If Their Plan Is To Exit, They Could Get Stuck
A report from the Seattle Times in Washington. “NEXUS, a new-construction, 382-unit condominium high-rise under construction at 1200 Howell St., underscored the pent-up demand for home ownership when it opened for public sales last month and subsequently sold more than 75 percent of its homes. Remaining homes at NEXUS include a mix of one-bedroom-plus-den, two-bedroom and three-bedroom homes priced from the low $900,000s. ‘Presales are back because the smart money is planning ahead,’ says Michael Cannon, the sales director for NEXUS. ‘Savvy buyers are locking in their future by investing today. A presale buyer doesn’t need to think about the move for another two years, and there’s no fear of price escalation or renovations. Current homeowners will also enjoy another two years of appreciation while their new condominium is being built.’”
From News Channel 5 in Tennessee. “Nashville’s first full-scale rooftop dog park hopes to draw in millennials in a very competitive housing market. With so many new apartments available in the market and more about to be completed, property managers are trying everything to get you to sign on the dotted-line. Other incentives being offered at apartment complexes around town include, salt water pools, outdoor fireplaces and on-site yoga studios. With the level of saturation in the Nashville area, experts said it’s a good time to be a consumer.”
“‘We have more than 400 residents and 100 of them have dogs,’ said Property Manager Courtney Dies. ‘This is what millennials want, this is the next level.’”
The Milwaukee Business News in Wisconsin. “Southeastern Wisconsin has sustained a construction boom for the past five years, particularly with multifamily housing developments being built in and near downtown Milwaukee. And while there are signs the market may be maturing as some developers and banks are putting the brakes on future projects, development and construction industry experts are confident the industry has not hit its peak.”
“One of the staples of this apartment boom has been high-end apartments in downtown Milwaukee targeted at millennials. According to Robert Monnat, a partner one of the city’s most prominent apartment builders, demand has never been higher for apartments, but high-end apartments for millennials have been overbuilt. ‘The market is beginning to exhibit normal characteristics where you have to think about what you are doing again,’ Monnat said. ‘It used to be biking downhill. At some point, you hit the bottom and you have to start pedaling again to get where you are going, and that is where we are. Projects are going to continue to get built, but they are going to get built only if there is true demand.’”
The Kokomo Tribune in Indiana. “The influx of housing to downtown Kokomo has left many wondering who is going to fill the apartments and townhomes and what could happen if some of the biggest projects flop. The biggest of Kokomo’s downtown housing projects, and its most talked-about, is 306 Riverfront District, a $32 million mixed-use development with 198 luxury apartment homes. the decision to undertake such an immense project wasn’t made by city officials, although they supplied the property. Instead, it was made by development firm Flaherty & Collins Properties after a meticulous market research process.”
“With roughly 9,000 people commuting to Kokomo for work but leaving at the end of the day to live elsewhere, Mayor Greg Goodnight and developers are focusing on what could become of Kokomo’s future. Goodnight said cities, similar to car companies, need to be on ‘the cutting edge of the next best thing,’ making the city attractive to people who could be convinced to move here. Flaherty & Collins Properties CEO David Flaherty, a person counting on an influx of commuters to fill the complex’s many luxury apartments, even noted that, ‘This project would not be possible without Kokomo Municipal Stadium.’”
The New York Times. “After a burst of construction, the luxury real estate market is awash with million- and multimillion-dollar homes for sale. Buyers are taking their time before signing on the dotted line, and sales agents and brokers have had to get more creative in drawing attention to their listings. ‘We’ve seen buyers come see an apartment four or five times and they’re still on the fence,’ said Steven Rutter, director of Stribling Marketing Associates, a division of Stribling & Associates. ‘There’s no sense of urgency.’”
The Real Deal. “The buyers who rushed into the Manhattan luxury real estate market in the frothy days of 2014 and 2015 did so with the expectation that their apartments would rise in value. But some have woken up just two years later to find that they must stomach a loss to resell their units.”
“So, what happens when buyer flip-flops? ‘When I got into this business, the sure bet was new development,’ said broker Dolly Lenz. ‘You get in first and you’re going to be able to flip it or resell it for 30 percent or even 50 percent more. In the case of 15 Central Park West, 100 percent. Today, buyers of new development better be very discerning and better have pen to paper because if their plan is to exit, they could get stuck like Leon Black.’”
