Under Economic Siege, Escala Tower Reports "Sales are Up!"

Escala‘s news release last Wednesday reported 65 new sales, with 38 closings, in the last three months. That’s 38 of a total of 275 units, after the condo tower reopened with prices reduced 20 to 50 percent at the end of March. (Last February, the PSBJ was reporting that only six units had sold, and current King County tax records show just eleven units in private ownership.)

Designed by Thoryk Architecture (Mulvanney G2 were architects of record, and DiLeonardo International, Inc., did the interior design), the 30-floor, $370-million tower from developer Lexas Companies has come down in the world since 2006, when you could “reserve a home” with a $10,000 deposit. (Urbnlivn took the video above, and wrote a review, after touring an open house.)

The idea was to overwhelm Seattle’s highest-living with luxury amenities, including a “spa, library, billiard room, theatre/screening room, fitness center with a lap pool, a catering kitchen, a formal dining room, and an events center.” There was a marble staircase at the entrance, of course.

In 2007, as the Seattle Times reported, it was the “year of the condo” in Seattle: “Real-estate economist Matthew Gardner shared Thyer’s optimism, telling an audience of about 700 that demand for new places to live downtown will remain ‘very positive.’”

Initially, the prices at Escala were to range from $500,000 to $4 million (with a $12 million penthouse). But by the time the project was finished in fall of 2009, the real estate market was not what it once was. (Escala’s original backer, Fremont General Corp., filed for bankruptcy in 2008.)

Escala’s developers had been introduced to the concept of “price-taking” when, about the same time their lender was filing for bankruptcy, they raised prices slightly, to show hesitant buyers that a better deal was not just around the corner. In December 2009, they claimed 78 sales from buyers under contract. In January 2010, they had 67 buyers under contract–at the end of February, 67.

By the time they made the 20 to 50 percent price reduction official, and dropped HOA dues to $500 from about $800 per month, Seattle Bubble was beside itself. If my math is correct, the six original full-price closings plus the new 38 (at the new prices ranging from $384,000 to about $2.3 million), bring the total to 44, or 16 percent.

Of the six original buyers, one paid $4.1 million for a unit recently appraised by King County for $708,000. Some of Escala’s $384,000 bargains (the one-bedrooms are over 900 sq. ft.) are now appraising at between $264,000 and $275,000. Interestingly, those $384,000 condos are supposed to be FHA-approved, though the FHA requires 50-percent owner occupancy, and 44 units in a 275-unit building is not that.

That sales streak had better keep up, but considering that the last three months in real estate were fired by a tax-credit window closing, and that the rate of home sales since have slowed, can an auction be far off? And even granting that hypothetical, how many units could an auctioneer hope to move?