife and I visit open houses from time to time. We haven’t seen ANY foot traffic, just a lot of bored agents usually watching DVDs by themselves. Most seem resigned to the situation and often lack the energy to even stand up.

  24. 24
    mukoh says:

    RE: Ryan @ 3 – Porters is almost done which is good. Harvest Run by Mcnaughton is stalled and is actually on the market behind the curtain. :) Prices in Harvest Run left overs will be $329S. :) Outta be good for the people who bought in the same project for $400k.

  25. 25
    Scott Weitz says:

    RE: jon @ 11

    The ‘shadow’ inventory is enormous…there are thousands of people that would list there house…but want to wait for a ‘receovery’ which isn’t going to happen…plus, wait until the banks start putting their inventory onto the market.

    YOY price change of 0? What numbers are you looking at?

    Printing money is a good thing? Never in the history of man kind has opening the printing press led to prolonged prosperity. Besides, the stimulus is a joke….its filled in holes in the banks and local govts…and will continue to be put there (rather than ‘shovel ready’ projects).

  26. 26
    mukoh says:

    Tim, NewHomeTrends does have a point, in an area where I track and know very well over the last 6 months the situation has been such: 200 average new construction sales a month vs. 70 new permits average a month.
    No development has been started in the last 12-14 months in the same area. Thus the supply of new product will be limited.

  27. 27
    Process Takes Time says:

    There will be a shortage of new construction in 2+ years. The entitlement process takes upwards of 24-48 months before any dirt can be turned. Then typically it takes 8-12 months to complete and record a plat. Currently permitted plats are all on the clock and entitlements on them will expire before development begins. NO ONE is able to obtain credit to build horizontal infrastructre.

    I don’t believe we are going to be in some kind of crisis by any means, but a simple look down the pipeline is pretty indicative of what the future will hold.

  28. 28
    Lake Hills Renter says:

    These “renters are losers” posts are giving me major flashbacks to 2007. Thanks for the comic relief. =)

  29. 29
    Softwarengineer says:

    RE: Ryan @ 1

    Hi Ryan:

    What’s amusing is the $139K house next door to me, totally remodeled by the bank….they don’t allow low credit rating FHA financing in my HOA [thank God, who wants that kind of unqualified subprime gypsy buyers next door anyway?], so legitimate 1st time home buyers, with a stable job and like 20% down [even on $139K], are apparently like dinosaurs today.

    Its been a month now, STILL NO TAKERS.

  30. 30
    Softwarengineer says:

    RE: Markor @ 19

    Stimulus Spending= Phony GDP

    Watch for a massive collapse in GDP when the government pulls out soon.

  31. 31
    Ryan says:

    RE: Softwarengineer @ 29

    Maybe nobody wants to buy a sub 150k POS….I have never seen one that I would want to live in. Even if it cost half that.

  32. 32
    Ryan says:

    RE: mukoh @ 24

    You speak as if you know something everyone else doesn’t which is probably not the case. Care to share or do you just like to speak as if you are in the know?

  33. 33
    Ryan says:

    RE: singliac @ 22

    Nope, we know foot traffic is not an indicator of future sales. All we know for sure is Tim’s historical data can/will predict the future.

  34. 34
    obelus says:

    Wow. Only an almost imperceptible uptick in the housing market for a couple of months due to massive govt. dollars (fake ones, I might add) and the trolls are all over the place again. Indeed, LHR, it is kind of heart-warming to see trolls here again.

    As for inflation, I would like to make a note and know what others think, since some keep mentioning that inflation will help those paying off loans: Inflation will not be a plus to the housing market by any means, at least in the short term and in regards to how people feel about taking on debt.

    Economics is primarily psychological and if noted inflation (more than the recent ~2.5%) takes hold, people will not be thinking, “Gee, now my house will be paid off earlier because I get to pay back in inflated dollars.” No, they will be thinking how much a gallon of milk has gone up or anything else they buy. They will be seeing their buying power diminish greatly.

    Paying off debt with inflated dollars sounds good in theory but only works if you are massively wealthy or a government entity dealing in huge amounts of money.

    OK, fire away!

  35. 35
    Ryan says:

    RE: mukoh @ 24

    You say that Porter’s is almost done which is good and I would agree….I guess my whole point had to do with why this community is even on Tim’s map? I wonder how many other communities that have pushpins on the map are similar?

  36. 36
    Sniglet says:

    RE: Justin Louie @ 8

    I do believe that the nation is headed for a housing shortage.

