Caught in the housing bubble

  • By Chris Fyall Enterprise editor
  • Wednesday, October 29, 2008 1:36pm

Declining home prices have hit few people as hard as they have hit John Ryan, a Lynnwood man who owns nine homes in the south Snohomish County area.

For years, Ryan bought homes, rented them out for a few years, and eventually sold them at higher prices.

In the zany years of the real-estate bubble, it was a system that worked.

Ryan netted hundreds of thousands, even millions, of dollars in the 10 years since he started flipping properties, he told the Enterprise.

But then housing prices started falling, the credit market seized, and Ryan was in trouble.

The burst of the housing bubble caught Ryan in the middle of his most ambitious gamble ever: In 2006, he bought a 10-bedroom, 6-bathroom mansion in the 8000 block of Cyrus Place for $1.9 million, and spent a year and nearly $1 million installing granite and marble throughout, refinishing the floors and the walls, and spit-shining what had been a worn, adult home.

It has a spectacular pool, and a spiral staircase in the entry-way that Ryan says was imported from Italy.

It is no surprise that a tour of the mansion feels like an episode from MTV’s “Cribs,” which shows off the gilded palaces of rich celebrities.

Of course, TV shows are not what Ryan needs. He needs a buyer.

The property is listed on zillow.com, a real estate Web site, for $1.8 million.

But, nobody is buying — or even nibbling.

So Ryan, a married father of two young children, is stuck.

His mortgage is $18,000 a month – much more than he can afford – and he is starting to miss payments. At press time, he was two months behind.

He and his family fear that would-be buyers might simply be waiting for his bank to foreclose on the mansion.

The situation is desperate, Ryan said.

It is desperation that drove him this summer to start advertising the mansion as a rental on Web sites like Craigslist, offering the house for prices as low as $695 a night.

Unruly partiers capitalized on a good deal, and neighbors and police complained. Police were called seven times in a two month period between June and August.

“I am desperate, you know? That is all there is to it,” Ryan said.

He feels badly that his neighbors have been bothered, sometimes as late as 5 a.m., and that 38 signed a petition demanding that the city take action.

The city is contemplating new regulations that would mandate all home rental agreements be a minimum of 30-days long. The rule is targeted squarely at Ryan and his million-dollar mansion.

He understands. But he wants them to understand, too.

“People should not be able to run rampant with their property. There is no question about that,” Ryan said.

“I understand their viewpoint, but I am just trying to pay a mortgage,” he said. “You’re trying to make a $18,000 payment; there comes a time when you have to make some money.”

Ryan’s neighbors understand his pain, too, they said.

They have talked to him.They have seen the work he has done, but they still want their quiet neighborhood back.

Lauren Donchez has lived near the mansion for 14 years in an upscale neighborhood that was always quiet — until this summer.

“I feel sorry for the guy, but it has been egregious,” said Donchez, who said she cannot sit on her own porch during parties at the mansion. “It has not been very pleasant. If it continues, we will probably sell and move.”

Edmonds mayor Gary Haakenson doesn’t want it to come to that.

He’s an advocate of Edmonds’ proposed changes, which will be before the City Council Nov. 3.

“We just are not going to allow those neighborhood disrupting activities in a residential neighborhood,” Haakenson said.

Reporter Chris Fyall: 425-673-6525 or cfyall@heraldnet.com

Talk to us