NewHolly Resident Sees Rash of Short Sales; Have Fortunes Dimmed for Utopian Dream?

In 2006, Zac Johnson bought a house in NewHolly, the Beacon Hill housing development created by Seattle Housing Authority as a prototype of mixed-income, multicultural living. He paid $345,000 for a newly constructed four bedroom--which a few months ago he sold for almost exactly half that price.

To Johnson, who runs Meaty Johnson's BBQ in Pioneer Square, it seems like home prices have deescalated even more sharply in NewHolly than they have in other parts of the city. "It happened so fast," Johnson says. Having seen neighboring home values rise to over $400,000, he watched them dip to the break-even point and then plummet as one neighbor after another went through a short sale (in which a house is sold for less than the value of the mortgage).

"On my street, there were literally 10 houses for sale," he says. That was at the time that he put his on the market. All of them were short sales, including Johnson's.

It would seem a big come down from the time when buyers rushed to NewHolly, proving that middle- class people really would buy homes right around the corner from poor public housing tenants. Indeed, in 2005, when developer Polygon Northwest was selling houses on a first-come, first-serve basis, buyers literally camped out. From a story SW did then on a buyer named Monica Hall:

On Thursday, the first two families arrived. Friday morning, Hall's real- estate agent, keeping close watch on the situation, told Hall to get down there. Nine families ended up spending the night together, supplied by Polygon with pizza, doughnuts, and an office where the buyers could lay out sleeping bags. In the end, 40 potential buyers showed up. The demand was so great that Polygon, which has continued building town homes, has raised prices several times in just the six months since.

Has the attraction of NewHolly waned? One informal survey among residents has suggested that crime is a problem. Johnson says his household, comprised of several roommates as well as himself, experienced five car break-ins. But that's not why he moved. Like many others who have decamped from their homes of late, he did so simply because he was deeply underwater. And the sharply deescalating prices he saw probably has more to do with NewHolly's status as a new development than a mixed-income experiment.

Mount Baker Windermere agent Al Johnson says that if you have a bunch of identical homes for sale--all built at the same time--a price war is likely to break out. "Obviously the buyer will pick the least expensive one," he says. If NewHolly's prices deescalated faster than in other parts of Seattle, that may be because new developments are few and far between in the city (most of them being other SHA projects that followed NewHolly). Indeed, that was a big part of New Holly's appeal in the first place.

And it still is--for those buying the new new homes that represent a quasi-addition to the development. Eric Uyeji, another agent in Windermere's Mount Baker office, says he is currently selling homes built on an extra parcel sold by SHA to developer Bennett Homes. Priced in the mid $300,000s, five of them have found buyers in the last month-and-a-half.

These new new homes may have contributed to the deflated values of NewHolly's slightly older homes, Uyeji surmises. When a similar but newer home is nearby, some buyers may reckon, why buy the older one?

So the utopian dream may be alive. It's just living in an especially punishing market.

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