    I doubt this very much. Most of the predictions for a housing shortage rely on population growth rates, and it’s historical relation to housing units. Unfortunately, this method of calculating housing “demand” is seriously flawed. Housing demand is VERY elastic and does not correlate to population.

    The over-all state of the economy is a much bigger predictor of housing demand than anything else. When unemployment is low, and people feel secure in their jobs (and financial well-being), demand increases as consumers decide that they “need” 4 bedrooms, 3 bathrooms, and 3 car garages. When unemployment is high, and people are concerned of losing their jobs, they will discover that the same 4 person family that used to live in a McMansion can now do quite nicely in a 2 bedroom apartment with 1 bathroom.

    To believe that there is going to be a housing shortage in the Puget Sound in the next several years is to believe that the global economy is going to be going gang-busters, and that the unemployment rate will fall substantially.

  37. 37
    Ryan says:

    Sorry, just wanted to test out my new picture.

  38. 38
    Kary L. Krismer says:

    RE: obelus @ 34 – Just out of curiosity, how old are you? Inflation was motivation to buy houses back in the late 70s, early 80s. Not only were people who owned houses happy that they were locked in and leveraged, but people who rented got upset once a year when their rent rose dramatically. And sitting on dollar denominated assets sucked!

  39. 39
    Markor says:

    RE: Sniglet @ 36

    To believe that there is going to be a housing shortage in the Puget Sound in the next several years is to believe that the global economy is going to be going gang-busters, and that the unemployment rate will fall substantially.

    Seems obvious. A drop-off of new construction due to less demand doesn’t lead to a shortage of supply by itself. Something else has to increase demand. It takes money to buy, not population per se, so population won’t necessarily increase demand. If higher population could scrape off more resources, that might work, but the easy-to-grab resources are being exhausted. And taxes are going up, reducing post-tax money…

  40. 40
    Urban Artist says:

    This is part on topic and a little off topic. I heard something on the news about the development finally going forward in Ballard where the old Denny’s was. It is supposed to be eight stories with shops below. They are having a hard time selling the places already built. I guess people in Ballard have seen some pink ponies around. I have a friend in Ballard that is moving and figures she just needs to rent her house for a couple of years and then she can sell it for 600 to 700K. I hope we don’t go back to a bubble that soon if ever.

  41. 41
    obelus says:

    RE: Kary @38.

    Nice try Kary. Just because inflation goes way up does not mean rent goes up. Rents are subject to what people can and are willing to pay (economy booming or not?).

    I am old enough to remember the Boeing bust and inflation of the ’70s and 80’s.

  42. 42
    jon says:

    By Markor @ 39:

    RE: Sniglet @ 36

    To believe that there is going to be a housing shortage in the Puget Sound in the next several years is to believe that the global economy is going to be going gang-busters, and that the unemployment rate will fall substantially.

    Seems obvious. A drop-off of new construction due to less demand doesn’t lead to a shortage of supply by itself. Something else has to increase demand. It takes money to buy, not population per se, so population won’t necessarily increase demand. If higher population could scrape off more resources, that might work, but the easy-to-grab resources are being exhausted. And taxes are going up, reducing post-tax money…

    Has Helicopter Ben has been showing, there is nothing easier than printing more money. As for resources becoming scarce, that makes existing houses all the more valuable, not to mention all the added efficiency regulations that are awaiting us when cap’n trade is passed.

    The additional population will not be sitting in the downsized apartments doing nothing. They will be put to work doing adminstrative jobs for stimulus/gov run health care and will want a condo or house just like anyone else. Unless some of them are put to work scraping additional resources to build houses, housing prices will go way up as the average number of workers in each household increases.

  43. 43
    Markor says:

    RE: obelus @ 34

    Paying off debt with inflated dollars sounds good in theory but only works if you are massively wealthy or a government entity dealing in huge amounts of money.

    I agree with Kary on this one. Fear of inflation is a major motivation for me to buy a house. High inflation could be hell, but it could easily be worse to be renting.

  44. 44
    Markor says:

    RE: jon @ 42

    As for resources becoming scarce, that makes existing houses all the more valuable, not to mention all the added efficiency regulations that are awaiting us when cap’n trade is passed.

    I’d say that’s true if the only resources getting scarcer were those needed to build houses. When it’s most resources, and a higher population to boot, people will have to spend more of their income to survive. They’ll have less money for housing. The demand for housing could be higher than ever, while the population’s money available to be spent on housing is less.

