Detail, east Portland photo, courtesy Miles Hochstein / Portland Ground.



For old times' sake
The bojack bumper sticker -- only $1.50!

To order, click here.







Excellent tunes -- free! And on your browser right now. Just click on Radio Bojack!






E-mail us here.

About

This page contains a single entry from the blog posted on November 26, 2007 1:35 AM. The previous post in this blog was "A horrible time" to own Whole Foods stock. The next post in this blog is In case you missed it.... Many more can be found on the main index page or by looking through the archives.

Archives

Links

Law and Taxation
How Appealing
TaxProf Blog
Mauled Again
Tax Appellate Blog
A Taxing Matter
TaxVox
Tax.com
Josh Marquis
Native America, Discovered and Conquered
The Yin Blog
Ernie the Attorney
Conglomerate
Above the Law
The Volokh Conspiracy
Going Concern
Bag and Baggage
Wealth Strategies Journal
Jim Hamilton's World of Securities Regulation
myCorporateResource.com
World of Work
The Faculty Lounge
Lowering the Bar
OrCon Law

Hap'nin' Guys
Tony Pierce
Parkway Rest Stop
Utterly Boring.com
Along the Gradyent
Dwight Jaynes
Bob Borden
Dingleberry Gazette
The Red Electric
Iced Borscht
Jeremy Blachman
Dean's Rhetorical Flourish
Straight White Guy
HinesSight
Onfocus
Jalpuna
Beerdrinker.org
As Time Goes By
Dave Wagner
Jeff Selis
Alas, a Blog
Scott Hendison
Sansego
The View Through the Windshield
Appliance Blog
The Bleat

Hap'nin' Gals
My Whim is Law
Lelo in Nopo
Attorney at Large
Linda Kruschke
The Non-Consumer Advocate
10 Steps to Finding Your Happy Place
A Pig of Success
Attorney at Large
Margaret and Helen
Kimberlee Jaynes
Cornelia Seigneur
Mireio
And Sew It Goes
Mile 73
Rainy Day Thoughts
That Black Girl
Posie Gets Cozy
{AE}
Cat Eyes
Rhi in Pink
Althouse
GirlHacker
Ragwaters, Bitters, and Blue Ruin
Frytopia
Rose City Journal
Type Like the Wind

Portland and Oregon
Isaac Laquedem
StumptownBlogger
Rantings of a [Censored] Bus Driver
Jeff Mapes
Vintage Portland
The Portlander
South Waterfront
Amanda Fritz
O City Hall Reporters
Guilty Carnivore
Old Town by Larry Norton
The Alaunt
Bend Blogs
Lost Oregon
Cafe Unknown
Tin Zeroes
David's Oregon Picayune
Mark Nelsen's Weather Blog
Travel Oregon Blog
Portland Daily Photo
Portland Building Ads
Portland Food and Drink.com
Dave Knows Portland
Idaho's Portugal
Alameda Old House History
MLK in Motion
LoveSalem

Retired from Blogging
Various Observations...
The Daily E-Mail
Saving James
Portland Freelancer
Furious Nads (b!X)
Izzle Pfaff
The Grich
Kevin Allman
AboutItAll - Oregon
Lost in the Details
Worldwide Pablo
Tales from the Stump
Whitman Boys
Misterblue
Two Pennies
This Stony Planet
1221 SW 4th
Twisty
I am a Fish
Here Today
What If...?
Superinky Fixations
Pinktalk
Mellow-Drama
The Rural Bus Route
Another Blogger
Mikeyman's Computer Treehouse
Rosenblog
Portland Housing Blog

Wonderfully Wacky
Dave Barry
Borowitz Report
Blort
Stuff White People Like
Worst of the Web

Valuable Time-Wasters
My Gallery of Jacks
Litterbox, On the Prowl
Litterbox, Bag of Bones
Litterbox, Scratch
Maukie
Ride That Donkey
Singin' Horses
Rally Monkey
Simon Swears
Strong Bad's E-mail

