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Leaking acid; I signed what?

January 4th, 2008 · Comments · By Matt

I was wondering why my neighbor stopped parking next to me about three weeks ago. I figured it had to do with my switch from a compact four door car to a hulking SUV. Turns out it really has to do with leaking acid:

Dear Matt,

We have recently been made informed of a potential danger in the area where you are parking which we want to make you aware of. Some water has migrated through the concrete slab on the west side of the Trace Lofts garage and has caused damage to a car parked below.

As you know there are dangers inherent in driving through and parking in a construction zone which is why everyone signed an early access agreement prior to closing. These dangers aren’t limited to dust and sharp objects – they specifically include water migrating through concrete and causing permanent damage to cars after the water becomes acidic. This has happened to at least one car so far.

The situation may improve when the courtyard is waterproofed in March, but this is no guarantee until after construction is fully completed.

We felt it was important to communicate this to you so that you are aware and can make alternate parking arrangements outside the garage if you so choose. Note that there will be no recourse for anyone sustaining damage to their vehicle in the garage, per the release that everyone signed.

Thank you.

Trace Lofts

For those not familiar with the Trace complex, there are two buildings. Trace Lofts is the old warehouse that sits on the south end of the lot and is mostly sold and occupied. Trace North is the new building on the north end of the lot that is still under construction. Parking is shared in a parking garage that is under both buildings. My stall is in a spot that is under the new building. And yes, I did sign an early access agreement [pdf].

Now if I were Trace and sitting on a large number of unsold units in a down market and had an issue with an early adopter who took a chance and bought early I would first inform people of the danger as soon as I found out about it and not sit on the bad news for several weeks hoping Matt didn’t get any acid on him. Sure, Trace, might not be liable because of something the residents signed a long time ago, but it’s the right thing to do when someone is facing permanent damage to their vehicle. Secondly, there are still a number of parking stalls available as there are unsold Trace Lofts units. Some of these stalls are presumably under Trace Lofts which does not have the water migrating acid leaking problem. Why not offer affected residents the opportunity to temporarily park in a safer stall instead of suggesting we should go rent a $100/month parking spot elsewhere?

We’re your best sales team, keeping us spreading the good word of Trace should be a top priority for the Trace developer and marketing team.

When faced with a difficult situation I don’t think its too much to ask that developers ‘do the right thing’ and ask how they would want to be treated if they were on the receiving end of a similar situation.

In other 12th and Madison news: I went to Boom Noodle the new restaurant underneath Agnes Lofts last night (it opened on the 2nd.) The noodles were good but even though I also had desert I was still hungry two hours later; not promising. But once the place gets their liquor license I suspect it will be a nice relatively upscale hang out for Capitol Hill yuppies.

…

While waiting for the always late #12 bus yesterday and today I noticed a land use sign. Looks like they are tearing down 1210 11th Ave:

PIC-0004

PIC-0002

Here’s the land use notice for 48 housing units and retail:

PIC-0001

….

They’re on the verge of completing the burying of the power lines directly across from me. I can’t wait to stop being woken up at 7:30. Now if only my neighbor would stop sleeping through their alarm…

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  • Barboursm
    ok, so I don't want to get in the investment debate but really want to comment on the parking...it sucks! I went in to ask about making a change and what the policy was around it, I was told that they were meeting about it and should have a solution in a week, I felt hope. I stopped by a week later and talked with Jim, he didn't know anything about it (not knocking Jim, because he is great) but I was pretty upset I was told they were going to come up with a solution and come to find out it was never even discussed. My spot is so compact that I can't open my door all the way, unless I want to hit my neighbors cars. I can't get my groceries out let alone my laptop bag. If I grow a size bigger I will have to find a parking spot outside of the building as there seems to be no flexibility in change. SO frustrating...just needed to vent!
  • Can we stop debating the definition of the word investment? Thanks.
  • Peckhammer
    "You think an investment has to pay income _while_ you hold it, thus buying Microsoft in 1986 would not have been buying an investment."

    That is not what I think. An asset acquired for the purpose of producing income and/or capital gains is an investment.

    "Buying land would also not be an investment in your eyes, since it actually consumes money for property taxes until it is sold or developed."

    Land can be an asset acquired for the purpose of producing income and/or capital gains.

    "I put 20% of the purchase price down that I had previously invested in the stock market, so Im going to call that 20% an investment.

