With signs of a housing recovery just beginning to materialize, one thing has economists and real estate professionals looking over their shoulders: a massive backlog of foreclosed properties.

All those foreclosures hitting the market at once could send home values plummeting. Don’t sell enough of them, on the other hand, and they could be a drag on the market for years to come.

An analysis of recent numbers from RealtyTrac and the Regional Multiple Listing Service suggests the latter might be more of a threat than the former. In the Portland area, at least, lenders seem inclined to take their time with foreclosed properties.

The vast majority of repossessed Portland-area homes aren’t up for sale. Instead, more than 80 percent of them are off the market, many vacant and developing maintenance problems that might ultimately take a toll on their resale value if and when they do sell.

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When Debbie and Scott Viegas started looking for a new home in June, they didn’t leave a stone unturned. Foreclosures, new homes, old homes: they toured them all.

Problem was, there wasn’t much to see. With the number of Portland-area homes on the market peaking near 12,000 last summer — and falling to 8,500 by January — pickings were slim, near levels last seen when the housing bubble burst in 2006.

After eight months of looking, they ended up buying a brand-new house on a West Linn cul-de-sac, an unlikely choice for a couple who owned their Southeast Portland home, built in 1908, for more than a dozen years. They decided to sell last year, seeking a different school district.

“We never thought that we would ever buy new,” Scott Viegas said. “It was the golden apple that we thought we’d never have.”

The thin inventory of homes, a quirk of pent-up demand paired with low prices that keeps would-be sellers on the sideline, has changed the way homes are bought and sold.

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The announcement by Lennar Corp., the nation’s third-largest homebuilder, that it plans to expand into the Portland market has left some local builders with a bitter taste.

The discord stems, in part, from Lennar’s handling of a portfolio of construction loans from the Bank of Clark County, which failed in 2009. The loans spent a year in Federal Deposit Insurance Corporation control before being sold to Lennar just over two years ago.

Now a loosely organized group of builders say a Lennar subsidiary, Rialto Capital Management LLC, has pushed many of the loans into failure and done little to work with borrowers. Some asked the Clark County Building Industry Association this week to reject Lennar’s application for membership, saying the newcomer has damaged the industry.

John Fazzolari, a Vancouver homebuilder who was developing a subdivision with a Bank of Clark County loan, attended the association’s board meeting Tuesday to share his concerns.

“They’ve basically stripped all they worked for over the last four to eight years and handed it to this East Coast corporation, all because we chose the wrong banking institution,” Fazzolari said in an interview Thursday.

Lennar announced in December it planned to build homes in the Northwest. In the Portland area, including southwest Washington, the company said it would acquire mostly foreclosed lots. That’s heightened builders’ suspicions that the company is purposefully hurting competing builders while adding to the inventory of distressed construction projects. Foreclose on other builders rather than work things out, the logic goes, and your development competition diminishes in the metro area.

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When the economy tanked in 2008, most homebuilders suddenly found that no one wanted their product. Or, at least, no one could afford it.

After fever-pitch rate of building leading up to the housing crash, they left behind hundreds of lots waiting for houses, many taken back by lenders looking to unloand them — quick.

That left one builder unusually suited to take advantage of the situation: Habitat for Humanity, the nonprofit that builds low-cost homes for low-income families.

So the organization’s Portland branch launched a fundraising campaign and started snatching up land.

In the last several months, the group has built up a five-year supply of land, enough for as many as 150 houses. It’s aiming to pump up its production by 50 percent.

“There’s a real window of opportunity here,” said Steve Messinetti , the executive director of Habitat for Humanity Portland/Metro East. “We’re getting deals we’re not going to see again.”

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The Kiggins Theatre has seen better days.

The on-again, off-again downtown Vancouver movie theater, shuttered since June, shows its age in its cracked leather seats, a few broken window panes and a thick coat of dust.

But the owner of the theater is getting ready to cue the lights again. Bill Leigh and a team of volunteers have launched a $300,000 project with the goal of restoring the Kiggins and reopening early next year.

The Kiggins closed June 1 because of low attendance for its second-run double features. When the theater reopens — likely early next year, said Seanette Corkill, a partner in the project –it will have a new focus on independent film, with an eye toward providing a venue for musical performances. An upstairs bar will provide a gathering spot.

“That was a business model that doesn’t work anymore,” Corkill said of the previous approach. “Commercial films in 3D you go see in a commercial theater. If you want to experience independent cinema, you come to see it in an independent theater.”

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COLUMBIA — Just a few years ago, the warehouse known as the Berry Building was used to store car tires headed for Walmart.
But soon the building will be a key part of a revitalized North Village arts district. That development at Orr and Walnut streets, and others nearby, could increase traffic to the district and make it more of a destination for downtown visitors.

“We should be generating some critical mass here (that) I think was needed,” said John Ott, who owns not only the Berry Building but several others in the North Village and downtown. Continue reading →