  45. 45
    Slumlord says:

    RE: Process Takes Time @ 27

    Process Takes Time,

    I disagree with your assertion that there will be a shortage of new construction in 2+ years. The reason is that many local jurisdictions are granting longer extensions to projects that would normally die due to lack of activity. This is something that Master Builders Association has been advocating for as an “economic stimulus”. The gist is that a subdivision permit would expire after 5 years but now it is possible to get a 3-year extension, bringing the lifespan to 8 years. There are enough proposed projects to keep the builders busy for many years, even with stronger demand.

  46. 46
    Markor says:

    RE: obelus @ 41

    Just because inflation goes way up does not mean rent goes up. Rents are subject to what people can and are willing to pay (economy booming or not?).

    Sure. But what if wage increases match inflation, for new employees at least? My neighbor bought his house for $16K. It would rent for $2K/month. In Zimbabwe, rents hyper-inflate along with other things.

  47. 47
    Sniglet says:

    what if wage increases match inflation, for new employees at least?

    This is true. Wages are trending down big-time these days, just like inflation. Wages are likely to be 20% to 30% lower (and more in many jobs) in the next 10 years, and asset prices will fall in concert.

    There is certainly no reason for anyone to be out buying assets as a hedge against inflation these days. Prices are just going to keep coming down in the foreseeable future.

  48. 48
    Eastside Westside its all Good says:

    Any housing shortage triggered by declining construction and normal population growth will be tempered and offset by decline in migration from California and increased household size. I don’t know to what degree, but it would not surprise me to see 70%+ of that housing demand just disppear for these reasons.

  49. 49
    Markor says:

    RE: Sniglet @ 47

    There is certainly no reason for anyone to be out buying assets as a hedge against inflation these days. Prices are just going to keep coming down in the foreseeable future.

    At the moment. After another 20% down, not so clear.

  50. 50
    deejayoh says:

    By Markor @ 46:

    RE: obelus @ 41

    Just because inflation goes way up does not mean rent goes up. Rents are subject to what people can and are willing to pay (economy booming or not?).

    Sure. But what if wage increases match inflation, for new employees at least? My neighbor bought his house for $16K. It would rent for $2K/month. In Zimbabwe, rents hyper-inflate along with other things.

    I once had a neighbor who bought his house for $8000. He was 83 and had lived there for 50 years.

    As for wages, think about it for a second:
    Is your own paycheck going up? I know Microsoft is giving ZERO merit increases this year.
    10% of the population is unemployed. Do you think employers are bidding up wages for new hires?
    Are unpaid furloughs hidden signs of wage increases?

    These are things that are really happening. I am not as bearish as sniglet, but talking about wage inflation seems a bit hypothetical these days.

  51. 51
    jimmythev says:

    By Pndscm @ 21:

    Does anyone know the story behind the old KFC on the corner of Bellevue way and Main? I’m only assuming that someone bought that lot to develop it and then couldn’t get funding. Anyone have a clue? I’m always amazed to see such decrepit weedy POS just a couple blocks from Bel Square.

    So, the word on the street is, when the developer drilled core samples they found an underground stream… which made teh development WAY more expensive because they had to divert it. That, in combo with the real-estate collapse… and I think you’ll see a nasty KFC across from Jack in the Box for quite some time… I’m just waiting for the squaters to come in and set up shop.

  52. 52
    Ryan says:

    I bet Mukoh knows the story behind the KFC since he seems to have the inside scoop on the local dealings…..he must hear all of the details through the walls of his apartment.

  53. 53
    TJ_98370 says:

    By Kary L. Krismer @ 38:

    RE: obelus @ 34 – Just out of curiosity, how old are you? Inflation was motivation to buy houses back in the late 70s, early 80s. Not only were people who owned houses happy that they were locked in and leveraged, but people who rented got upset once a year when their rent rose dramatically. And sitting on dollar denominated assets sucked!

    .
    Yes, but don’t forget that double digit interest rates kept housing prices down. It was the financing that made buying a house during those times disproportionately expensive. It was a great time to buy real-estate with CASH!
    .
    .

  54. 54
    Markor says:

    RE: deejayoh @ 50

    Do you think employers are bidding up wages for new hires?

    Probably not. I don’t fear inflation now, but I’m keeping an eye on it. Zimbabwe has super high unemployment, and also super high inflation.

  55. 55
    jon says:

    By Markor @ 54:

    RE: deejayoh @ 50

    Do you think employers are bidding up wages for new hires?

    Probably not. I don’t fear inflation now, but I’m keeping an eye on it. Zimbabwe has super high unemployment, and also super high inflation.

    Employees/consumers are not the only source of demand. Government also buys things, perhaps indirectly through contractors. Government borrowing is out of control and can make up for a shortfall consumer demand, at least for a while. The US GDP is $14T and the federal deficit is 10% of that. That makes up for having 5% over normal unemployment and a 5% pay cut to boot.