    You can call it your "little friend" for all I care; you are still wrong.
  • Eric K
    You think an investment has to pay income _while_ you hold it, thus buying Microsoft in 1986 would not have been buying an investment.

    Buying land would also not be an investment in your eyes, since it actually consumes money for property taxes until it is sold or developed.

    I don't care what you call it. I put 20% of the purchase price down that I had previously invested in the stock market, so I'm going to call that 20% an investment.
  • Peckham
    " just think its misleading to say that condos are always a terrible investment."

    And I think it is wrong to call it an investment at all, unless it is an income property. No accountant on this planet will call your primary residence an investment. It is not. It is an asset that has a historical inflation adjusted appreciation on par with my checking account.

    No offense Eric, but you are not absorbing this very well, and you do not appear to be able to calculate the costs of ownership either. This is not unique to you, however, and I don't mean to single you out. You just happen to be the guy talking when I was within earshot. ;)

    I love hearing about the great tax "savings" that people get with that interest deduction. LOL! I want in on that card game: for every dollar you give me, I'll give you 27-cents back... and you'll think you are winning.
  • Eric K
    In my friend's case, he bought in a building that was completed in 2002-3, and the builder paid the homeowners dues through mid 2004. Interest rates were very low in the winter of 2002-2003, which was the depths of the last bear market, and he had a 3 year fixed rate mortgage at some ridiculously low interest rate. You're right, though, that the calculation is more complicated. In his case, the cost of renting a new construction apartment was comparable to the monthly cost of his mortgage, property taxes, and (when he had to pay it) condo dues.

    I don't believe that "real estate always goes up" or that it is a surefire investment. There are times when it is better to hold hard assets like real estate, and their are times when it is better to hold cash and rent. It's also true that larger condos (above 1,000 sq) have historically underperformed small condos, since the pool of buyers is smaller while the supply of large downtown condos is oddly larger. (This is even more true of the new buildings -- 1521 2nd ave is all 1650sq and up).

    I just think it's misleading to say that condos are always a terrible investment. I wouldn't buy for a year or two, but at that time I think condos will make a great investment.
  • Mark W
    Eric writes
    ... That still leaves a gain of 103k ...
    What is his % return on that period? Most people would say 41%, since 103/250 = 41%. However, he didnt buy the place with cash he only put 20% down, or $50k. So his actual return is 103/50 = 206%. ....

    Although I agree that the return shouldn't be based on purchase price, basing it only on the down payment isn't right, either. After all, he also had approx 44 months of payments, taxes and HOA dues (with payment interest and taxes partially offset by tax deductions). And there's also lost opportunity cost from not investing the down payment and subsequent payments money in something else instead. The 206% return ignores all of that.

    (I effectively lost money on a house I sold in Ohio in 2002 after 7+ years of ownership, and "is Seattle housing experiencing a price bubble" headlines appeared with some regularity after I arrived here in 2002, so I'm gunshy rather than anti-condo, a newbie who figures a condo is in my future at some point.)
  • Peckhammer
    "It sounds like you believe people should always rent. Is that really true?

    When the cost of buying, in financial terms, is in step with well-established fundamentals, I believe buying is a good choice. There will always be a cost for housing, renting or buying.

    There are other reasons for buying. Psychological satisfaction is one of them, for example. I accept that argument so long as it isn't justified with talk of "investment strategies" and other such hoo ha.
  • Eric K
    So are you saving that rents don't increase with inflation? I could have used the unit below mine, whose rent increased 30% since I bought my unit in 2003. If you don't believe that inflation exists, then there's no point hedging it by owning a home with a fixed interest rate.

    It sounds like you believe people should always rent. Is that really true?

    I left off principal in the inital sum because because
    1) by reducing the balance of the loan, it is a form of savings that has no equivalent in renting
    2) I didn't include the tax deduction yet. Once the tax deduction is included, the total number of pretax dollars that I must allocate to principle, interest, taxes, and condo dues is the same as my downstairs neighboor who rents, yet I get the savings from paying down the principal and she doesn't.
  • nitsuj
    ACK!!! stripped it out again. stereotype in brackets on both ends of that comment, good lord i fail at the innernets
  • nitsuj
    oops, my "" and "" didn't come thru before the BR shopping comment. guess the blog strips out potential html commenting??
  • nitsuj
    FWIW I actually enjoy (to a point) what Peckham and others add. Living in the Bay area I've seen too much of the "BR shopping, BMW driving, condo owning overleveraged metro with a smugness that comes from 'owning'", who think they are financial geniuses because they bought a place and never thought twice to renting an equivalent place for a fraction of the cost while investing the rest of the money (granted, most people just seem to up their consumption rather than invest). I think it's good to get that other viewpoint in here as it may cause others to think for a minute, but I do understand how it (negatively at times) changes the dynamic you probably expected when starting your blog.

