This page contains a single entry from the blog posted on March 15, 2010 3:53 PM. The previous post in this blog was Sister city potential galore. The next post in this blog is Best economic development plan ever. Many more can be found on the main index page or by looking through the archives.

E-mail, Feeds, 'n' Stuff

Monday, March 15, 2010

Breaking news: Condomania is over

Here's further proof that Portland is way, way overbuilt when it comes to condominiums and doesn't need any more for a long, long time.

Comments (34)

OK, the John Ross is up for auction, yet we are half-way thru building another condo tower within 200 feet down there?

Now that's just crazy talk. Next thing you know, you'll be spreading piffle like washing your hands after picking your nose, living within your means, or suggesting turning off the television and going outside.

The John Ross AND the Meriweather.

And...Even with underutilization, they have a hideous traffic problem, made worse by OHSU using land they promised not to turn into parking lots as...parking lots.

Y'know, there is a reason why there is a Center for Research on Occupational and Environmental Toxicology (CROET) at OHSU. Didn't you ever think that that Schnitzer land would come to any good use? Now you know...it's "research". Probably using OHSU personnel and patients.

This is what I can't figure out, they're still building condos beside condos that are vacant and distressed. Who'd providing the money for this and why? It makes no sense at all. If anyone couldn't see a surplus of condos 5 years ago they were an idiot. It was plainly evident to me and most of my friends so I don't know how it wasn't evident to the banks and builders.

Wow! This sounds like the perfect time to pick two or three condos on the cheap! Real estate prices always go up, right?

Canucken, I think some of these projects are so big, with multiple years of ramp-up time, that they gained a lot of momentum before the downturn really kicked in. If developers had the financing commitments in place, they'll plow forward, take the development fee just to stay in business for a couple more years (no other development work right now), and pray for the best.

Even though the prices maybe half price, the homeowners association fees can be quite large, and I don't think they will ever be going down.

Condomania - that's a stretch.

Even though the prices maybe half price, the homeowners association fees can be quite large, and I don't think they will ever be going down.

Nope. Gonna go up. Once the developer can unload enough units to turn it over to the condo association (build it out and run away fast) then the association will have to figure out how to pay for the maintenance and upkeep on the backs of (half as many) owners.

Can you say deferred maintenance? Which will depress RE values even further when people who bought low at auction plan to sell high in 10 years. Ain't gonna happen.

For years we have had conversations in our neighborhood that they are overbuilding, so many vacancies, yet more being built, no lights on ever, so vacant. What was this all about?

How about someone coming up with numbers of just how many vacancies there really are throughout our city?

We may have overbuilt for the next 20 years as far as we know. The rate the city is going with lack of fiduciary responsibility more and more people may be leaving our once beloved city. Then who will pay the bills and what number of vacancies will result? Or will our city only be left for those who can afford to live here and the rest of the folks who helped to build this city up and now in their later years may have to leave, well sorry, C'est la vie!!

Who can afford to stay here with double water rates and everything else they plan to tack onto the citizens? Businesses leaving because of double water bills or more??

What an example for the rest of the nation to run away as fast as they can from any of Portland's plans! Instant gridlock for one if there ever is an emergency in this city!! All because some believe the mantra paraded before them, I say look behind the curtain. A price will be paid for this folly!

I had a doctor's appointment today on the 16th floor of the OHSU building in South Waterfront. It has the most stunning view of any waiting room you could imagine - Mt. St Helens looked tremendous.

Then I waited again in a room on the south side and stared down and across at our little bouquet of condo towers. The one with the auction sign is tucked - almost hidden - among 4 or 5 others so a good percentage of the view will be other buildings.

The one just to the north is still being built but I noticed only 3 workers on the whole gigantic thing. Clearly there isn't a huge rush. The crane was stopped although the outside elevator went up and down on its endless journey to real estate nowhere.

Then I watched the cars on I-5 and it hit me. The human species has survived a long time with some fairly crazy traits. Greed, barbarism, out-of-control ambition and a desperation to do things. We plunge into endless all-consuming projects rather than confront our own lives. We act frenzied and passionate about tons of different subjects to avoid the real story - our own mortality.

Meanwhile Mt. St. Helens was just brilliantly there. It's as much a part of it all as any canyon on Mars or frozen ocean in a galaxy a billion light years away. The mountain didn't need to explain.

But what about us? What are we doing?
How could you look at South Waterfront and not know immediately that the species that built it is fatally flawed?

Somewhere in our heads there is a program that makes us act irrationally. It has to be irrational because we're in a pretty grim predicament. Winners in life? Are you kidding? In the end nobody wins.

