Monday, July 21, 2008

What Happens When Real Estate Goes From 70 Miles an Hour to Zero

The Oregonian did a piece this week about Ryan Olson, one of Portland’s fastest growing developers, who crashed along side the housing market. I toured some of his homes and they certainly are different than the typical Buena Vista boom-time home.

From the Oregonian:

His newly built Happy Valley homes lit up like a movie set, Ryan Olsen was enjoying one of the brightest nights of his life.
Hundreds of guests -- bankers, real estate brokers and local leaders -- strolled the porches and the grounds as his two little girls twirled on a dance floor under the stars.
The August 2006 party at Olsen's boutique 12-lot subdivision -- named Tarynhurst, to evoke Portland's prestigious Laurelhurst neighborhood -- set him back $100,000.
The day after the party, Olsen sold the model home for $860,000. But then, the good times simply ended.
"We didn't sell another home for three months, anywhere," Olsen said recently, two years into a crushing collapse that has not yet ended.
In the Portland area, Olsen was one of the first to fall, bringing others down with him. Subcontractors and suppliers filed lawsuits alleging nonpayment; he pushed some customers to the brink of foreclosure. He maxed out his mom's credit cards.
In January, he lost his contractor's license because of unpaid debts.

"Young guys got burned the worst," said Eugene Grant, a lawyer and former Happy Valley mayor, who thought Olsen's homes were some of the nicest designs to emerge during his city's boom. "If you haven't lived through the rough times as developers, you don't have a healthy caution for the real estate cycle."
When a market turns, Grant said, "It goes from 70 miles an hour to zero in one second."
At month's end, Olsen's own home is scheduled to go to auction. He doesn't know where he'll land when the bidding is over.
"I was a millionaire by 28, and by 31, I'm as broke as when I was homeless," said Olsen, still wearing a polo shirt bearing his defunct company's logo.
Today, Olsen's professional life is ripped down to the studs.
At the end of last year, he shuttered his office. In January, the state revoked his contractor's license. Today he faces a hefty $113,000 in judgments from the Oregon Construction Contractors Board, based on complaints already investigated; several more are pending. All of his partly built houses and vacant lots in Happy Valley and Gresham are in foreclosure.
"I'm a smarter man, and a better guy," he said. "And I'm not quitting."