Oregon News
KGW-TV
The Oregonian
Portland Tribune
KOIN
Willamette Week
KATU
The Sentinel
Southeast Examiner
Northwest Examiner
Sellwood Bee
Mid-County Memo
Vancouver Voice
Eugene Register-Guard
OPB
Topix.net - Portland
Salem Statesman-Journal
Oregon Capitol News
Portland Business Journal
Daily Journal of Commerce
Oregon Business
KPTV
Portland Info Net
McMinnville News Register
Lake Oswego Review
The Daily Astorian
Bend Bulletin
Corvallis Gazette-Times
Roseburg News-Review
Medford Mail-Tribune
Ashland Daily Tidings
Newport News-Times
Albany Democrat-Herald
The Eugene Weekly
Portland IndyMedia
The Columbian

Music-Related
The Beatles
Bruce Springsteen
Seal
Sting
Joni Mitchell
Ella Fitzgerald
Steve Earle
Joe Ely
Stevie Wonder
Lou Rawls

E-mail, Feeds, 'n' Stuff

Monday, November 26, 2007

How low the mighty have fallen

Portland's big-shot condo tower developers are now scratching and clawing over $15,000 deposits. Couldn't happen to a nicer bunch of guys.

Meanwhile, you've got to wonder whether the buyers might not have a defense. By now, the SoWhat district was supposed to be a vibrant neighborhood, with thousands of high-tech jobs rolling in. One could certainly argue that it is not.

Comments (26)

One wonders, if those hideous towers stand empty for long enough, when bored kids are going to start taking potshots at the windows with air rifles while crossing the Ross Island Bridge...

Stunning monuments to greed, arrogance, and stupidity.

Remember this screed from less than three years ago? A comedy classic:

Fine. We now have a North Macadam Urban Renewal District. Ok, what do we build there?

It was decided by a series of city councils beginning in 1988 that that area should be mixed use. That vision morphed into what is now the issue at point: Are 325-foot residential towers appropriate at that site?

I never have been nor do I pretend to be an urban planner. I am used to climbing flights of stairs in these high rises with full fire protection gear to put out a fire, not designing them.

However, the Council must resolve what, and now it appears if anything, will be built there.

I believe that the project as it is envisioned will create family wage construction jobs, will provide an expanded tax base for the city and, last but not least, will recover a parcel of Portland land along the Willamette River that has been an eyesore. Additionally, the project will create a dynamic live/work environment that is central to what Portland has been envisioning for decades. The project, when completed, will allow residents of all income levels to live in a neighborhood that will eliminate the need for an automobile.

Priceless stuff.

I remember buying a condo in my 20's and having an upside down loan when the market crashed back in the 80's, having condo I could not sell or even give back to the bank until I had no equity or any other assets to burn or they could threaten to take, and not being able to rent it for the mortgage payment. When the adjacent ones started to go section 8 it got even worse. It really set me back financially for many years forward since I was not a trust fund baby. I swore never again. But I see there is a whole other generation of 20 somethings getting suckered into that deal.

PS.

Love the Lola header the face and expression say it all. Looks like you got yourself a great new Blog staffer.

Well, if the SoWhat district is within 30 minutes of the airport, Sleepy Ted has a biz that is working on developing new solar cell
technology who might need factory space should they develop something after the state invests a few million.

I know that 30 minute rule is a problem with ODOT always closing streets and freeways for their multi-hour investigations.

Just an idea.

P.S. Don't tell Teddy about all the Chinese Solar Cell makers that are doubling their production every 24 hours.

It's probably time for signs to go up near any Gerdling/Edlen developments that any buyer may be sued by the developer after purchase if he or she finds the property has such a low value that a bank won't even loan money for the purchase.

I don't really get the attitude of people who want their deposits back. If the unit appreciated $100,000 between signing up and closing and the developer decided to "back out" you can bet these buyers would be in court faster than you can blink. Why should these sales contracts be enforceable only one way? The buyers in SOWA should be glad the contracts did not allow for other remedies beyond the deposits like specific performance or damages.

