What Housing Bust?

I’m not one to bemoan the coming of more high-density housing to Seattle, but still, something seems a tad out of touch with reality in the scene shown above (and have you ever seen such a magnificent application of blue tarps?).

Seneca Towers, a 25-story, 285-unit condo tower, will soon to rise from this site at the corner of 8th and Seneca on the West slope of First Hill. And to make way, what would appear to have been a decent, usable, 5-story brick apartment building is coming down.

It’s all about timing. And location. Given the cooling housing market, and given the large quantity of condo units coming online just ahead Seneca Towers, and given that most of this competition is arguably in more desirable downtown locations, one might have expected the developer to hold off on pulling the trigger on the building demo.

The development slowdown is real, just ask the architects. But here in Seattle, is it being driven more by actual lack in demand, or by the banks overreacting to their prior lending carelessness and keeping an excessively tight hold on financing? Overall, Seattle still seems to have relatively strong fundamentals — for example the PI recently reported that Seattle was the nation’s leader in high-tech job growth for 2006. If, in fact, financing is the main culprit, then the slowdown is artificial and will lead to pent up demand, which in turn will perpetuate a painful and inefficient bust-boom cycle.

Dear Bankers: Please try to do a better job controlling your business.

7 Responses to “What Housing Bust?”

  1. joshuadf

    Well, IIRC that building, while I agree it’s beautiful, had a sign on it saying there were structural problems long before the proposed land use sign.

    On the location, surely someone works in the hospitals next door or across freeway park in the Zippo building.

    In any case, it is nice to see Christo participating in the demolition.

  2. michael

    She was the Alfaretta
    built in 1926 or thereabouts
    affordable apartments
    roomy (up to 850sqft) and quaint
    close to downtown
    but dangerous she was
    she had to be taken down
    brick by brick
    and replaced
    luxury condos

  3. dorian gray

    I can say firsthand that financing is the issue. We have amazing demographics and continue to import highly educated (and compensated)workers -a trend other cities would kill for. Financing controls implemented are directives for the whole country as they relate to the loans that will be securitized into massive pools. These pools of funds, can’t be resold to investors if they have development related loans (mezzanine etc.) so banks aren’t making the loans.

  4. Michael Robb

    I live on First Hill and feel really confused by the development that we are seeing there. This is the second 1930’s era brick apartment building torn down in recent months. First Hill is full of parking lots. They might be owned by someone who does not wish to sell it for development, but I think some could be persuaded with enough money. In the meantime the hood has lost several dozen affordable apartments for new medical and condo buildings.
    I agree with most things you have to say on this site. The neighborhood has great potential but for some reason has not had its share of new buildings. So when new projects start at the expense of old but nice brick buildings I feel confused. Why aren’t they filling in all the parking lots instead?

  5. Steve

    dorian gray —

    That makes sense, but if the fundamentals are really there in this area but not nationwide, it seems like some local, capital-heavy organization like a university endowment or a pension fund might take advantage of specialized knowledge of market conditions to make the loan directly. Is that not happening?

  6. Sabina Pade

    One is certainly happier at the disappearance of a parking lot than at that of a handsome, interwar multi-family pile.

    Yet if there is any condominium in downtown Seattle that should sell easily, it is the Seneca Towers. With a lush park at its feet and an impressive skyline beyond, it offers Seattleites a breath of uptown Manhattan. I think this is precisely the sort of high-density housing that even a suburbanite could get excited about.

    Too, being but 2 city blocks removed from the central business district and literally only steps away from Virginia Mason, it enjoys a notably strategic location.

    Even those among us not able to afford an upmarket downtown condo unit stand to benefit here : from a better-watched, more animated Freeway Park.

  7. JoshMahar

    Dominic Holden had a pretty good article about stalled projects in this week’s Stranger. As banks tighten their belts, watch for a lot of these places to remain holes for quite some time.

    But its not all bad. This bust gives us a chance to really analyze and amend some of the poor construction and design laws on the books and have them streamlined and ready for the next big Emerald City Building Boom.

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