  56. 56
    David Losh says:

    Once again I’m going to make an off the wall comment about new construction because I have researched it enough. It’s an ultimate ponzi scheme. There are dollars in every step of new construction. The land acquisition, platting, site prep, and sidewalks, some one makes money before the building begins. Wages, builder, super, and subs, more people, more money doled out over a period of time while interest is being paid. Then the buyer comes in to clean up the long list of debt paid out to the economy in general.

    Governments are happy. Every body gets a piece of the pie.

    Construction means jobs. Some building crews follow the developments around the country and when it’s over, it’s over. Well, it’s over.

    I like this post because it is the beginning. Was it 15 million empty housing units last year? I’m pretty sure.

    The obvious answer is that people are walking away. In five years when those granite counter tops are so last year the people who bought “new” will want new again. The surplus will be in the thousands of used units in the Seattle area. Puyallup, South Everett, Bothell, and Redmond, just to name a few will be way over built compared to the demand for living in the middle of nowhere. Monroe? for get about it.

  57. 57
    Markor says:

    RE: David Losh @ 56

    In five years when those granite counter tops are so last year the people who bought “new” will want new again.

    Can’t wait to see whether or not Kitchen Trends magazine lets them keep their stainless steel.

  58. 58
    waitingforseattletocool says:

    RE: Ryan @ 52

    You shouldn’t take this so personally, on this blog a troll is a bull, neutral, or homeowner.

  59. 59
    Scott Weitz says:

    Inflation talk is only half the story….the weak dollar will mean inflation for global commodities. Real estate does not fall in that category. Get ready for asset deflation, but commodity inflation.

  60. 60
    Lake Hills Renter says:

    By waitingforseattletocool @ 58:

    RE: Ryan @ 52

    You shouldn’t take this so personally, on this blog a troll is a bull, neutral, or homeowner.

    No, a troll is someone who contributes only things like this:

    think it is more safety in numbers and allows the renters to feel good and hopeful about all of the soon to be on the market 3000 sq/ft homes for 200k.

    Classic Tim, hiding behind mountains of statistics to show that his view is the only one.

    All we know for sure is Tim’s historical data can/will predict the future.

    …he must hear all of the details through the walls of his apartment.

  61. 61
    waitingforseattletocool says:

    RE: Lake Hills Renter @ 60

    No non-troll on this site has stepped up to indicate why Porter’s Landing is listed as stalled or slowed development per Ryan’s original beaf.

    According to the builder / developer website (not verified through public records), of the 59 buildable lots in the development, only 7 remain unsold.

    2 are complete, 1 is presale, 1 is at foundation, 2 are at framing, and 1 is at siding.

    Asking price range is $440K to $520K, 2300 to 3100 square feet.

    So why specifically is this development on the map?

  62. 62
    Justin Louie says:

    By jon @ 42:

    By Markor @ 39:

    RE: Sniglet @ 36

    To believe that there is going to be a housing shortage in the Puget Sound in the next several years is to believe that the global economy is going to be going gang-busters, and that the unemployment rate will fall substantially.

    Seems obvious. A drop-off of new construction due to less demand doesn’t lead to a shortage of supply by itself. Something else has to increase demand. It takes money to buy, not population per se, so population won’t necessarily increase demand. If higher population could scrape off more resources, that might work, but the easy-to-grab resources are being exhausted. And taxes are going up, reducing post-tax money…

    Has Helicopter Ben has been showing, there is nothing easier than printing more money. As for resources becoming scarce, that makes existing houses all the more valuable, not to mention all the added efficiency regulations that are awaiting us when cap’n trade is passed.

    The additional population will not be sitting in the downsized apartments doing nothing. They will be put to work doing adminstrative jobs for stimulus/gov run health care and will want a condo or house just like anyone else. Unless some of them are put to work scraping additional resources to build houses, housing prices will go way up as the average number of workers in each household increases.

    To be honest, I feel it is as simple as new construction dropping off is enough to create a housing shortage (or what would show the beginnings of this). The inventory is decreasing. Banks are smart enough not to flood the market with foreclosure listings and as long as nothing comes into undercut public trust, we’ll slowly slowly rebuild everything from trust to home sales from this point forward. All things combined, at the rate homes are moving we’re aimed at a housing shortage. Builders’ll notice this and take action before it gets too crazy.

    Who knows, 2012? 2020? Well, I hope it’s by 2012 because on Dec 12th, it’ll be all over anyway (horrible doomsday joke i know).