I agree. I'm no fan of those developers, but a contract is a contract. Those people have a lot of nerve asking for that money back. Any investment contains risks, and all investors must weigh those risks against possible profits. Many did not buy in SOWA because they were smart enough to see those risks realistically. Those people who jumped in to buy in SOWA, and are now asking for their deposits back are just as greedy and unethical as the developers with whom they're dealing.

Nah don't feel sorry for these guys. They speculated on these condos hoping to flip them when they opened. Now some of them are playing the poor little guy getting beat up by the developer card. You play with the big fishes don't be surpirsed if you get eaten.

No the real news here is that the SOWA buildings are so undersold that the developers need to go after these pennies to try to keep them afloat.

Greg C

"...now scratching and clawing over..."

This blog is nicely permeated by the cat influence. That is a lovely photo in the banner.

"Those people have a lot of nerve asking for that money back."

Those people didn't necessarily ask for their money back - they just didn't sign a paper authorizing the title company to release their deposit to the developer. Who knows what the buyers' performance was conditioned on? There are all kinds of good reasons a buyer wouldn't agree to release their earnest money.

One thing is for sure... now every potential buyer knows these condos are a bad investment and that they're dealing with litigious a** holes.

Good to see the Portland Housing Market finally catch up with the rest of the country.

Condo owners are taking a bath, but this is one of the few places in the country where single family home prices increased during last year--about 4% I believe.

If you look at many of the housing markets with the most problems today, you will find that speculators drove the market to its present insanity.

I believe that many of the prospective condo buyers in SoWhat have evidence of many "promises" made by realtors representing the developers that haven't been met. Such as the Greenway, shopping amenities, parking, and parks. All were promised with timelines established by the URA Amendments and all the planning documents from all the city agencies. Legal experts are probably advising "breach of contract". It will be interesting and the attorneys will enjoy it.

I bet most of those wanting their money back were specu-vestors who lied about their intention to owner-occupy the units too.

Breach of contract probably goes both ways but I'm not sure Gerding/Edlen made those promises, the city did. GE bought that bill-of-goods as much as anyone.

"A contract is a contract"?

Where was that ideal when the developers were blowing through their contractual agreements right and left?

I only need mention the "poodle poop park" was not part of the contract. That park was to be elsewhere within the SoWhat district until Homer decided he could do better by building on that site and making the city spend beaucoup bucks on the storage facility.

From the developers point of view, "a contract is a contract, unless we lose money on it, then it's open for renegotiation and public subsidy."

Thanks for the Comedy Classic link. The funniest part of the article was the part about "Does a URA cause development that would otherwise not occur?" I guess that's for people who never took Econ 101, or even thought about how government transfers and private investment interact in real life.

Got to agree with John, too. Personal responsibility has to come into play somewhere along the line. I consider myself a lefty, but I get sick of hearing about how people who speculated on real estate or got into these variable, interest only type ARMs are victims. Banks shouldn't get bailed out by the Fed so their stock price doesn't fall, but neither should home buyers who shopped out of their range or gambled on the market.

Question to Jack... If the buyer of one of these condos has to forfeit the (let's say $15,000 of) earnest money, can the buyer carry that over as a LT capital loss and get some recovery out of it, even though the asset purchase never occured?

---"A contract is a contract"?

Where was that ideal when the developers were blowing through their contractual agreements right and left?---

Touche. I was looking at this simplistically. There may be many details of which we don't know that complicate the situation. But the two sides still deserve each other, as far as I'm concerned. Let them enjoy each others company in the courtroom for a long time.

Hmmmm. Based on no research and off the top of my head:

First of all, if they were planning to use the condo for personal purposes, it would be a nondeductible personal loss.

Assuming they signed the contract in hopes of engaging in pure investment and speculation, a deduction for the lost earnest money would seem proper. It doesn't seem like a classic capital loss because there is no sale or exchange on abandonment of the deposit. But it's kind of like a lapsed option. If analyzed that way, I believe it would be an ordinary loss if the taxpayer was active in real estate, and a capital loss if not. (IRC 1234.) Since ordinary losses are better for federal income tax purposes, the active speculators might make out better.