It's that dark reality that gives birth to a million insane ideas. I saw that these condo towers were someone's irrational attempt to avoid death and it obviously won't work. Hell, in this business climate, they'll be lucky to sell them and start on the next plan.

I thought of the new book, "The Big Short: Inside the Doomsday Machine", and all the trillions of bits of financial information that surround us. All the little dreams and plans going by on the freeway.
All counting on an economy that was now so rotten you could smell it through the 16th floor glass windows.

I looked at the condo towers and realized we may have outrun our cover as a species here. We may be coming face to face with our own inherent craziness.

And the river views from SW Portland are gone forever.

You know Bill McDonald, we don't even have to look behind any curtain, it is all out there big as a sore thumb for all to see!

Thank you for all your insights. I have had such interest always in reading your comments.

In a neutral tone, I asked a friend of mine who works in City Hall what people there really think about South Waterfront.

"It's going to take longer to get our investment back than we thought," he said.

Not a loss, a delayed success!

"Our (taxpayers') investment" is probably $500 million. Return so far: zero.

Canucken... maybe there still building condos next to vacant condos for when the pacific northwest, California and Idaho are traded for debt forgiveness to China and much of their overpopulated nation is moved over here?

The moral of the story here is that the market does work. What doesn't work is socialism for the rich. Without the absurd public subsidies, no developer would have ever gone close to South Waterfront. The city would have grown at its natural pace. There would be fewer new condos, but supply and demand would not be so out of whack as they are now. And who pays? Certainly not the rich developers. It's the common people who stretched out to buy these places who are getting burned. I think all the "Stand By Your Sam" people should all move to the South Waterfront and form their own little village. If you go to Nashville they have Dollywood and Twitty City. This could be Samlandia or Katzastan or something like that. I would support such an urban planning concept and wish them all well, though I don't think I'd want my teenage son walking through that neighborhood after dark.


Great post as usual. 95% of the time I can tell it's you before I get to the bottom and see your name at the bottom of the post. You have at least a book or two in there kicking around. I'd love to read it if you ever get around to writing it...seriously.

I wonder if we're building too many condos...


If we're building too many luxury housing units.

There are many people out there who would love to buy in the $100-$300K range for a home, for a reasonable sized family home. (I was one of them who was until last year shut out of the market; I finally found a home in Tigard for our family.) Not everyone needs granite and marble; top of the line European kitchen appliances, ten foot ceilings, gas fireplaces, or floor-to-ceiling windows. Yet that is all that Portland (and many of the suburbs) have built in recent years. Maybe it's time to start building ranch homes, or detached row homes, at affordable prices for the middle class again, and not uber-expensive homes to import more out-of-state "investors" to.

Jack, you're about right in $500 Million so far invested by taxpayers in SoWhat. The neighborhood association in several presentations before the design commission on through the City Council, had display boards that totaled up the costs with debt service at $1.2 Billion for a 25 year period. A PSU economics professor helped substantiate the neighborhood's total.

What do you think the City Council's reactions was? Scoffing.

There were many that said, wrote, demonstrated, and testified to the points that Bill makes. And these attempts were made over a decade before and the ensuing years before groundbreaking in SoWhat. And luckily we have people still saying it, and many now pulling back the cover of SoWhat and what it means. Now, will it help us for the future?

Erik H.,

I can direct you to a 5-block stretch of NE 66th avenue, on which street I have happily lived for years, where there are at least 7 "distress sales" of houses, ranging between $200K and $250K. These are all foreclosures and short sales, and most of the houses appear to be in excellent shape, even though they are 90 years old.

You will need a car up here though, as they are in the process of shutting down all of our bus routes at the moment. All of the jobs, though, are in Washington County, so be forewarned.

Anonymous, I think you are only partly right - there were people lined up to develop South Waterfront, but their ideas didn't fit (then)Mayor Vera's grand dream. So instead of having lower-density, tax-paying development, it sat empty for years and then was developed with subsidies that instead steal taxes from the general fund. That, to me, is the real crime here.

I wonder if we're building too many condos...


If we're building too many luxury housing units.

A condo, especially a high-rise, has limited marketability to certain segmants of the population - primarily families that want a yard. That's one of the many reasons there's a more distressed market here.

You almost hit it on the head. The primary limiting factor isn't condo versus single family detached, or level of luxury. It's pricing in excess of $200 per sf. You can put quite a bit of luxury into a $200 per sf construction, if well designed, and people still buy it. But at $400-$500 per sf - which was the pre-distress price point of a lot of this inventory - there was just a lot of plain price gouging going on.

don'tcha all understand this was all caused by a 100 yr. economic typhoon that nobody could have predicted?