“Private equity billionaire Black was a hot topic of conversation at the event, as a poster boy for the high-end real estate slump in Miami. He sold his condo at Faena House in Miami Beach for $12.5 million earlier this year, a steep discount from the $16.5 million he paid in 2015. Art giant Larry Gagosian flipped his penthouse at the same building for $12 million, a loss of nearly $1 million in just a year. Ken Griffin is also looking to flip his penthouse there. ‘It’s shattering every record again on the way down,’ Lenz quipped. ‘Leon Black just lost 25 percent plus 10 percent in closing costs. Hedge fund billionaire Ken Griffin is out before he’s in.’”
“The price crunch is also impacting developers, many of whom forked out top dollar for land several years ago with the assumption they could sell at record-breaking prices. Lauren Muss of Douglas Elliman agreed: ‘Every broker I’m dealing with is pretty emotional. They don’t want to hear it. It’s difficult to convince people of what their place is really worth,’ she said.”
The Seattle Times headline mentions “2nd in-city owners.” Nothing like gambling on pre-construction condos while you rake in that sweet equity from your current shack.
Yet, head into the rural areas and people are living hand to mouth.
people are living hand to mouth. yep, always been that way.
When you’re one and the same and surrounded by it, it only seems that way.
We are not socialists.
“…subsequently sold more than 75 percent of its homes.”
MOre from the article:
“He says securing a presale at NEXUS requires an initial 5 percent earnest money deposit held in escrow, followed by a 5 percent deposit increase by June 30 and closing mid-2019.”
“…subsequently accepted 5% deposits on 75% of its apartment units.”
There. Fixed it.
We’ll soon find out how many of these gamblers go thru with the deal or walk away from their 5% - 10%. Heads they win (flip before closing), tails the developer loses more than the deposit and eventually the American taxpayer via TARP2.0. I’m betting the lender will eventually release these as luxury rentals after the development is liquidated.
Neil, please pass the popcorn.
‘When I got into this business, the sure bet was new development,’ said broker Dolly Lenz. ‘You get in first and you’re going to be able to flip it or resell it for 30 percent or even 50 percent more. In the case of 15 Central Park West, 100 percent.’
I understand Dolly is kinda famous in RE circles. (She once bragged about Australian pre-construction towers selling out overnight to all Chinese speculators. Now 80% of them want out.) Here’s the thing: no one should ever be able to flip a new airbox for 30-100 percent more. If that’s going on somebody is gonna get their head handed to them. But these big wigs can never connect these dots when they are making gobs of loot.
‘We have more than 400 residents and 100 of them have dogs’
And 100 of these dogs bark. Come to think of it, some of these rich renters probably have more than one dog. And in the morning, when they all make a bee-line for the elevators, I’d bet each day at least one dog won’t be able to hold it long enough.
That was my first thought too - I would never move into a building where 100 of the 400 units have dogs. As a matter of fact, a rooftop dog park would be a major deterrent that would ensure I look elsewhere
Nothing like the smell of fresh urine in the morning…
Yes, there is nothing like having a roof top dog park….it all runs downhill. It seems likely the smell is going to get pretty overwhelming after a while.
Nothing like the smell of dog crap baking in the sun atop your luxury high-rise apartment building…
I once stayed at a hotel across from Madison Square Garden when the Kennel Club Dog Show was in town. The entire block around the hotel was a sewer. And the barking at night…Oy, veyh!!!
It seems the majority of tenants in my 300 unit complex have dogs, many of them more than one, and some of them quite large. They bark, they run around above my head jumping and playing day and night on the bare flooring (because nothing spells luxury like faux-wood flooring to echo every footstep) and they all poo everywhere. The people here do love their dogs, but not so much cleaning up after them.
‘We have more than 400 residents and 100 of them have dogs’
Did they convert Michael Vick’s old Ranch into condos?
Michael Vick vs Dog Jury
https://www.pinterest.com/pin/206602701628837201/
Oh yes, more stories about “pent-up” demand. The only investing that should be going on is the building of needed housing. Any speculation on real estate is sheer lunacy. There have been too many busts scheduled with the same dreary timetable. Honestly, I’d rather buy tulips. Those are at least pretty. Instead of true investments like construction of affordable units with some eye-appeal, we get luxury crap boxes, precious metals, valuable stones, housing-flippers, and more ways to lose money than ever.
