Condos ‘Poised To Take A Hit’ In Philadelphia
Some condo bubble reports from the Philadelphia Inquirer. “When it comes to price, Philadelphia was the biggest winner. The city’s median represented a 32 percent increase over the 2004 median. The address for much of the region’s home-price success? Downtown Philadelphia and surrounding neighborhoods, where loft conversions and new construction on long-vacant former industrial and government-owned property moved speedily from conception to reality.”
“‘You can’t stand too long on any corner, or they will turn you into a condo,’ said Bari Shor, an agent in Center City.”
“Can Philadelphia have too many million-dollar high-rise condos? As the city’s real estate market slows along with those of the region’s and the nation’s, some local observers say that high-end housing seems poised to take the biggest hit.”
“It’s my gold-faucet condo theory,” said Fred Glick, president of US Loans Mortgage L.L.C. in Old City. ‘Ten separate developers hire consultants who tell them to build high-end, high-rise condo buildings, and 10 different shovels go into the ground. When you look closer at the market, there are only enough buyers for five of them.”
“Real estate agents say they are seeing a summer slowdown in sales in all price ranges for the first time in two years. As a result of the current slowdown, city listings are climbing into the thousands of units. And, with interest rates heading upward, buyers have been losing that sense of urgency that they need to buy a particular house now.”
“‘For the first time in years, buyers are low-balling offers and then moving on to the next house when the seller won’t budge,’ agent Mark Wade said.”
“Although investors have played a major role in pushing up prices in many neighborhoods in the Northeast, (broker) Chris Artur said, higher prices have cut the number of them by about 50 percent and sent them down to the Kensington area.”
“‘We are now about one-third investors and two-thirds first-time buyers, but a lot of those buyers come with credit problems that need to be addressed, even though lenders will still give you 100 percent if all you have is a pulse,’ he said. ‘It’s taking a while to get these sellers to look at reality,’ Artur said.”
“The long term for the Philadelphia market still looks good, even if, as Center City Realtor Allan Domb insisted, ‘half of the projects planned likely will never be built.’”
‘The Lebanon Daily News. ‘Michael and Alma Raffaele have had the two-story house in Springbrook Farms listed since December. ‘The market is slow,’ Michael Raffaele said last week. ‘We’re just not having any luck selling the house.’
‘Michael said the house may not have sold, in part, due to the price tag and the nearby new housing construction. The asking price was recently reduced to $285,900. ‘I am open to any reasonable offer,’ he said.’
I love these quotes they come up with…
“The long term for the Philadelphia market still looks good, even if, as Center City Realtor Allan Domb insisted, ‘half of the projects planned likely will never be built.’”
It’s time for the Bubble Mad-Libs!
“The duration term for the city market still looks positive adjective, even with noun occurring location. Real estate always goes synonym for up.”
What I find interesting is that quotes like these are always intertwined with contrary indicators. Like “Inventory is at a record high, but that means that buyers have more choices” or “Prices are slipping but that’s good for a healthy market and frankly I’m relieved”.
The positive spin on how the market is okay seems to be rooted in conjecture, nervous optimism, or wishful thinking…data and facts are glaringly absent.
“‘For the first time in years, buyers are low-balling offers and then moving on to the next house when the seller won’t budge,’ agent Mark Wade said.”
That’s really a good strategy to use if you want to buy. Get an ordered list of the top 6 of 8 properties and start working down from No1 with super-lowball offers. If the owner drops close to the offer, perhaps go to round 2, otherwise repeat all the way down the list, until you identify the panicked seller with the ability to drop his price (not eveyone can afford to drop their price without brining CASH to the closing). With inventories high and a lot of nervousness I am convinced it’s a good time to use this technique, if you feel compelled to buy.
I would rather sit tight and wait a year or 2 if I were already in a rental. I was in a situation with an employer once where I had 6mos to close on a house where they would cover all costs - moving, closing, legal…, so that I suppose is pretty good motivation. There could be others.
one third “investors”,say one third with credit problems…sounds like solid demand,compared to phoenix anyway.