  63. 63
    deejayoh says:

    RE: Markor @ 54 – please read about hyperinflation in zimbabwe and explain to me anything about how it applies to the US. They printed money and paid it to soldiers. policemen, and civil servants.

    We created money and gave it to banks, who left it in “reserve” at a 1:1 ratio because the Fed is paying them interest. This is an optical move, nothing more. We might as well have printed it and given it to the joker to burn. It has not entered the pockets of anyone.

    Oh, and by the way – yes FTTM is up 100% in a year to about $8T, but this is nothing compared to the shrinkage in M3+Credit – which has shrunk in the same period (and totals $55T!). Money supply is so much more than what the fed controls.

  64. 64
    shawn says:

    RE: Ryan @ 52 – yawn, wow, thanks for sharing, boring.

  65. 65
    shawn says:

    RE: Justin Louie @ 62 – Justin, that trust is going to take about 50 to 80 years to earn back. Ever hear folks saying recently that, “hey my broker told me to invest in dot com companies, they’re hot!” Has that trust come back yet?

  66. 66
    shawn says:

    RE: Kary L. Krismer @ 6 – Kary you really don’t like to be predictable do you? Its refreshing to read your comments because you don’t stick to a never ending everything is beautiful RE spiel.

  67. 67
    David Losh says:

    The inflation argument is pretty much dead, in my opinion At some point, maybe in the not too distant future, some one in the government, any place, will make a passing comment about raising interest rates, and every thing will come to a stand still. Like deer in the head lights the economy will look at the oncoming mass of steel that will knock it to the side of the road.

    Anyway, the housing shortage argument is interesting because it comes up a lot lately. We just had the highest rate of home ownership ever and people talk like that will continue. Another opinion I have is that a lot of people are disappointed with the way things went to put it mildly. Maybe you hit a bump in the road or know some one who was in trouble financially, but there are people, and families who lost everything.

    It’s kind of like the cash for clunkers program that is creating all these debt instruments with buyer exuberance. I think next year you will be able to buy repossessed cars for cheap.

  68. 68
    Kary L. Krismer says:

    RE: shawn @ 66 – Thanks, but I don’t really consider that post a post where I was unpredictable. I’m not a big fan of new construction. Also, I’m a believer in capitalism being reaction and over-reaction. Thus I’d expect builders to over-build, and have pointed that out repeatedly when in comes to condos, where they can expand inventory greatly in a small amount of time.

    Actually, it’s not just capitalism that is a system of over-reaction. It’s human nature. Look at the flap over the unrestricted air space over the Hudson River. One crash and there are calls to regulate the air space. Over-reaction is human nature.

  69. 69
    mukoh says:

    RE: Ryan @ 35 – A few pin points on Tims map are developments owned in part or whole by someone I know very well. And he is extremely cash heavy, no loans. He will slowly build one every few months on his schedule. Can’t really call it failed, he will still make his money.

    Tim however has no way of knowing that so I don’t blame him for having those pins there. If Sundquist doesn’t let go of two projects by Martha Lake soon then Porters will definately be a casualty though.

  70. 70
    Process Takes Time says:

    RE: Slumlord @ 45

    They’re working on this in SnoCo, but nothing has stuck yet. (And my understanding from the get-go was that project approvals would be extended from 3 to 5 years, not 5 to 8) The other issue is that SEPA review, operating independently from jurisdictions, is not extending its approval time and tightening its regs. So even if a jurisdiction wanted to extend a project’s approval, they may be impotent to do so.

  71. 71
    mukoh says:

    RE: Ryan @ 52 – Yes Ryan, the apartment walls are nearly paper thin, all kinds of news that are heard from neighbours. LOL.

  72. 72
    The Tim says:

    RE: waitingforseattletocool @ 58 – Hardly. I (and most other commenters) have no problem with reasonable disagreements. What I call out as trolling is when someone shows up and just starts calling people names and throwing out angry assertions without ever coming to the table with any verifiable data to back up their statements.

    RE: waitingforseattletocool @ 61 – Easy, it’s on the map because a reader added it, and I have not had the time to make a detailed check of every single point on the map. When I get some time this weekend I will look into the two points Ryan brought up to see if they are appropriate to have on there. That said, it is the “Stalled/Slow Seattle Construction” map. Even if building is going on, if it is significantly “slowed,” it still has a place on the map.

