Thursday, May 1, 2008

Another Builder Goes Belly Up

According to a story today in the Oregonian, the soft real estate market has claimed another victim, local builder Tony Marnella.

"Clackamas County homebuilder Tony Marnella and three of his companies filed for Chapter 11 bankruptcy earlier this month.

Landing Development LLC, 550 Investments LLC, Tony Marnella Inc. and Marnella collectively owe about $24 million, the bulk of it to two lenders -- Sterling Savings Bank and MW Housing Partners III LP, an affiliate of timber giant Weyerhaeuser."

""One of my biggest frustrations right now is the amount of FUD (Fear, Uncertainty and Doubt) being generated by the media about the state of the current real estate market and the local economy," Marnella said in a March 20 post.

"In my opinion, there is a lot of misinformation and a failure to acknowledge the positives about our local real estate market.""

Right, it's all the media's fault. It has nothing to do with people actually needing a real down payment, and being required to take out loans where you actually pay back some principle, not just some of the interest. And it also has nothing to do with an overpricced market that probably made him a lot of money over the past few years.

"It's true that the Portland area remains vigorous relative to the weakness in much of the rest of the country. But the market in the area has slowed, as Marnella's own numbers show.

Marnella's various companies brought in $4.3 million in revenue in 2006 and $1.1 million in 2007, according to the bankruptcy filing. So far in 2008, the companies have generated revenue of $10,000."

Maybe you should have done something when your revenue dropped by 75% last year, and tricked to basically zero this year. But nope, you're committed to building more homes that people don't need and can't afford. Smart.


Anonymous said...

Is this the same guy?

PDXOutsider said...

Yup, looks like the same guy. I like how he just started his blog over the last two months, I guess he has had a lot more time on his hands with no houses selling.

Tyler said...

yeah, you won't see me shedding too many tears for struggling builders. One less builder blighting the landscape with overly subdivided lots and ugly cookie cutter homes.

They build ugly junk because ugly junk is easy to build and they behave as though they are entitled so sales.

In my current search for a home I told my agent that I'm not interested in in anything built over the last ten years. Shoddy construction and woeful attention to aesthetics.

Anonymous said...

Tyler, I would be careful about that 10 year thing. I don't know if you have notice but there have been hundreds of buildings with tents over them while siding and windows were replace in the last 10 years. The huge number of lawsuits has resulted in builders being forced to learn and implement better building techniques. I wouldn't touch a house built after the codes required a tight insulated house and before builders learned how to make them not leak and grow mold (unless it is post-lawsuit and repair). Either get a drafty old house or one built in the last few years. Also, these days furnaces, water heaters, etc. last about 15-20 years, your aesthetic tastes might cost you dearly.

Tyler said...

thanks for the advice and fair warning. There is something to be said for modern building techniques. However, the town houses that I live in that were built only 3 years ago are falling apart. The builder is being sued and as a result my neighbors aren't able to sell their homes since nobody will finance a buyer until suit is resolved. I'm glad i only rent. Down the road another builder of townhomes just lost a law suit, across the street another builder is being sued for failing to properly shore up the embankment upon which the homes were built. I'll take old an drafty over built in 3 weeks as cheaply as possible any day.

WillJongIll said...

"In my opinion, there is a lot of misinformation and a failure to acknowledge the positives about our local real estate market."

I've heard this before. We've allegedly got the same problem in Iraq. If only the media would report that we were winning, we'd be winning.

PS: That's the same reason we lost Vietnam.

Anonymous said...

why are these builders allowed to keep building?

aren't they ruining it for everyone?

bearlee said...

willjongill, so why did we lose Korea? The media didn't even touch that war.

Anonymous said...

If you were selling your house, would you use the RMV in your tax record to determine its value? Remember buyers, someday you will be a seller. Will you be satisfied with what the tax records say your house is worth when your neighbor’s homes are selling for more? I've sold real estate in NY and OR - tax record "RMV" is always lower than actual selling price or appraised value.

The examples you cited where sales prices were lower could be short sales, foreclosures, houses that were fixers… there could all kinds of explanations. You can’t infer that these sellers were willing to sell for less than RMV. Also, some sellers may choose to sell their home below market value to a family member or friend!