Erik H.
I wonder if we're building too many condos...


If we're building too many luxury housing units.

There are many people out there who would love to buy in the $100-$300K range for a home, for a reasonable sized family home.
JK: Builders can’t give us a $100k house when metro has driven up the price of buildable land to a million dollars an acre land ($125k for a normal 5,000 sqft lot). Then add another $60+K for permits and fees. You have almost $200k before you start building. It is time to eliminate Metro and clean house at city hall if you want affordable homes.

However you can still buy affordable houses off the parking lot at Home Depot or Lowes to put on that $200k lot:


At least one developer built two-story townhouse condos in Souteast in the gray area between Portland and Gresham that had prices in the $90K-$120K a few years back. Some of the multi-family real estate people laughed at him. Everyone knows that buyers only wanted luxury units and granite counters. But they sold out because they were affordable. I'm sure the per-unit profit margin on that type of construction wasn't anything like what you could get for a luxury condo at four times the price, but then again, if you can sell all of them at a profit, you might be better off than having to take a loss on short sales of luxury units.

Portland...the UNhappiest city.

Eric H., there are new detached houses with real back yards being built right now in Milwaukie for $200,000-250,000. Affordable houses both new and old are available in the metro area now, you just have to look a bit. And you may want to skip the "hip and trendy" areas since there seems to be a never-ending supply of tulip buyers there.

JK: "However you can still buy affordable houses off the parking lot at Home Depot or Lowes to put on that $200k lot."

So true about those HomeDepot Houses. But you don't need to pay ANY permit fees for those puppies. Check you county zoning. Under 120 sqft and you are good to go for any 'shed'. (Ok, illegal to 'live' in that shed, but still no fees to site it on your property.)

And if you want more than 120 sqft, just keep the wheels on that 'trailer' and you can keep it on your land as a temp, but you may have to move it periodically.

Going forward, with housing investments the way they are, it ain't a bad idea, if you can stomach living like a turtle.

Necrotic 'condo tumors' are only one among hundreds of symptoms, (incl. mass or socio-gluttony, -avarice, -pride, -envy, -rage, -lust, -slothy couch-potato veg'ing), which stem from a common root diseased cause. Putting a poultice patch on any one of the symptoms is no cure until the first cause is pulled up by its roots and dispatched. Saying that the wrong way to go is -- and it doesn't work -- to effect patchwork 'fixes' such as focusing our attention on the SoWhat condo tumors.

(There are some right ways to go to get ourselves well. Hint: one symptom of recovering health toward sustained viable mass- or socio-survival, is seen in any country where the most majority of folks comprehend and comply with the self-regulation of parenting only one child per family, so willfully managing population reduction along a 'glide path' toward a safe 'soft landing.')

The root sociopathic cause within our various socio-symptoms is described in a new movie, for all to see. It opened the Film Festival on Martha's Vineyard last weekend, and the Gazette there reviewed it ('Collapse') beforehand, HERE, 'Doom ... Stirs Efforts to Survive ...', By MIKE SECCOMBE

Not that I regularly read Martha's Vineyard Gazette, but that link appeared, showing supporting evidence in a foresight of our future, presaged, (3/7/10), in a blog I regularly do read, HERE, where the extensive cogent collection of news reports and developments makes awfully clear -- as plain as the SoWhat condo towers tumor -- what our problem is. That is, basically, we're all gonna die, and unless we act before we die, then no future humankind is going to live and the evolution dies off into extinction with us.

As much as "many have said, wrote, demonstrated, and testified, (h/t Jerry), no understanding and no forewarning circulates among us while LIARS media censor, suppress, deface and sicken our collective dreams, prophetic words, and the writings on the wall. As they say in TV news, "demonstrate all you like wholeheartedly, yet if there is no pictures of it, it didn't happen."

At some point in time -- and the time is arriving now, the LIARS media better be shut off and cut off from bending our mass mind into consuming mass suicide. A time to stop spending our planet, a time to start saving our planet -- acting yourself, saving yourself in your local sustainable-network countryside, (meaning the Willamette River watershed, not the 'sea-to-sea Lower 48') -- relinquish personal exception and coexist with others in your area ... or expire with them.

Consider the model of positioning for survival, shown in one-child-per-family China, in the orient, (think: 'rising'), with an impressive, if imperfect, 5000-year track record of success; where the most recent Evolutionary Great Idea those folks adopted 100 years ago from catholic minds in the occident, (think: 'sinking'), is 'cooperative labor and self-supporting sacrifice' -- from each in abilities, to each for needs -- Marx's socialisms; and which wherewithal, (as many comment voices see and say, here with bojack), is taking custody of this land we're standing on, haven't sustained, and are dying off of ... going on ... yammering about this or that symptom du jour ... held rapt inebriated with media myths of last century.