  73. 73
    George says:

    The building industry and the real estate industry are still thinking in terms of “cycles”. What they are having a hard time dealing with is a wholesale shift in values which has radically changed long term demand. The industry is still thinking of demand as “bouncing” back but it will stay very soft as societal values are moving away from comsumption to conservation. These projects will limp along and they will get built out. There will depletion of new construction and lot invetory at some point in time because of municipal approval lag times and lack of credit to purchase and build but the bottom line is that overall we will need fewer untis and the customer will no longer pay a premium “to get in”.

  74. 74
    deejayoh says:

    There was a related article on Mish’ blog yesterday talking about the same phenomenon in other markets: Zombie Subdivisions and “Pig In The Python” Shadow Inventory

  75. 75
    Kelly says:

    Regarding the “Capitol Hill Rowhomes” on Federal Ave E. and E. Republican:

    In 2006 the three homes that occupied the property were bought for approx $700,000 a piece. The buyers made the collosal mistake of renting out one of the homes for almost a year, and then it was another six months before they finally started demolishing them. How much that cost, I don’t know.

    Then the property sat vacant for about a year, except for the signage touting the new townhomes (which looked more like an office building for an insurance company, very cold and sterile, nothing like the surrounding homes). No action, no pre-sales, just a new field of grass, wildflowers and blackberry bushes.

    Found out 3 months ago that the bank has foreclosed on the property.

    So three houses that could’ve been rented all this time are gone, the fools, I mean the buyers lost at least $3 mil (boo-hoo) and now the property is basically an amateur dog park.

    I would agree that project is “stalled”.

  76. 76
    Ryan says:

    RE: The Tim @ 72

    Tim-

    What might be more useful would be a map with points for where construction hasn’t slowed…..I don’t think there is one project out there that hasn’t dropped off some. I guess that just goes to show that without vetting the data, this map is completely worthless and does nothing to illustrate any point.

  77. 77
    Ryan says:

    RE: mukoh @ 69

    Alright, maybe I am confused now. You are talking about Porter’s and Sundquist but I thought we were talking about McNaughton? You indicated that Harvest Run was being shopped behind the scenes and that lead me to believe you had some insider info but now you are saying you know the scoop on Sundquist instead?

    If sundquist doesn’t ditch two martha lake area projects than Porter’s is going to be a casualty of what? They are almost done with this development so I am not sure what you mean by a casualty?

  78. 78
    The Tim says:

    By Ryan @ 76:

    I guess that just goes to show that without vetting the data, this map is completely worthless and does nothing to illustrate any point.

    Now that’s just a nonsense fallacy. Just because one or two points on the map may not qualify does not make the entire map worthless any more than one or two false statements in Wikipedia make the entire encyclopedia worthless.

  79. 79
    Ryan says:

    RE: The Tim @ 78

    I looked at two points on the map (which happen to be close to where I live) and it turned out that both of these points seem to be iffy as to whether or not they should be there. Then you said you haven’t checked the data which leads me to believe that there could be more of these points on here that shouldn’t be….until the data is vetted this seems like a suspect map at best. I know that it supports your housing armageddon belief though so there is no doubt it will remain as fact on here when we know that at least two points are incorrect.

  80. 80
    The Tim says:

    By Ryan @ 79:

    I know that it supports your housing armageddon belief though so there is no doubt it will remain as fact on here when we know that at least two points are incorrect.

    Oh yeah, I remember the time I said “this map should be treated as 100% gospel truth and everyone should use it to make important major financial decisions.”

    I also remember the time I said “housing prices in Seattle will drop 99%, all current homeowners will go bankrupt and/or end up in debtor’s prison, and everyone renting today will be able to buy ten homes for a hundred dollars.”

    Oh wait no. I never said anything even remotely resembling those things. You appear to be arguing against some sort of straw man Tim you have constructed that only exists in your imagination.

  81. 81
    Ryan says:

    RE: The Tim @ 80

    Nice deflection. You could just say this map is for entertainment purposes only and most of the data is probably incorrect but enjoy it anyway.

    Instead, you make mention in the original post that you are amused to consider a housing shortage when looking at this map….I assumed that you saw all of the points and threw your head back in laughter while you thought about all of the points representing 10-50 units of empty holes/houses when in reality some (who knows how many) of these points reflect neighborhoods that will have 0 units available sometime in the near future. Your comment made me think that you have some level of confidence in the map b/c you used it to justify your disbelief in a housing shortage.

    If I am incorrect in my assumptions than I apologize.

    Here is your quote from 72: RE: waitingforseattletocool @ 58 – Hardly. I (and most other commenters) have no problem with reasonable disagreements. What I call out as trolling is when someone shows up and just starts calling people names and throwing out angry assertions without ever coming to the table with any verifiable data to back up their statements.

