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Streets of Nightmares

Unless you’ve had your head in the sand for the last few months you’ve seen that this is not a good time to be a developer. Bob Ball unloaded the Wyatt to an unnamed buyer in the Pearl. Buena Vista Homes auctioned off 147 homes. D.R. Horton held and auction and the Oregonian reports of a whole subdivision going into foreclosure. The first three situations may not have turned out too bad for the developers; we don’t know the financials behind the story. The last example, today’s story, can’t be good no matter how you look at it.Portland Real Estate Blog

14 Comments on “Streets of Nightmares

  1. FYI Sobrato Development Co bought Wyatt from Ball. I am waiting to see if anyone is going to rent these condos for 3-4k!?!

  2. Okay, since Naysayer is restarining himself- The renter and the buyer are not ‘the same person’. Buyers were willing to pay $5k+HOAs during the boom because they were speculating (and had a tax advantage). The house was an ‘investment’. Renters, if anything, look to short the market. They would prefer a place in which they anticipate little to no rent increases and low likelihood of getting kicked out when the investor is ready to sell. At the Wyatt I would be very afraid of rent hikes and/or condo reconversion.

  3. MarketTimer-

    I would guess that CT edited Naysayer’s comment. I wish Naysayer had his own blog.

    Charles-

    CT: “The first three situations may not have turned out too bad for the developers; we don’t know the financials behind the story.”

    Situation:

    1. Bob Ball unloaded the Wyatt to an unnamed buyer in the Pearl.
    2. Buena Vista Homes auctioned off 147 homes.
    3. ???

    The last of the three situations is missing!

  4. Come on Naysayer…SAY IT.

    BTW the “same person” was not willing to pay 5K + HOA. The sales were slooowwww so Ball unloaded it.

    So how are sales going for the Pacifica, the Waterfront Pearl, the Encore, the 937? Anyone have any stats besides what the sales people tell us.

    Last time I checked (about 2 weeks ago) the John Ross was about 45% UNsold yet “they” are reporting 80% sold…go figure. And now the Atwater Place is ready…

    I am anxious to see how this unfolds throughout the year.

  5. Condos and developments with sales offices make statistics hard. Were they listed? Were the sales recorded in RMLS (SNL- Sold Not Listed)? Were they ever a part of inventory? How do they report their information?

  6. I get so confused at times.

    “The first three situations may not have turned out too bad for the developers; we don’t know the financials behind the story. The last example, today’s story, can’t be good no matter how you look at it.”

    The first three may not have turned out too bad, and the last example cannot be good.

    1. May not be bad.
    2. May not be bad.
    3. May not be bad.
    4. Cannot be good no matter how you look at it.

    That’s four situations, right?

  7. Ok, I think I have it now. I think you are suggesting that the DR Horton situation might not be bad, but at the same time you suggested that you didn’t have any financials for the company. Since DR Horton is public, I tied the Oregonian article to DR Horton, but now it looks like that was the wrong approach.

    In a year DR Horton’s stock went from 25~30 to ~11. The general sentiment is that DR Horton is not performing well, and they are producing negative earnings.

    http://finance.yahoo.com/q?s=dhi

    I just don’t see any good in the DR Horton situation.

    Then there is the foreclosure situation.

    I could also chisel away at the Buena Vista Homes (BVH) aution, as the developer stated that he lost money. That may be good from a consumer standpoint, but I doubt it’s good for BVH.

    I am not sure who ended up with the better deal in the “Bob Ball unloaded the Wyatt to an unnamed buyer in the Pearl.” As far as I know the Wyatt was sold a a fair price given the market conditions at the time.

    1. = Unknown
    2. = Bad
    3. = Bad
    4. = Worst

  8. We know the developer at Buena Vista said he lost money but I think you have to consider unloading the payment on $60M in inventory as win for him. Not what one would consider ideal but beats some of the other options.

    Hard to tell what DR Horton’s motivations are when we are a small market to their overall scheme.

  9. Having a rough Monday JP?
    1) Wyatt
    2) Buena Vista auction
    3) DR Horton auction
    We don’t know how those three turned out financially for the developer.
    4) Subdivision foreclosed
    Cannot be good no matter how you look at it.

  10. “I think you have to consider unloading the payment on $60M in inventory as win for him.”

    What I hear is “Cash flow problems as a result of sluggish sales.”

    I remember reading the Oregonian one Monday and a broker for BVH suggested that a buyer could get $20k in “instant equity.”

    The next week I checked the BVH web site and they had a “new lease program.” If you leased one of their never-lived-in homes, they would give a free vacation to Hawaii.

    Shortly thereafter I hear about the auction.

    I, personally, see nothing positive in the historic trend. Sure they sold some homes at a loss to reduce their debt servicing load, but that’s not the way to make a profit. I have to ask myself if BVH had a poor business plan that didn’t have enough cash, or are they executing some sort of contingency plan, or is it a market failure?

    You are right that DR Horton is a large operation, but I guess we could agree that the situation “might be bad.” I personally think that the DR Horton situation “is probably bad.”

    I guess when one avoids bankruptcy or foreclosure, that’s good, right?

  11. Yes, I am having a rough Monday. Today I am up in Seattle, but I will be back in Portland tomorrow.

    🙂

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