Perhaps the buyer could argue that the option analogy is inappropriate, in which case the abandonment of the transaction could result in a nice ordinary deduction.

Again, no warranties -- that's just off the top of my head.

John; GE, Homer, Dike, Weston, Onder and others have several LLC arrangements for vacant blocks and on-going projects in SoWhat. These entities were signatures to most of all the eight Amendments to the NM Plan with the city. Many parts of the Amendments designate explicitly project descriptions, timelines, and even penalties/reinbursements that are required from different parties if they are not met. In fact, there are already conditions that Homer and Co. haven't met, and it is hard to investigate if CoP and PDC have imposed the conditions of the Agreement. That would be an interesting investigation for some investigative reporter.

The article stated that many would-be buyers had finance contingencies, and were not able to get a mortgage for the amount on the contract after real estate tanked. I would think those buyers would have an excellent case to keep their earnest money deposit, and wonder why they haven't gotten it back already.

To those buyers that didn't have such contingencies, well, as the saying goes, caveat emptor.

In both cases, I suppose, this boils down to "a contract is a contract" - regardless of what your opinions are for both the parties involved in the transactions.

And - unrelated - did anyone else note this quote in the article from Mark Edlen: "...If we enter into a contract, we live up to our obligations and we always hope that others will do the same."

Jack, I wonder, in an audit, how the clause in the contract that warranted that the buyers would use the condo as a personal residence would fly?

John Rettig, most of these contracts to not have financing contingencies and if they did they most probably would not have a cap on terms. I bet these buyers could get some kind of financing... 5 points and 15% interest short term loans are not too hard to get. Anyone have a copy of a John Ross Sales contract they might share?

That's how I saw it too. So if somebody had a good tax atty, you would file a Sch C., claim that the deposit you made on the condo was your foray into house flipping, and you lost out. File on paper, because that reduces your chance of audit, too. Then do a LT cap loss until you've milked it for all its worth. That's all I could really say to the folks who got soaked in the downtown condo market. I've always lived by the maxim that land is more scarce than highrise claim to airspace, so when you get to these kinds of valuations, it's better to go for deeded land. Now in a South of Market world like SF, it's a little different, because land has been saturated for generations in The City, but in a city like Portland, you'd have to be crazy to pay those valuations for a slice of air that requires HOA dues, for which there is no tax recovery.

HOA dues, in large part, pay for maintenance, insurance, water, sewer, garbage, hot water, etc. The tax effects of HOA fees are no different than the expenses on fee simple property.

If the property is an investment you can write the HOA dues off your taxes, if it is owner occupied you may not. If you have an investment property you can write off maintenance, insurance, water, sewer, garbage, hot water, etc., but if you owner occupy you may not.

Only 2% of Oregon is developed, land is hardly scarce. It has government imposed restrictions on its use, just like the government restricts the amount of air space that can be used through FAR's etc.

I don't see either of your points Ted...


Sponsors


As a lawyer/blogger, I get
to be a member of:

In Vino Veritas

Lange, Pinot Gris 2015
Kiona, Lemberger 2014
Willamette Valley, Pinot Gris 2015
Aix, Rosé de Provence 2016
Marchigüe, Cabernet 2013
Inazío Irruzola, Getariako Txakolina Rosé 2015
Maso Canali, Pinot Grigio 2015
Campo Viejo, Rioja Reserva 2011
Kirkland, Côtes de Provence Rosé 2016
Cantele, Salice Salentino Reserva 2013
Whispering Angel, Côtes de Provence Rosé 2013
Avissi, Prosecco
Cleto Charli, Lambrusco di Sorbara Secco, Vecchia Modena
Pique Poul, Rosé 2016
Edmunds St. John, Bone-Jolly Rosé 2016
Stoller, Pinot Noir Rosé 2016
Chehalem, Inox Chardonnay 2015
The Four Graces, Pinot Gris 2015
Gascón, Colosal Red 2013
Cardwell Hill, Pinot Gris 2015
L'Ecole No. 41, Merlot 2013
Della Terra, Anonymus
Willamette Valley, Dijon Clone Chardonnay 2013
Wraith, Cabernet, Eidolon Estate 2012
Januik, Red 2015
Tomassi, Valpolicella, Rafaél, 2014
Sharecropper's Pinot Noir 2013
Helix, Pomatia Red Blend 2013
La Espera, Cabernet 2011
Campo Viejo, Rioja Reserva 2011
Villa Antinori, Toscana 2013
Locations, Spanish Red Wine
Locations, Argentinian Red Wine
La Antigua Clásico, Rioja 2011
Shatter, Grenache, Maury 2012
Argyle, Vintage Brut 2011
Abacela, Vintner's Blend #16 Abacela, Fiesta Tempranillo 2014
Benton Hill, Pinot Gris 2015
Primarius, Pinot Gris 2015
Januik, Merlot 2013
Napa Cellars, Cabernet 2013
J. Bookwalter, Protagonist 2012
LAN, Rioja Edicion Limitada 2011
Beaulieu, Cabernet, Rutherford 2009
Denada Cellars, Cabernet, Maipo Valley 2014
Marchigüe, Cabernet, Colchagua Valley 2013
Oberon, Cabernet 2014
Hedges, Red Mountain 2012
Balboa, Rose of Grenache 2015
Ontañón, Rioja Reserva 2015
Three Horse Ranch, Pinot Gris 2014
Archery Summit, Vireton Pinot Gris 2014
Nelms Road, Merlot 2013
Chateau Ste. Michelle, Pinot Gris 2014
Conn Creek, Cabernet, Napa 2012
Conn Creek, Cabernet, Napa 2013
Villa Maria, Sauvignon Blanc 2015
G3, Cabernet 2013
Chateau Smith, Cabernet, Washington State 2014
Abacela, Vintner's Blend #16
Willamette Valley, Rose of Pinot Noir, Whole Clusters 2015
Albero, Bobal Rose 2015
Ca' del Baio Barbaresco Valgrande 2012
Goodfellow, Reserve Pinot Gris, Clover 2014
Lugana, San Benedetto 2014
Wente, Cabernet, Charles Wetmore 2011
La Espera, Cabernet 2011
King Estate, Pinot Gris 2015
Adelsheim, Pinot Gris 2015
Trader Joe's, Pinot Gris, Willamette Valley 2015
La Vite Lucente, Toscana Red 2013
St. Francis, Cabernet, Sonoma 2013
Kendall-Jackson, Pinot Noir, California 2013
Beaulieu, Cabernet, Napa Valley 2013
Erath, Pinot Noir, Estate Selection 2012
Abbot's Table, Columbia Valley 2014
Intrinsic, Cabernet 2014
Oyster Bay, Pinot Noir 2010
Occhipinti, SP68 Bianco 2014
Layer Cake, Shiraz 2013
Desert Wind, Ruah 2011
WillaKenzie, Pinot Gris 2014
Abacela, Fiesta Tempranillo 2013
Des Amis, Rose 2014
Dunham, Trautina 2012
RoxyAnn, Claret 2012
Del Ri, Claret 2012
Stoppa, Emilia, Red 2004
Primarius, Pinot Noir 2013
Domaines Bunan, Bandol Rose 2015
Albero, Bobal Rose 2015
Deer Creek, Pinot Gris 2015
Beaulieu, Rutherford Cabernet 2013
Archery Summit, Vireton Pinot Gris 2014
King Estate, Pinot Gris, Backbone 2014
Oberon, Napa Cabernet 2013
Apaltagua, Envero Carmenere Gran Reserva 2013
Chateau des Arnauds, Cuvee des Capucins 2012
Nine Hats, Red 2013
Benziger, Cabernet, Sonoma 2012
Roxy Ann, Claret 2012
Januik, Merlot 2012
Conundrum, White 2013
St. Francis, Sonoma Cabernet 2012