Me? I went and bought something I have always wanted, a 2007 Mustang GT with a standard shift. Got it for $5.5K. Now, I know what it will be worth in a year: $4.5k. Bad investment? No, I’ll use this car to go to work, drive to New Orleans or the beach, go to my other part-time job, and take my wife for drives in it. I’ll keep this car for a while. Hopped up Ford 4.6Ls are fun.
If I’m going to lose money, I’d like to know how I’ll lose it, and how much I’ll lose.
Regards,
Roidy
Nice. I wish Bill would have done the same.
2007 Mustang - i bet it rattles like crazy! Did you factor in the new transmission and suspension? Sensors? AC compressor? U paid too much.
Still cheaper than paying $40K for a new one. If the mileage is low and it’s clean (yeah, not likely on a 10 year old car), why not? Transmission replacement? He said he got a stick, so maybe a new clutch might in order, but he won’t need a new gearbox or clutch if the miles are low.
I suppose you could lease a new one for 3 years for 20-25K. For that difference he could just throw the old one away and replace it.
The new ones are insanely powerful (mid 400 HP) but if it’s hot rodded then there won’t be much difference.
As someone who has had well over 50 cars by now, I lease these new PC’s on wheels, I can afford to and new cars are faster, quieter, and better MPG AND SAFER.
Oh, yes. A few rattles. Nothing I can’t handle. Transmission is standard, or I wouldn’t have bought it. Clutch is not due until 170k. It’s at 118k now. Nice and clean. No crap tint on the side windows, new front windshield, two year inspection sticker. Runs smooth without problems. Suspension is solid, AC compressor replaced with OEM parts. It’s a good car. I like it.
So, new_att, what Chevy or Dodge do you drive?
Regards,
Roidy
Natty Ice Dude’s car
http://whitetrashrepairs.com/redneck-catering-truck/
new attitude
‘people are living hand to mouth. yep, always been that way’
Especially out there in Appalachia on the Pacific.
Appalachia on the Pacific
That’s the perfect description for much of the west coast.
‘people are living hand to mouth. yep, always been that way’
He would know, wouldn’t he
Appalachia at least has some hope that things will get better, the pain is only going to get worse in California when the high tech and housing bubbles pop. Coal country is coming back, must be fake news since we were all told Trump could not help bring coal mining back:
http://www.msn.com/en-us/money/markets/in-coal-country-signing-bonuses-and-pay-raises-are-back/ar-BBACMCY?li=BBnbfcN
I rented that Mustang, I was shocked at the cheap plastics inside and bad visibility.
I drive an Acura. Japanese robots make the best cars. I am not sure of the processing speed.
I rented that Mustang, I was shocked at the cheap plastics inside and bad visibility.
Hahah…you should try a Camaro.
The target market for those cars doesn’t care about those things. I’ve owned a Mustang, I’ve owned an Acura. Liked them both for different reasons. Enjoy your Acura.
‘Mayor Greg Goodnight and developers are focusing on what could become of Kokomo’s future. Goodnight said cities, similar to car companies, need to be on ‘the cutting edge of the next best thing,’ making the city attractive to people who could be convinced to move here.’
For the monthy rent of these luxury apartments you could buy most of the houses in Kokomo:
Kokomo, IN Real Estate & Homes for Sale
405 Homes
http://www.realtor.com/realestateandhomes-search/Kokomo_IN
Kokomo, IN Price Reduced Homes for Sale
110 Homes
http://www.realtor.com/realestateandhomes-search/Kokomo_IN/shw-pr/show-price-reduced
Oh dear…
Goodnight Irene
I lived in Kokomo for two years back in the mid-1980s. It was the headquarters for Delco Electronics (now a part of Delphi whose HQ is now in Britain), who employed almost 20K employees within the city. That number is now under 2K and falling.
Chrysler still has a casting plant and transmission assembly plant located there, which has to be the city’s largest employer now.
I still can’t believe that project is going to happen in Kokomo. It’s also in a floodplain I believe.
Isn’t globalism grand?
Good news and another example of the jawboning power of a president but I wonder if it is going to pay them Indian wages?
https://www.rt.com/business/386836-india-infosys-us-jobs/
‘Every broker I’m dealing with is pretty emotional. They don’t want to hear it. It’s difficult to convince people of what their place is really worth,’ she said.”
A realtor friend of mine told me this exact same thing. He says the worst clients are old boomers who want to list their house at some unattainable number. When he explains that the market can’t support their price they always say the famous boomer line: “Well, I’m not gonna GIVE it away!”
w interweb tubes why would anyone use a realtor?