    Re: his last comment, interest only loan, thus nothing going towards principal?
  • Peckham
    "My mortgage interest (~800) + taxes (~200) + HODs (~300) equals what my downstairs neighbor pays to rent her unit (1,300)."

    I notice that you have conveniently left off mortgage principal in your calcualtion. When do they teach children to count, or don't they do that anymore?
  • Peckham
    " I too am puzzled why the bears and anti-condo folks spend so much time here."

    To offer balance to an otherwise lopsided representation of condo living and the real estate market.

    IOW, we round-earth peeps can't let you flat earth folks go unchecked.
  • Peckham
    "The 12% increase in rent is from Scott + Dupre, who have been tracking apartment rents for decades,and they look at a broad sample or properties.

    Your statement is either disingenuous, or you don't understand how flawed your data source is in this context.

    The Dupre + Scott report polls only apartment complexes of 20 units or more; it does not account for apartments of 19 units or less, rentals created by condo, or SFH rentals.
  • Eric K
    Mark W - while I'm sure you did fine by renting, if you could have bought in 2003 you could done well buying something because the return on your down payment is what matters, not the % increase in the condo itself.

    As an example, I'll use a friend of mine who bought a new construction condo in Belltown for $250k in Jan 2003. He sold it in Sept 2006 for $384k, and made no improvements to it. I do understand how much it costs to sell real estate (6% for a traditional brokerage, which you deserve to pay for not chosing Redfin!, plus about 2% in closing costs and excise tax), so let's say he grossed 92% of that, or 353. That still leaves a gain of 103k, and there weren't any special assessments during that time. (No, I don't work for Redfin - I just think that traditional agents charge too much and I really admire Redfin for taking on such an entrenched industry.)

    What is his % return on that period? Most people would say 41%, since 103/250 = 41%. However, he didn't buy the place with cash -- he only put 20% down, or $50k. So his actual return is 103/50 = 206%.

    Of course, leverage can cut both ways -- if your properly declines in value and you can't wait it out, the leverage can wipe you out. (That's why I was shorting the financials...) So you have to be very careful what price you pay.

    Real estate is like any asset class -- it can be a good investment if your timing and holding period is appropriate. Saying that "buying a condominium is about the stupidest purchase a person could make" is like saying that stocks are a horrible investment because the S&P500 is now below where it was at the end of 1999 (with a divided yield less than inflation).
  • Eric K
    I hope your car's paint wasn't damaged. I agree that Trace handled this poorly. Most businesses don't understand the power of blog communities yet. The web company where I work has been threatened with lawsuits many times by one company whose service is reviewed on our site. Trace obviously doesn't realize how important it is to be proactive to a current owner who's blog is the 3rd result in Google for Trace Lofts Seattle. Just think, if they had told everyone to park under the Trace Lofts portion, no future prospective owner would associate Trace with leaking acid. While water seeps are very normal for a construction zone, they could have at least asked you to park under Trace Lofts as soon as the leak started. The cover-up is always the biggest problem from a PR perspective.

    Yeah, I don't think prices will crash -- there is too little new supply in Seattle (especially compared to Miami and Las Vegas, and especially in the ~500k segment). I do hope that some of the units that are currently asking close to $1,000/sq foot will drop 25%, but I think the average price per sq ft will remain over $500 for downtown condos because of the significant increase in construction costs since 2002.

    Personally, I'm curious how many of the new proposed buildings will actually be built in this cycle, especially with the freeze in the credit markets. I would be surprised if AVA and the twin 40 story Weber-Thompson towers on 2nd are built within the next 5 years. Emporis has a section on proposed buildings:
    http://www.emporis.com/en/wm/ci/bu/sk/li/?id=10...

    It's interesting to see that some of the current projects (Olive8, 1 Hotel + Residences) were actually proposed back around 2000, but were shelved for 5 years.
  • Mark W
    Re Eric's 12% rent increase figure - thanks for posting the source, as it notes that over 6 years it's averaged less than 3% - that's close to my experience renting in a newer downtown highrise for the last 6 years, even when I include the free month's rent I got my first year. Of course I do expect to see bigger increases the next year or two courtesy the conversions.