The ten condos-being-built relative to a demand for five is a problem that’s been around for a long, long time. It’s an interesting problem, from the point of view of a non-stuckee, wondering why the information age didn’t mitigate the problem. But that increase in speed of communication has been offset by the imposition of layer upon layer of regulation and red tape regarding large-building construction.
The last time I saw this problem up close and personal, here in central Florida, was the building of hotels in the area around Disney as soon as the park opened. It seemed no one building a hotel noticed that everyone else and their uncle were, too. Then the overbuilding was compounded by the oil crisis and resultant plunge in tourism — you could stay anywhere, including very nice hotels, for under $30 a night and in some places for as little as $10-12. The parallel now for places like Philadelphia and Miami is that they are overbuilding not only relative to the assumed market, they are waaaayyy overbuilding relative to the near term post-crash market.
In condo-bubble areas, as a result, there will be a very noticeable number of skeleton buildings uglifying the skyline for years — bankrupt, incomplete projects tied up in court battles instead of being demolished or completed.
Is there any “demand” where real according to Maslow’s hierarchy of needs or created by advertisers or manufacturers of products that isn’t met and then overkilled by a factor of 100? If someone comes up with an idea, how long is it before it’s being copied and commoditized to sell large amounts for less profit on each one. I can’t stand to even go to a mall anymore. It makes me nauseous to see all the “stuff” being hawked in such a cynical way.
Well, supposidly condo sales are “surging” here in the San Fernando Valley according to the Sunday LA Times real estate rag! I guess SFH are going to be next to SURGE in brisk sales since this is occurring. It makes me want to PUKE! These people will say anything and spin, spin, spin! They really need to go into politics!
LARenter
Not to worry…nothing is surging in LA…except perhaps the inventory. The market is frozen. There are a few folks that cashed out on the westside downsizing to the valley…just wait till they melt in the triple digit temps!!!!
You’re right….the open houses in LA aren’t getting 1/10th (less?)the foot traffic they were getting last summer. Agents must be bored out of their minds, not to mention frustrated beyond belief.
“‘For the first time in years, buyers are low-balling offers and then moving on to the next house when the seller won’t budge,’ agent Mark Wade said.”
Also, for the first time in years, recent buyers (1-3 years) are beginning to realize they may be in over their heads as markets cool and homes in their area aren’t selling. The “leverage” buyers have now is just a taste of what’s to come.
And then factor in that half the “buyers” are the same fools who bought last year and want to “move up” yet can’t sell the shitbox they currently occupy. That’s the bunch I want to see terminated. They see these great “bargains” (being the only ones stupid enough to think of them that way) and want to overprice shitbox No. 1 to buy shitbox No. 2 at a discount, thereby declaring themselves the brilliant real estate arbitraguers they always knew they were.
Can you tell I’m in a bad mood?
…where loft conversions and new construction on long-vacant former industrial and government-owned property moved speedily from conception to reality.”
I live outside NE Philly. There’s a naval air base here (Willow Grove) that is being shut down in the next few years. Lots of talk about what might go up in its place (if the land becomes available). I will cringe if it’s more McMansions or condos. I’d rather have a civilian airport (lots of folk protesting that around here) than more ridiculous housing. Besides, when the navy families all move away I’d suspect demand for housing will decrease.
Hey Ecoaster. OCNJ here. Have relatives up that way. Also Doylestown. On topic, had a brother who just recently closed on a condo sale in south philly. He was surprised by how low the appraisals were coming in at.
Are you a year-round Ocean City resident? Or seasonal?
Re: your brother’s condo - was it priced in line with the appraisals he was getting?
Year round. His was priced slightly above the 1st app. Silly buyer went and got a higher app from someone else. Brother was cool because he bought a few years ago and did well but there were others who have bought in same building recently for 30-50% more than current app.