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.