Condos hit the block
- Jim Redden
- Portland Tribune - News
Mass selloffs are clearing out the unsold inventory
When plans for the Waterside condominiums on Hayden Island were announced in 2004, the project was seen as a sign that Portland's hot condo market was spreading beyond downtown.
At the time - just before the peak of the housing bubble - the 84-unit development was envisioned as a lower-cost but still luxurious alternative to the Pearl District, featuring stunning views of the Cascades and access to a marina on the Columbia River.
But like other upscale condominium projects in town, Waterside sales began to slow shortly after it was completed, and they eventually stalled. So now, following the example of the Atwater and John Ross condominiums in the South Waterfront, 30 unsold units will be up for auction on Sunday, Oct. 24. Kennedy Wilson, the firm conducting the auction, promises beginning prices at less than half the original $375,000 to $840,000 asking prices.
Another sign the local condominium market is in the tank? Yes - but maybe not exactly, say those familiar with the condo and auction business. Yes, the auction is being held because the vacant units have not been selling, and Realtor Gary Whiting says it will be years before buyers who paid the higher prices for their condos will be able to get their money out of them.
'People may want to sell now, but if they owe more than their condo's worth, they're out of luck,' says Whiting, who works for John L. Scott and is chairman of the area Regional Multiple Listing Service.
On the positive side of the ledger, the Waterside is one of the last luxury condo buildings in the Portland area with so many unsold units. The previous auctions and ongoing monthly sales have actually helped push the number of unsold new condos in Portland to the lowest level in years.
'The reality is, the inventory level has shrunk to the lowest level since we began tracking it on a monthly basis,' says Todd Prendergast, principle director of Realty Trust.
Prendergast's firm has tracked sales in new central-city condos for 15 years. When the condo market began to explode approximately six years ago, the firm began compiling sales figures on a monthly basis. The figures show the available inventory peaked in January 2007, with around 2,600 units on the market. Today, that number has dropped to just 366, with a disproportionate share in just a few buildings. For instance, the Encore - the most recently completed project in the Pearl District - has more than 100 vacancies.
Another reason the inventory has dropped so much is that several major condo projects converted to apartments in recent years, substantially reducing the number of new units coming on the market. Because no new condos are under construction, Prendergast predicts that some of those projects might convert back to condos when the remaining available condos are sold.
'With a conversion, you can have condos on the market in a matter of months, instead of the years it takes to complete a new project,' he said.
At the same time, Realtor Charles Turner at Prudential Northwest Properties notes that many previously sold condos around town are up for sale again.
'There are still a lot of for-sale signs on condo buildings,' says Turner, who operates the local www.PortlandRealEstateBlog.com website.
Slight upward trend
Talk of the condo market recovering may seem like wishful thinking. The real estate collapse of the past few years has stalled projects throughout town and dimmed city planners' dreams of South Waterfront becoming Portland's next great neighborhood.
Condos are just one part of the larger real estate market that is still reeling from the burst of the housing bubble and ongoing credit crisis. Portland was one of seven cities where prices of previously owned single-family homes declined in July, according to the Standard and Poor's/ Case-Shiller Index. And the most recent RMLS report shows that closed sales for all types of homes decreased 25 percent in August when compared with a year ago.
But Prendergast notes that sales in the condo buildings that his firm tracks are running ahead of last year's numbers - an average of 22.9 per month so far this year, compared with 19.3 per month last year.
Because it is outside the central city, the Waterside is not included in the firm's tally. But condo sales throughout the metropolitan area tracked by RMLS show a similar trend. The organization's most recent report showed 2,174 active condo listings in August 2009, compared with just 1,908 last month.
In fact, while overall median home prices have not risen since August 2009, condo prices have increased slightly, rising from $187,000 a year ago to $190,000 last month.
Although they helped reduce the inventory of unsold condos, the auctions at the Atwater and John Ross also contributed to an impression that the building's owners were panicking. What else can you think when the advertising promises potential savings of 50 percent or more at what is supposed to be some of Portland's premiere housing? But as it turned out, the actual sales prices were higher than that. Turner attended the Atwater auction last September and documented sales at 58 percent to 66 percent of the original asking prices.
An island of housing choices
At first glance, Hayden Island may seem like a strange place to build an upscale condo project. Some residents of the island in the Columbia River have complained over the years about the congestion on Interstate 5 that makes it difficult to get to work, run errands or reach home, especially at rush hour. That is why so many of them support the Columbia River Crossing project, which includes new interchanges on and off the island.
But the island has long contained a wide range of housing. On the inexpensive end, it has mobile home parks - a type of housing that's dwindling in other parts of town. High-end apartment complexes also were built on the island in the 1970s and 1980s. The island also has floating home communities, where some prices rival those in the West Hills. And the island's marinas shelter some of the most expensive yachts in the Pacific Northwest.
But just as it has done in other parts of town, the poor economy has halted other upscale projects on Hayden Island. The developer of a 204-unit luxury condominium project filed for bankruptcy protection in June. Only the marina at the Salpare Bay development was ever completed. The company is talking about building a 371-unit apartment complex in place of the condos.
The Waterside auction is at 1 p.m. on Sunday, Oct. 24, at the Portland Marriott Downtown Waterfront Hotel, 1401 S.W. Naito Parkway. Kennedy Wilson will host a 'How to Buy' seminar at 1 p.m. on Sunday, Oct. 17, at the Waterside Auction Information Office, 707 N. Hayden Island Drive, Unit 202.