Kill sick broadcast-dictate authoritivity; topple towering figures.
Grow healthy person-to-person interactivity in the world wide web.
See here: http://wsws.org/

Notice in that last-cited website, a March 12 article, ("Greece: Millions join strike ..."), reporting where the economic collapse (instigated by 'world-banker greed' persons) corrupted into and defrauded pension funds of local police unions, brought the local police themselves to join in common cause with the marching protesters rather than arrest the movement. (Which, btw, blacked out the broadcast media there, too, stopping such shouting, 'Stop! Halt! Give up! Bow down! Go home!')

Perhaps the most refined understanding of our political options and situation today, (condemning Wyden ads), was written by sentient sentry Ralph Waldo Emerson a century ago.
There are always only two Parties: the Party of the Past and the Party of the Future -- the Establishment and the Movement.

(Which is all the insight it takes to see that such broadcast myths as Newt Gingrich's "Republican Movement" or "Party of NO (i.e., no movement)," or Obama's "Democratic Hope of Change (i.e. movement)" -- each instance heard from Establishment figures claiming to make movement, are bald-faced LIES.)

Building a whole bunch of luxury condos before anything else in what is supposed to be a "mixed-income" neighborhood? Bad policy.

Building a whole bunch of luxury condos, middle-income family homes and smaller, affordable apartments alongside each other? Good policy.

Herein we find the difference between the New Columbia and the SoWhat.

Beck on health bill: [broadcasting] "If this passes, they will control every aspect of your life," including whether you can have children. (Video of asininity at link.)

Or, a conscientious individual will control that aspect of her or his own life, perhaps delighted to have one progeny surviving, rather than many more to be seen in future global desolation starving to death in front of the parents' eyes.

BeckTV is fear mongering: No sale.

Everyone asking why you're still seeing construction of those condos when there's no market for the blasted things asks very good questions. It's a question that I asked a long while back, and the answer is really quite intriguing. The reason why they're being built is because it's cheaper to build than not to build.

Since Dallas is home to a ridiculous number of architects, real estate magnates, and real estate lawyers, I asked a long while back as to why we're still seeing rapid construction on houses and condos when we have about as much of a market for million-dollar houses as you do. The first reason is that if a project gets canceled, NOBODY gets paid. Once a loan goes through to build, the idea is to crank through the construction as quickly as possible, because the whole thing would fall apart, literally, if the bank decided to foreclose on the loan early. (This was a real problem at the beginning of the oil bust in 1986, and it bankrupted the father of a good high school friend. He was making his payments for construction projects, but his bank had so many bad loans on their books that it called in his early. He didn't have the money to pay on this, and he was alternately wiped out by the bank and then hit with a $3 million bill by the IRS for the value of the properties before the bust.)

The second reason is a bit more obscure, but it's just as vile. A lot of those one-and-two-million-dollar houses that are going up right now are going up without a buyer, because the builder gets a better tax writeoff if a house is on the property than if it's just an empty lot. In fact, one of the scams out here that's slowly being cracked down upon is where Builder A puts up a giant McMansion on a property it owns outright. It then arranges for a loan from Owner B, who has absolutely no way to pay for said loan and no interest in doing so, either. Owner B defaults on the loan and gets evicted, taking a hit on his credit rating roughly comparable to missing two credit card payments in a year. At this point, the house now belongs to the bank issuing the loan, and the repair and upkeep is the bank's responsibility. And if Owner B can't get it, well, Builder A still makes more in a tax writeoff than it would make by lowering the price of the house and moving the damn thing.

And there you have it. Those condos will probably never sell, but it'll be someone else's responsibility to convert them into apartments. It'll be someone else's hit to let them rent for market rates instead of the obscene prices envisaged by the original developers. Best of all, all of the money spent to build them is already gone, spent, or hidden in the Caymans, and Portland is left once again with cleaning up the mess.

Texas, I think most posts about the tower now being built in SoWhat is the Marabella. This tower was essentially 80% sold (reservations) before construction began. It was also initially affiliated with OHSU-in fact they were to be partners in the venture. So it had that false sense of security too. It's senior residents were to participate in senior health studies by OHSU. It was already on the boards, essentially financed before the Great Recession began. It's another "in-the-pipeline" dilemma. No one wanted to pull the plug, and the signs of doom were there when they could have. Committee building is a hard tosay no to, versus like the Moyer building in downtown where one person, Mr. Moyer, can pull the plug.

Clicky Web Analytics