I bought an sold w/o them pre net. Can’t wait to sell my own shack via web=a breeze
Some small towns have tribes of Realturds who will black ball the FSBO listing, lie about it too.
It’s exactly that way in our small western town. FSBO is the kiss of death for your property.
I bought my home FSBO. I still had to pay for a title search and loan destination but no appraisal since I put up $50k on a $125k purchase price. It took about five working days to close and no more than $1400 in total fees. I paid it off in nine years along with student loans and major dental work. Never again.
Well, you’re gonna die in it then, and a lot sooner than you think.
http://www.zerohedge.com/news/2017-05-01/attention-turns-torontos-subprime-debt-time-bomb
Attention Turns To Toronto’s Subprime Debt Time Bomb
Canada is my number one pick for a country about to implode.
Falling prices to dramatically lower and more affordable levels is the only path to a booming robust economy my good friend. Here, there and everywhere.
1 million dollar purchase with a $250,000 rehab budget on Property Bros. proves it!
the global central bank regime has you guys by the b@lls.
It’s got everybody by the balls. I was reading the other day on ZH that a rise in interest rates to 3.5% would cause massive and widespread defaults and business failures. Let the implications of that sink in.
I have days that I pray for a Carrington event to flush the planet.
‘On September 1–2, 1859, one of the largest recorded geomagnetic storms (as recorded by ground-based magnetometers) occurred. Auroras were seen around the world, those in the northern hemisphere as far south as the Caribbean; those over the Rocky Mountains in the U.S. were so bright that the glow woke gold miners, who began preparing breakfast because they thought it was morning.[6] People in the northeastern United States could read a newspaper by the aurora’s light.[9] The aurora was visible as far from the poles as Sub-Saharan Africa (Senegal, Mauritania, perhaps Monrovia, Liberia), Monterrey and Tampico in Mexico, Queensland, Cuba, Hawaii,[10] and even at lower latitudes very close to the equator, such as in Colombia.[11] Estimates of the storm strength range from -800 nT to -1750 nT.[12]‘
‘Telegraph systems all over Europe and North America failed, in some cases giving telegraph operators electric shocks.[13] Telegraph pylons threw sparks.[14] Some telegraph operators could continue to send and receive messages despite having disconnected their power supplies.[15]‘
‘On Saturday, September 3, 1859, the Baltimore American and Commercial Advertiser reported: “Those who happened to be out late on Thursday night had an opportunity of witnessing another magnificent display of the auroral lights. The phenomenon was very similar to the display on Sunday night, though at times the light was, if possible, more brilliant, and the prismatic hues more varied and gorgeous. The light appeared to cover the whole firmament, apparently like a luminous cloud, through which the stars of the larger magnitude indistinctly shone. The light was greater than that of the moon at its full, but had an indescribable softness and delicacy that seemed to envelop everything upon which it rested. Between 12 and 1 o’clock, when the display was at its full brilliancy, the quiet streets of the city resting under this strange light, presented a beautiful as well as singular appearance.”
https://en.wikipedia.org/wiki/Solar_storm_of_1859
I found this at the link:
‘The solar storm of 2012 was an unusually large and strong coronal mass ejection (CME) event that occurred on July 23 that year. It missed the Earth with a margin of approximately nine days, as the Sun rotates around its own axis with a period of about 25 days.[1] The region that produced the outburst was thus not pointed directly towards the Earth at that time. The strength of the eruption was comparable to the 1859 Carrington event that caused damage to electric equipment worldwide, which at that time consisted mostly of telegraph stations.’
https://en.wikipedia.org/wiki/Solar_storm_of_2012
Hong Kong bubble hitting 22-year high.
http://www.scmp.com/property/hong-kong-china/article/2092034/hong-kongs-new-flat-sales-surge-22-year-high-hk375-billion
Average transaction price = U$ 1,785,000/unit. Wow.
Cullinan West was the most sought after….U$ 2,147,000/Unit
China’s all-omniscient central planners would surely never let a speculative bubble get out of hand and threaten the financial system.
http://www.reuters.com/article/us-china-economy-debt-idUSKBN17X1BD
You seem to ignore it is the Chinese government itself that has identified the problem and is actively taking measure to deflate the bubble. Moreover, it is having a success. It moved because its GDP was growing faster than plan. When GDP was slower, it helped create the bubble. Both the US and China use bubble to create growth, the only difference ironically is China is more honest about it, because it has no problem with acknowledging it is a planned economy. The US is a planned economy masquerading as a free economy.
