Foreclosure in Washington and Sprott on Silver

Interesting article in the Seattle Times.

Seems the largest condo development ever undertaken in the American Pacific Northwest, basically a two hour drive from Vancouver, has been foreclosed on.

Portland-based Gerding Edlen, the developer of Bellevue Towers, has turned over the development to their lenders, an entity led by investment bank Morgan Stanley. If the development wasn't turned over, Morgan Stanley would have moved to foreclosure.

The new owners announced price cuts to help spur sales at the 539-unit development, where just 118 sales have closed since the two towers were completed nearly two years ago.

The development is two towers of 43 and 42 stories. Gerding Edlen built them in large part with $275 million borrowed in January 2007 from a consortium of lenders led by Morgan Stanley.

"This is an acknowledgment that prices today aren't what they were," Ira Glasser, an adviser to Morgan Stanley, said Monday.

When Bellevue Towers opened in February 2009, condo prices ranged from $399,000 to $4.4 million. A Gerding Edlen principal predicted the project, at Northeast Fourth Street and 106th Avenue Northeast, would sell out in two years.

Five months later, with less than 10% of the units sold, Gerding Edlen cut prices an average 20%. With the additional reductions announced last week, average prices are 30$ lower than two years ago, Glasser said.

County records indicate just three condos have sold over the last three months.

Meanwhile 2 hours north, Vancouver preens about it's resilient housing bubble.

Sprott Asset Management and Silver

Silver trading continues to be incredibly strong despite the raids from the last two days. From the source who follows the Comex:

• "The total open interest on silver remained resolute at 136,931 up a huge 645 contracts with a huge pummelling of silver by almost $1.60 yesterday. I think the bankers were more frightened with this figure than with gold. I may be mistaken but the bankers have been trying for the past month to shake the silver leaves from the comex tree and they have failed time after time. The front options delivery month of January saw its open interest mysteriously rise from 55 to 59. The estimated volume on the comex today was a monstrous 83,889. The confirmed volume for yesterday was 88,172. This is a far cry from the 16,000 contracts traded during the last week of 2010."

But the big silver story of the day comes from Sprott Asset Management.

Sprott runs a silver fund that is completely backed by Silver assets. And Eric Sprott is having trouble getting silver. Yesterday his chief lieutenant John Embry was on Eric King and predicted, based on the difficulty in acquiring physical silver, that he see's the price of silver rising above $50 in 2011 (he sees Gold going to $2000 for the same reason).

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