March 28th, 2009Seattle Repartment Trend Goes To Woodinville
The word “repartment” is not in the dictionary yet, but I have a feeling it will be soon. The term refers to a developer who buys an apartment complex with the intention of converting the units to condos. After dismal or no sales, the developer rightfully panics and re-converts the units to rentals.
The repartment trend is occurring all over the United States, including the Seattle area, including the Belltown Moda complex which is now a repartment community.
The eastside’s newest complex to repartment is Woodinville Village. Here is a write-up from Puget Sound Business Journal from April 2008.
Developers have put the cork back in the $200 million wine-themed Woodinville Village after two of its four winery tenants have backed out and initial financing efforts failed.
…The firm recently sent an e-mail notifying dozens of Woodinville Village’s prospective condo buyers that construction would be delayed — again. Many had eagerly signed up within the first 48 hours of the project’s initial offering last summer, (Geldpress comment: VERY DOUBTFUL!) and they expected construction to start this spring on the proposed mixed-use development that will include wineries, a boutique hotel, shops, restaurants, offices, a grocery, spa and 260 residential units when completed.
The original sale prices of the condos were so astronomical it’s not worth even mentioning. The developers brought new meaning to the term “Above and Beyond”, but it referred to the prices and not the quality. In the end, they never (substantially) broke ground on the new development, but they did convert the first phase of the adjacent rental untis purchased – “The Villas” – to condos. Those never sold, and now the repartment of those units is official. Here is a snapshot of the latest e-mail from the developer.
Some older Woodinville Village websites are still active: (for now)
The Villas (formerly Woodinville Village) may have started the eastside repartment trend, but they will certainly not be the last. On my recent unscientific tour of eastside condo developments, the common theme was a combination of construction complete and less than 20% sold.
March 30th, 2009 at 9:04 am
Unfortunately, developers don’t understand the impact of overdevelopment on real estate prices even without a recession. They are on the “real estate will boom forever” bandwagon.
The last community that I lived in was in a nice town with a decently growing real estate market. The 2 local developers (did I mention that they were also the largest real estate companies in town as well) kept building new upscale homes pricing out new buyers, flooded the market and prices tanked..I got out just in time!
March 30th, 2009 at 2:30 pm
You are the escape artist, TigerAl. What about your current situation? Are you renting, or paying a mortgage and watching prices go down all around you?
March 30th, 2009 at 3:12 pm
Trick question, huh:) Well, I do pay a mortgage but it is not underwater based on research and my realtor. I bought the last of a set of new town-houses that had a price lock and an amazing view on the Eastside of Seattle in 2007. I have bought and successfully sold a number of homes, the rules that I hold myself to are:
1. A view is a very important selling point.
2. Don’t buy a home that is more expensive that one that can be purchased with the median income in the area.
3. A knowlegeable and trustworthy realtor (both as a buyer and seller) is very important and I have been fortunate in this dept.
4. Don’t exceed a 40% D/I ratio in buying a home (28 – 30% is better but if you have to..).
March 30th, 2009 at 6:08 pm
It’s not only a question of whether you are underwater, but whether you have or are losing money. Im sure you are very responsible and may have put down 20, 30, or even 40% down, which is a big buffer protecting you from becoming underwater. But that says nothing on whether you have lost money on your investment…
I really like your idea of buying a home near the median income in the area. A common misconception of so many people is that they are paying their mortgage and therefore they made a wise decision. But if you buy a new house in an overpriced area (house prices more than median income can afford), then you will lose money regardless of how responsible you are. When your neighbors stop paying, it drives your investment down with it.
As for the debt/income ratio, I think the 40% number is a large part of what got us into this economic mess – that, and the no doc, no job, no asset loans of course. 30% is a much safer and sustainable debt/income ratio. And if you are as conservative as I am, then 25% is the maximum you would want to spend.
March 30th, 2009 at 8:47 pm
Not losing money per my research, put 20% down, my D/I is right around 25% though I have been close to 40% when I had multiple properties at the same time but it was still ok since I don’t have an expensive lifestyle
March 31st, 2009 at 7:18 pm
That’s not the question he asked. I’m pretty sure what he asked is how much of your 20% down is gone. If bought a 200K house with 20% down that means you leveraged it 5 times. A 20% drop wipes out 100% of your equity. At the same time you have property taxes, maintenance, and possibly associations fees as fixed carrying costs for a home.
If you are asking yourself whether or not your home is underwater it means that you’re looking at it the wrong way. To truly calculate whether you are underwater subtract the carrying costs from your equity.
Owning property that is not creating cash flow is a bad proposition because of the carrying costs. So bad that banks are now refusing to proceed with foreclosures, because its more expensive to pay carrying costs, legal fees, etc then to try to repossess the property.
March 31st, 2009 at 9:10 pm
And I did answer: the home is still pricing at above what I paid for it..hence the “I’m not losing money”. The underwater comment was because of a recent C-S conclusion that most people who bought around the time I did, are in that situation. BTW, you are not telling me anything I don’t already know and have already worked through the numbers
April 10th, 2009 at 12:32 pm
“the home is still pricing at above what I paid for” != “I’m not losing money”
“I’m not losing” ~ “have already worked through the numbers”
I was confused, because it seemed like you were justifying the not losing money part simply by the home still being priced at above what you paid for it.
April 10th, 2009 at 2:27 pm
If I were you, I wouldn’t worry about my home and financial situation ..I’m certainly not
BTW, I would highly recommend re-reading information and trying to figure out what the person is saying before posting comments. And, btw, i will not continue this pointless discussion either.
April 10th, 2009 at 5:30 pm
I wasn’t continuing any discussion. I was observing that your sentence structure implied a different meaning than what it seems you had in mind.
It’s possible you are using a definition of hence that I am unfamiliar with.