    Can you please find an example from this thread where I called anyone names? I posted the first comment with a valid point that your map is flawed b/c the data is incorrect….nowhere did I call anyone anything. You post these charts and provide all of this data to support your thesis of housing prices are going to keep going down yet when someone calls you out on a piece of it you label them a troll?

  82. 82
    guiness says:

    By Pndscm @ 21:

    Does anyone know the story behind the old KFC on the corner of Bellevue way and Main? I’m only assuming that someone bought that lot to develop it and then couldn’t get funding. Anyone have a clue? I’m always amazed to see such decrepit weedy POS just a couple blocks from Bel Square.

    Don’t know. I’ve assumed in the past that it had to do with the Bellevue Park Expansion plan, but looking at the map, it may just happen to be next door.

    http://www.wildliferecreation.org/wwrp-projects/projects/Meydenbauer_Bay_Acquisition

    uggestion: There’s a dive bar called Mustard Seed that just closed next door. The sign said that it had been open for 37 years. I didn’t know about the place until after it closed (like 2 months ago, according to the sign), but there are two others. One in Newport Hills and the other is in redmond. If anyone knows why Mustard Seed closed, that might shed light on why that block is looking that way. It looks like there is in-progress construction nearby.

    We were there on main street about a month ago. Right by the water, there’s a banner by some partially finished condo construction that reads something like “On-site manager coming in fall of 2007”. Agreed, I would expect this is bothell or north seattle, but I am suprised to see a nearly two-year-old sign in downtown Bellevue.

  83. 83
    The Tim says:

    By Ryan @ 81:

    Can you please find an example from this thread where I called anyone names?

    Again you are arguing against a straw man. I did not say “you are a troll only in this thread.” The troll call was based on a pattern from numerous comments left by you over recent weeks.

    July 27, you called people who think home prices will fall further “scared bubbleheads.”

    …all of the bubbleheads will continue renting indefinitely under the belief of home prices still having so much room to fall when in reality they are just scared to pull the trigger.

    July 27 you called people “idiotic,” implied that they are “financial morons,” and referred to them as “ignorant sheep.”

    It is staggering just how idiotic some of you can sound. I seriously hope you don’t talk like this in public or around anyone else that is not the equivalent of a financial moron.

    Tim’s army might possibly be one of the most ignorant bunch of sheep I have ever encountered.

    August 7, you called renters “losers.”

    Instead of just making the losers (renters) with nice cars feel good like you do now, you could expand your cult into losers with crappy cars also.

    I think three is enough. I have better things to do with my lunch hour than continue to argue with an obvious troll.

  84. 84
    Markor says:

    RE: deejayoh @ 63

    My comment about Zimbabwe is only to show that high inflation and high unemployment can possibly coincide.

  85. 85
    mukoh says:

    RE: Ryan @ 77 – Ryan in case you do a site visit Porters is accessed as well through Harvest Run. Thats why they were being reffered to as almost a single plat. BTW Sundquists 152 lotter note is sold. Regards.

    Tim’s Armegeddon might be correct if you look at Mill Terrace, Camden, Crossings which are 50% off peak. :)

  86. 86
    Ryan says:

    RE: The Tim @ 83

    Ok, thank you for clarifying what you meant by troll. Also, thank you for again deflecting in reference to my point about your map being a POS with flawed data.

    I am done with the back and forth on this thread b/c I don’t want to waste anyone’s time (your’s included).

  87. 87
    Flying Ape says:

    RE: deejayoh @ 63

    The excess reserves are not “optical”, they are a forward indicator. Once the economy stabilizes and risk appetite returns this money will flow into the real economy. The banks are not going to sit on these reserves forever. If they thought the economy would be worsening they would be purchasing risk free US treasuries.

    Deflationists keep mentioning M3/M2 money supply but this is a lagging indicator since it takes 12+ months for Fed policy to seep into the economy (Maybe even longer for reserves since there doesn’t seem to be a precedent other than Japan). So the current M3 money supply is reflecting Fed policy before the Lehman collapse. Reserves and M3 money supply both have problems but you will miss the money supply bottom if you use M3 exclusively.

  88. 88
    Ryan says:

    By mukoh @ 85:

    RE: Ryan @ 77 – Ryan in case you do a site visit Porters is accessed as well through Harvest Run. Thats why they were being reffered to as almost a single plat. BTW Sundquists 152 lotter note is sold. Regards.

    Tim’s Armegeddon might be correct if you look at Mill Terrace, Camden, Crossings which are 50% off peak. :)

    RE: mukoh @ 85

    I don’t know what you mean by 152 lotter note or single plat (they are owned by diff co’s right)? Not being sarcastic, I seriously don’t have a background in this so I don’t understand what you mean. Mill Terrace, Camden, etc I will have to look at for sure but I would agree that 50% off is pretty bad.

