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.