    As for Eric vs Peckhammer - feel free to debate the investment pros & cons of my example :-) (2 bdrm, 2 bath, 1050 sq ft, downtown highrise apt w/nice amenities at $1995 rent vs. a comparable downtown highrise condo, and money not tied up in my home brings in just over 6% a year over the years.)
  • Eric, thankfully they now have.

    And I too am puzzled why the bears and anti-condo folks spend so much time here. It's as if they keep expect me to write about my own condo implosion or are waiting to hear what we have to say when the condo market drops 50% YOY. Both scenarios are of course highly unlikely :).
  • Eric K
    The 12% increase in rent is from Scott + Dupre, who have been tracking apartment rents for decades, and they look at a broad sample or properties, which is why their average rent is only $1,169:
    http://seattletimes.nwsource.com/cgi-bin/PrintS...

    My mortgage interest (~800) + taxes (~200) + HODs (~300) equals what my downstairs neighbor pays to rent her unit (1,300). However, the mortgage interest and taxes are tax-deductible, and even when you deduct the writeoff I would otherwise get by using the standard deduction, it still lowers my taxes by $170/month. So I save $170/month by owning, which incidentally is the amount of principal that I pay down each month on my 30 year fixed mortgage.

    So, for the amount of pretax dollars that I would otherwise need to allocate to rent, Im paying off a condo that I will own free and clear in 26 years. That seems like a good investment to me.
    While the condo probably wont appreciate over the next year, I can always console myself with the 51% that I made last year shorting financial stocks and periodically buying ETFs.

    So Im hardly a permabull. I just think its silly to say that condos are never a good investment. I do think current prices for new condos are inflated, which is why I wont trade up to another condo until 2010 at the soonest. When I do sell my condo in 2012 (most likely to my mother, who wants to trade down from her house), the capital gains will all be tax-free.

    Peckham, you still havent explained why youre spending time on urbnlivn if you think condos are such bad investments How much schadenfreude do you really get by reading about leaky parking garages?

    Matt - will they let you park under the Trace Lofts portion? They should have offered to let you park their sooner, of course...
  • You don't "invest" in gold et al...you speculate in it...just like people did with condos as of recent. That is why there are so many people that are gonna get Sker-ooood!
  • The other thing that really bugs me about this email from Trace is that it wasn't signed by someone associated with the development. Its as if they don't want to take responsibility for what's occurred.
  • Peckhammer
    "An investment need not generate income; it could appreciate (capital gain)."

    A capital gain is considered income. That is why the IRS taxes capital gains.
  • Ross
    <>

    An investment need not generate income; it could appreciate (capital gain). i.e. gold, diamonds, stocks which don't pay dividends, etc. can all be considered investments.
  • Dan C.
    Peckham,

    I fully agree with you, although discussing residential real estate's value as an "investment" has almost become as taboo as talking about religion or politics at a party. This arguement is not worth starting...
  • Peckham
    "A condo provides owners equivalent rent, a major component of the CPI. A condo is a good investment if the carrying costs are not that much higher than the cost of renting a comparable unit, since rent increases with inflation (up 12% yoy in Seattle) while the condo will appreciate over time. "

    What a crock of sh@#! First, it is far cheaper to rent in Seattle than to buy, and second, your 12% figure is pure malarkey. I am willing to bet that the figure is derived from apartment buildings with 20 or more units, which excludes condo units that are rented, SFHs, etc.

    "A self-amortizing mortgage is also a good forced savings plan, which many people need to accumulate significant savings."

    What an incredible farce! You'd come out further ahead if you rented and put the money you saved over the cost of owning into certificates of deposit (CDs).

    I passively made 12% in mutual funds last year. How did that compare to YOY condo appreciation, less the costs of insurance, taxes, interest, and maintenance?

    "If you think that condos are such bad investments, why are you spending your time on urbnlivn?"

    To offer counter point to the snake oil sales-people like you.
  • Eric K
    A condo provides owner's equivalent rent, a major component of the CPI. A condo is a good investment if the carrying costs are not that much higher than the cost of renting a comparable unit, since rent increases with inflation (up 12% yoy in Seattle) while the condo will appreciate over time. A self-amortizing mortgage is also a good forced savings plan, which many people need to accumulate significant savings.

    Are you arguing that buying your home, whether it be a house or condo, is a bad investment? Or that condos specifically are bad and homes are good investments? Water intrusion problems and construction defects happen to homes, too, expect that few owners of houses have a reserve to pay for disasters, and when disaster strikes, they can't rely on a HOD Board to figure out what to do and get it fixed.