“The US is a planned economy masquerading as a free economy.”
Bingo. We’ve long ago trodden that ground here, but the U.S. central planners and their propaganda apparatchiks remain resolutely in denial.
HA - found your truck you always talk about unloading.
https://slo.craigslist.org/cto/6113186908.html
$11000.
My first vehicle was a 1969 short narrow Ford, about the same puke green color. If I had to drive it, you couldn’t pay me 11k to take it from you.
that is a barn find! I had a hand me down ford capri in high school for a bit. I remember the throttle cable broke and I had the co pilot operate the throttle from a cable to the carb outside the passenger window. Had to improvise but it got us home.
$11k? Are you sure that isn’t a troll? Nasty. Really nasty.
Regards,
Roidy
Its not easy being green
https://www.youtube.com/watch?v=rRZ-IxZ46ng
is this AL dufus’es new movie
Time to dust off my copy of the Marx Brothers film, The Cocoanuts. Groucho Marx’s character, Hammer, is a scam artist and used home sales person:
Florida Housing Demand Plummets 35% YoY
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
http://myrealestatedealzone.com/san-diego/
Those testimonials are awesome!
These are my two favorites.
“Joy Tied Up 83 Properties In Memphis, For $1000 Down!”
“You might remember me and my son from your Fort Lauderdale event - Jamaican, crazy hair! Well, I just tied up 83 properties in Memphis, for $1000 down!”
“$41,000 All Cash Pay Day For Bob”
“I bought a property for a total of $109,000 with closing cost. I took their $90,000 mortgage subject to, paid $9,000 to reinstate their mortgage and gave them $5,000 to walk away. They were scheduled for foreclosure. I put a handy man special ad in the paper and sold it to another investor for $150,000 cash! You guys Rock!”
Bob Chandler
why would anyone ever tell someone else the “secret” to making $ ??
“why would anyone ever tell someone else the “secret” to making $ ??”
For the joy of seeing someone with Jamaican crazy hair tie up 83 properties in Memphis for just a $1000 down?
Are you missing out on the last remaining cheap asset in Bubbleland?
Here’s the ‘last remaining cheap asset’ as the Fed pumps up prices for everything else
By Victor Reklaitis
Published: May 2, 2017 7:52 a.m. ET
Critical information for the U.S. trading day
And you thought there weren’t any deals to be had.
It’s time to see if Apple’s earnings and the Federal Reserve’s latest signals can keep the stock-market party going.
The Colossus of Cupertino’s big reveal comes after the close, while Janet Yellen & Co. are starting to huddle up today, then send out a memo tomorrow.
…
So many solar panels! Doesn’t Apple know that coal is America’s future?
Certainly a fuel that gives America an energy price advantage is a part of our future. China is running out of coal and is buying and importing it at prices far higher than we are paying. Hence, it support for not allowing us to maximize our competitive advantage. Smart.
Looking for my buggy whip… USA makes the best ones!
if someone you know is about to hop in at the peak just ask them
“would you buy a residential REIT if it cost 6% to exit?”
“F” new low
every bubble has popped except RE and stocks
That is because they are government endorsed and encouraged bubbles, the other ones were accidental and actively discouraged.
Biggest accomplishment of first 100 days:
Inspiring discussion of a proposed CSNY reunion.
Beam me up Scotty
Wooden beams trending in Conn. real estate
Lidia Ryan Updated 1:57 pm, Monday, May 1, 2017
http://www.ctpost.com/realestate/article/Real-estate-trend-Wooden-beams-11112116.php
Last night I took my 5 yr old, super-slow laptop and swapped out an SSD drive and LINUX, blazing fast now.
‘‘We’ve seen buyers come see an apartment four or five times and they’re still on the fence,’ said Steven Rutter, director of Stribling Marketing Associates, a division of Stribling & Associates. ‘There’s no sense of urgency.’”
The NYC supply glut is already fully manifest at a protracted period of near-record low unemployment. It’s bound to get extremely ugly in the next recession. Good thing the Fed has established a recent precedent for massive bailouts in the 2007-2013 episode, as the need for electroshock economic stimulus is soon to recur. Small wonder so many pigs are crowded into the trough.