  89. 89
    Markor says:

    RE: Justin Louie @ 62

    Here’s some info to consider while predicting when the housing shortage will start:

    [From April 2009] A record 19.1 million homes stood unoccupied in the first quarter, and the U.S. homeownership rate fell as the recession sapped demand for real estate.

    The number of vacant homes, including foreclosures, those for sale and vacation properties, rose from 18.6 million in 2008, the U.S. Census Bureau says in a report released Monday. …

    There were 130.4 million homes in the United States in the first quarter, the Census Bureau says.

    With 15% of houses unoccupied, it’s a safe bet that it’ll be long past 2012 before there’s a housing shortage. I’m confident too that people will leave Seattle if other places get relatively cheap enough.

  90. 90
    deejayoh says:

    RE: Flying Ape @ 87 – they are essentially invested in risk free T-bills as the fed is paying interest on these reserves

    http://www.federalreserve.gov/newsevents/press/monetary/20081006a.htm

    these are there to shore up the banking system and give the picture of stability. The money was not a gift, it was a loan/exchange for questionable assets and must be paid back so it will probably not work its way into the financial system.

    As for M3 – the figure I quoted was M3+Credit. Credit has become the most critical part of our money suppy in the past 10-20 years and it is the contraction of credit that is the most salient issue IMO w/r/t money supply today and the one most often ignored when focusing only on fed policy.

  91. 91
    Flying Ape says:

    RE: deejayoh @ 90

    Yes but they are investing in overnight risk free bills that return less than 1%. Why would they not want to use it to purchase longer term securities? The only risk to longer term securities is inflation. If they expected deflation they could be earning 4% or more of “real” yield. I highly doubt the Fed would reject any longer term US securities in exchange for risky assets when they have to pay it back.

    Regarding excess reserves, that is the whole idea behind quantitative easing. BOJ targeted excess reserves since they no longer could manipulate interest rates. The Fed on the other hand is manipulating money supply through asset purchases but growth in excess reserves is an incidental consequence. Saying growth in the excess reserves has no effect on future money supply is like saying lowering interest rates has no effect on money supply.

  92. 92
    deejayoh says:

    RE: Flying Ape @ 91 – again, as I said. FTTM has increased $4T, but this pales in comparison to the drop in other components of money supply. You are still focusing only on Fed money policy as the driver of money supply. it is less than 20% of money supply

    and as to why banks don’t put reserves into longer term securities? the simple answer is that they can’t. Banks have to hold reserves in cash or cash equivalents. So you cannot imply anything about their inflation or deflation expectations based on the length of the maturities.

  93. 93
    shawn says:

    RE: Ryan @ 81 – saying that somone gets their financial data from listening to their wall is not calling someone a name, yes you are right you did not call him a name, however, it is suggesting he was crazy/nuts. You are learning a hard lesson, that you will be judged by your words.

  94. 94
    what goes up must come down says:

    Ryan when did you buy 2007 or 2008?

  95. 95
    The Tim says:

    RE: what goes up must come down @ 94 – via Ryan » Jul 27, 2009 at 10:57 am

    I don’t need to have a comprehensive argument b/c I put my money where my mouth is and bought a home last August.

  96. 96
    what goes up must come down says:

    RE: The Tim @ 95 – Now I understand the attitude.

  97. 97
    Ryan says:

    RE: what goes up must come down @ 94

    August 2008. Interestingly enough, the same floor plan that I have is selling for almost the same price.

  98. 98
    Ryan says:

    RE: shawn @ 93

    I would hardly call being labeled a troll on the seattle bubble website learning a hard lesson :)

  99. 99
    Ryan says:

    RE: The Tim @ 95

    Jeez tim, give a guy a chance to answer! I was probably brushing my teeth at 0630 this morning.

  100. 100
    Flying Ape says:

    RE: deejayoh @ 92

    Well you are obviously not a believer in Monetarism. I guess all central banks in the world (US, Japan, UK, etc) are wasting their time trying to control money supply growth.

    Also you are taking about reserves. I have always been talking of “excess” reserves. The banks can do whatever they want with it. They are parking it in the reserves because they don’t know what to do with it. They can lend it, invest it, or park it in reserves.

  101. 101

    […] housing oversupply of 36,000 housing units.Although it has been quite a while since we updated our collaborative stalled developments map, I still see many hundreds of plots ready to be developed whenever local homebuilders perceive that […]

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