The Occasional Book

Kent Haruf - Our Souls at Night
Peter Carey - True History of the Kelly Gang
Suzanne Collins - The Hunger Games
Amy Stewart - Girl Waits With Gun
Philip Roth - The Plot Against America
Norm Macdonald - Based on a True Story
Christopher Buckley - Boomsday
Ryan Holiday - The Obstacle is the Way
Ruth Sepetys - Between Shades of Gray
Richard Adams - Watership Down
Claire Vaye Watkins - Gold Fame Citrus
Markus Zusak - I am the Messenger
Anthony Doerr - All the Light We Cannot See
James Joyce - Dubliners
Cheryl Strayed - Torch
William Golding - Lord of the Flies
Saul Bellow - Mister Sammler's Planet
Phil Stanford - White House Call Girl
John Kaplan & Jon R. Waltz - The Trial of Jack Ruby
Kent Haruf - Eventide
David Halberstam - Summer of '49
Norman Mailer - The Naked and the Dead
Maria Dermoȗt - The Ten Thousand Things
William Faulkner - As I Lay Dying
Markus Zusak - The Book Thief
Christopher Buckley - Thank You for Smoking
William Shakespeare - Othello
Joseph Conrad - Heart of Darkness
Bill Bryson - A Short History of Nearly Everything
Cheryl Strayed - Tiny Beautiful Things
Sara Varon - Bake Sale
Stephen King - 11/22/63
Paul Goldstein - Errors and Omissions
Mark Twain - A Connecticut Yankee in King Arthur's Court
Steve Martin - Born Standing Up: A Comic's Life
Beverly Cleary - A Girl from Yamhill, a Memoir
Kent Haruf - Plainsong
Hope Larson - A Wrinkle in Time, the Graphic Novel
Rudyard Kipling - Kim
Peter Ames Carlin - Bruce
Fran Cannon Slayton - When the Whistle Blows
Neil Young - Waging Heavy Peace
Mark Bego - Aretha Franklin, the Queen of Soul (2012 ed.)
Jenny Lawson - Let's Pretend This Never Happened
J.D. Salinger - Franny and Zooey
Charles Dickens - A Christmas Carol
Timothy Egan - The Big Burn
Deborah Eisenberg - Transactions in a Foreign Currency
Kurt Vonnegut Jr. - Slaughterhouse Five
Kathryn Lance - Pandora's Genes
Cheryl Strayed - Wild
Fyodor Dostoyevsky - The Brothers Karamazov
Jack London - The House of Pride, and Other Tales of Hawaii
Jack Walker - The Extraordinary Rendition of Vincent Dellamaria
Colum McCann - Let the Great World Spin
Niccolò Machiavelli - The Prince
Harper Lee - To Kill a Mockingbird
Emma McLaughlin & Nicola Kraus - The Nanny Diaries
Brian Selznick - The Invention of Hugo Cabret
Sharon Creech - Walk Two Moons
Keith Richards - Life
F. Sionil Jose - Dusk
Natalie Babbitt - Tuck Everlasting
Justin Halpern - S#*t My Dad Says
Mark Herrmann - The Curmudgeon's Guide to Practicing Law
Barry Glassner - The Gospel of Food
Phil Stanford - The Peyton-Allan Files
Jesse Katz - The Opposite Field
Evelyn Waugh - Brideshead Revisited
J.K. Rowling - Harry Potter and the Sorcerer's Stone
David Sedaris - Holidays on Ice
Donald Miller - A Million Miles in a Thousand Years
Mitch Albom - Have a Little Faith
C.S. Lewis - The Magician's Nephew
F. Scott Fitzgerald - The Great Gatsby
William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
Oscar Hijuelos - Mr. Ives' Christmas
Madeline L'Engle - A Wrinkle in Time
Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 96
At this date last year: 144
Total run in 2016: 155
In 2015: 271
In 2014: 401
In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269


Clicky Web Analytics