    You didn't give an example of a post-1999 steel-and-concrete building where the homeowners had to pay a significant assessment because of water damage or construction defects. Stucco 5+2 buildings often have incorrect flashing (that was the case with Belltown Court).

    If you think that condos are such bad investments, why are you spending your time on urbnlivn? That would have to be a terrible investment of your time.
  • Peckham
    "Buying a condominium can be a smart investment"

    By definition, an investment is something that generates income. Unless your condo is generating income as a rental unit, it is an asset, not an investment. Are you renting it out?

    "Since condo associations have 5 years to sue, we should already know if the post 2000 crop of downtown buildings is built to a higher standard than the 1990s crop."

    There is a deluge of construction defect and water intrusion type condo legal actions taking place in Seattle metro area and Porland, and they are not limited to pre-2000 construction.
  • Eric K
    Buying a condominium can be a smart investment (it certainly has been for me), but buyers need to due a lot of due diligence and avoid inflated prices.

    Peckham - the buildings you gave as examples were all built in the early 1990s, and most of them were also converted from apartments during the 1990s. That was a particularly poorly-built crop of buildings, and all of the lawsuits that came out of that made insurance more expensive for developers and made them go to great lengths to limit defects.

    So, Peckham, give me some examples of steel-and-concrete buildings built after 1999 where the owners had to pay for a significant special assessment. Since condo associations have 5 years to sue, we should already know if the post 2000 crop of downtown buildings is built to a higher standard than the 1990s crop.

    While I would never want to buy a pre-construction condo, I am waiting to buy another condo once the current crop of downtown towers are completed. (I can rent out my current condo for more than the mortgage + dues.)

    It seems that most developers won't start reducing their prices until the units are completed and have been sitting on the market for a few months.
  • Peckham
    "Yet one more examples of the perils of buying new or pre-construction condos.

    I agree. The amazing part to me, however, is the amount of money people fork over for pure junk in this city.

    "I think buying a building thats been around for a few years and has its chance to shake things out is a safer bet.

    I disagree. Belltown Court is a great example of how your theory doesn't hold water, no pun intended. Cititscape is another example. Both are building that have needed total stripping and recladding -- TWICE!

    How about Seattle Heights? It only cost the owners $5M to $6M to replace every window in this 21 story building. Frankly, buying a condominium, given all the negatives, is about the stupidest purchase anyone can make -- especially at contemporary prices.
  • newbuyer
    We live at the Matae. Our parking spot also leaks from above onto our car. We had it buffed out a couple times (which was more difficult than expected. Then I was given some kind of spray from my dad. I will have to go out to the car to find out the name (since this is where we keep it because it happens so often), but it literally takes it off in seconds. Just spray and wipe. I'll get back with the info. soon!
  • Oh, and I'm liking this slog post and comments on Boom Noodle: http://slog.thestranger.com/2008/01/first_impre...
  • I think you all saw how little pull I had when it came to that sign over my window! :)

    Rachel, hook me up on Slog posts!
  • jcricket
    Yet one more examples of the perils of buying new or pre-construction condos.

    I think buying a building that's been around for a few years and has its chance to shake things out is a "safer" bet. Who knows what other decisions the builders make that will end up requiring a "special assessment" to fix in a year or two.
  • Dan C.
    Sounds like you are stuck...being the agreement what it is.

    What is you use your "pull" as a high-powered blogger and known condo writer to get yourself a new spot, or perhaps have your parking paid for elsewhere?

    If this is indeed an ongoing issue after construction...I think you have yourself a claim though.
  • Rachel
    I don't have any comment on the garage situation...I can't even get my car into my spot.

    There was a post on the Slog about the "Undre Arms" apartments over the holidays. I failed to email it to you. http://slog.thestranger.com/2007/12/smell_you_l...
  • nitsuj
    jeeez, so many issues with these condos. crazy. i wish the seattletimes or other big pubs would pick up on some of the headaches others have experienced, but i guess that wouldn't help them sell ads.
  • sounds like you have a "drippy" garage also. 2200 leaked so badly during that last big rainstorm that it left concrete residue on the cars that was so bad that I had to use a razor blade to get it off my windows. Other cars haven't tried to clean the muck off yet...they'll be pissed when they try to.

    Ok...back to sugar white sand beaches and a nice cerveza!
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