Snohomish County real estate land developer Barclays North is shutting down.
Back in April, CEO Patrick McCourt went public with their financial problems.
Everett-based developer Barclays North has struggled since late last year to repay loans from nearly 100 banks and other lenders, according to court documents. Company officials said in court papers in January that Barclays North and its many affiliates were in default with at least 56 lenders, though most had agreed to hold off any action until the end of March…
“What got Pat into trouble,” said Britsch, was purchasing land in advance to supply “national contracts with very large builders,” who backed out after the housing downturn began in California and the Southwest in mid-2006.
Demand for undeveloped lots in Snohomish County “fell relatively hard and fast,” he said, “and when that happened the builders obviously didn’t need as many lots as anticipated. That left Pat and the banks holding this huge financial burden.”
Local state-chartered banks exposed to loan losses include Frontier Bank, Banner Bank, Shoreline Bank, Cascade Bank, and First Sound Bank.
and from the Everett Herald story:
“It’s fair to say all builders and developers are facing pressures in this market, although every company’s business model is different,” said Mike Pattison of the Master Builders Association of King and Snohomish Counties
I wonder which title insurance companies are on the hook for any outstanding mechanics liens?
I’m sorry to see them in trouble. I also have compassion for their employees.
The ebb and flow of the market…..unfortunately there are casualties.
Currently its tough being a seller of any property in a new construction area of Sno. Co.
Hi Greg,
They were one of the major employers in the city of Lake Stevens. I think they were down to about 20 employees as of yesterday.
I remember back in 1989 having to sit down with some local builders and have that difficult conversation of telling them that my company could no longer insure their titles because they were not paying their subcontractors.
How’s the new construction in the Bothell area doing?
When the market is hot, new construction seems to be the leading edge of price raising. The buyers who buy in see equity go up quite quickly.
When the market corrects, builders have to drive prices down to move anything. Too much supply and few buyer. Now we see buyers about even with what they paid for the house 2-3 years ago.
New construction is more speculative than older, established neighborhoods.
Nobody remembers this when markets are hot. There are many buyers that are drawn to the new like a bee to honey.
One thing I learned big time from the early 1980’s is that new construction always gets overbuilt, especially in the outlying areas where there is lots of undeveloped land, same with condos; and new construction is the fastest way I know of to lose money in a depressed market. The real question to ask is: are we depresessed or simply correcting? No one agrees that we are actually having a recession, at least by typically defined recession standards.
I think the incoming growth, and hiring cycles of Microsoft, Boeing, high tech etc are the critical link for our area – will they save the day or not? None of them are flinching one iota, at least as far as I can see. Retaining more and more space, hiring more and more employees, requiring mandatory overtime … these are signals of life, not death.
What do todays arrests mean to the mortgage crisis? Certainly there is damage. Does arresting individuals start a healing? How fast?
and the new the sponsor of the Ironman 70.3 at Lake Stevens is…………TBD.
I recall a meeting about 2 yrs ago where I talked shop with a couple Exec. VP’s of Banner Bank and discussed my “concern” with the lending going on an the exposure some of our local banks have to builders. I recall the dismissive body language I got and the “not here” argument. Evidently, according to the article in the Herald Banner filed a suit against Barclays North for a deal gone bad.
I drive by (multiple times a day) a new construction home planted literally about 50 ft off of US- HWY 2 in Snohomish with a large sign saying financed by Frontier Bank. Who in their right mind would lend on a SFH spec home right ON Hwy -2 where thousands of cars and commercial semi-tractor/trailers are howling by at 65-70 mph. I mean there is nothing surrounding the home. No trees, no buffer, nothing.
Mystifying.
Jillayne, I’ve always been amazed that builders receive discounted title rates when their transactions are the most risky.
Hi Rhonda,
Title companies mitigate that risk by asking builders to sign an indemnity agreement.
What title companies receive in return for offering builders lower rates is market share, and the revenue from the escrow side.
Jillayne, I understand but what good is an indemnity agreement when you’re toast?
It’s not just the title that’s discounted, it’s also the escrow.
I think’s it more about market share than profit. That always used to bug me when I was a title rep…I remember talking to my managers and asking them, “whaddya want from me, market share or profitable business?” They are two separate types of business.
Actually, Rhonda there are three types of business. Back in my bankruptcy attorney days we’d sometimes have clients that lost money on every deal, but tried to make it up on volume! 😉
Kary, that sounds like a big loser to me! 🙂