The real estate blog.

What goes up, must come down. It’s a cliche we’ve heard for some time about the housing market, with Utah finally beginning the coming down process. What about things that were supposed to go up, but never did? How about things that came down when nothing will replace them? Welcome to the ugly side of the downturn.

The City Weekly had a pretty in depth cover story a couple weeks ago about the ugly side of development including infrastructure requirements for our continuing residential growth. It reminded me that during the booms, developers will do just about anything to get a project built, but if market conditions change, they back out and leave everybody holding the bag.

Kennecott Land is literally the biggest example of this. Their Oquirrh Mountain project would have

changed the face of Salt Lake City by building on 41,000 acres of land on the Western side of the city. With deteriorating market conditions, particularly on the overbuilt west side, this project has been mothballed and funds for the government agencies tasked with planning it withdrawn.

Kennecott abruptly withdrew its funding this year from the county’s west-bench planning team - charged with crafting land-use laws to govern the 41,000-acre makeover - and effectively shelved one of the largest developments of its kind in the nation.

To me the most egregious withdrawal came from the master developer of SunCrest that declared bankruptcy and walked away from liability to repair prematurely wearing roads and slipping foundations. The company is also embattled in several lawsuits including one with the city of Draper concerning the road repairs. Draper city and its taxpayers will be stuck holding that bag.

In Orem, a massive mixed-use project has been put on hold after nearing completion. Without further construction, this hulking behemoth will become an eyesore. Midtown Village has sold four condos and a pizza restaurant on the lower level is developing a strong clientele. However, the developer has run out of money and tightening commercial credit markets won’t help.

But with sales plummeting in recent months, there was no revenue coming in to pay contractor expenses or bank loans, he said. Myler plans to continue work on the development once he has refinanced the project and condo sales have rebounded.

Salt Lake developer Craig Mecham has different kinds of construction problems. Instead of a half-completed project, he’s got a half-demolished one. Amidst controversy, Mecham has destroyed a large block of old Sugarhouse with plans to rebuild a mixed use project. He started tearing down buildings and then stopped due to neighbors concerns and the slowing economy. What remains is a giant hole in the ground. Today, he’s agreed to at least landscape it.

My point here is the real estate slow down is going to affect a lot of things. We are not immune as the problems in the mortgage market are systemic. I don’t think things will be as bad here as other places, but we’re just beginning to see the backlash. Be prepared for more.