“An Extension Of This Hyper Market” In Arizona
A report from the Arizona Republic. “Buyers for metropolitan Phoenix’s most expensive condominiums have gotten pickier and more cautious at a time when developers are racing to build dozens of elite condo projects across the city. Now, more than 30 of these urban projects are either finished or under construction in multistory buildings close to restaurants and stores.”
“More than 20 of the projects, mainly in Phoenix and Scottsdale, feature units costing $1 million or more, according to the Sullivan Group.”
“‘There are just too many of these luxury condos,’ said Bob Kammrath, a Phoenix commercial real estate analyst. ‘For the life of me I can’t fathom why they would be appealing here. People with that kind of money can buy a nice house and hire someone to take care of the yard.’”
“Condo advocates sell the lifestyle. ‘I don’t think we have scratched the surface,’ said Keith Mishkin, founder of a Phoenix company specializing in urban condos. ‘With more urban product, you create a critical mass and create a community where people can live, work and play in places that are walking distance for them.’”
“The new-home and resale housing markets have been soft this year after an investor-driven boom that pushed prices and sales to records. Condos are feeling the pain, too. ‘A lot of this condo stuff was an extension of this hyper housing market,’ said Jay Butler, at Arizona State University Polytechnic.”
“There already are signs of trouble in the Valley’s overall condo market: Foreclosure notices were filed against Elevation Chandler, a condo-hotel project near Chandler Fashion Center, and Chateaux on Central, a luxury brownstone project on Central Avenue in Phoenix.”
“Some developers are reversing course on condo-conversion projects and turning them back into apartments. Houston real estate company Hines decided to build an office tower near 24th Street and Camelback Road in Phoenix rather than the condo tower it considered initially.”
“It’s hard to gauge real demand. Investors have bought into some of the buildings, hoping for quick sales at higher prices. Many of the buildings are so new that they have yet to run through that portion of buyers who don’t plan to stick around. Some units have become rentals.”
“‘We don’t know how many are being sold to investors,’ Butler said. ‘A lot of the market is going to be for seasonal visitors.’”
“About 5,000 apartment units are expected to be built next year, mostly north of Phoenix, the southwest Valley and far east in Mesa, Gilbert and Queen Creek. Failed condo conversions may hurt some nearby apartment complexes by offering lower rents.”
“Real estate watcher Jay Butler anticipates the return of some concessions because of those failed conversions. He’s already noticed a few complexes posting free rent.”
“‘They are not going to get the big rent increases,’ he said. ‘A lot raised rents (once the housing market stalled), and a lot are finding that they are having trouble keeping tenants.’”
‘Maricopa County will auction off a 53-acre, triangle-shaped pocket of land near Grand Avenue and Loop 303 on Jan. 11. The appraised value, and lowest acceptable bid, is $6.4 million.’
‘The parcel borders Sun City West to the south and east, Surprise to the west and Loop 303 to the north. It has potential for residential or other development.’
‘Sun City West’s governing body approached Pulte Homes, which builds Del Webb communities, about Pulte buying the land to build more age-restricted homes, said the group’s president, Chuck Ullman. However, Pulte Homes spokeswoman Jacque Petroulakis said the company has no interest in buying the land.’
“The appraised value, and lowest acceptable bid, is $6.4 million.”
WTF? They are only interested in bids ABOVE appraisal? Right now the dirt is paying zero in taxes but if you pay more than it is worththen you get to pay property taxes on more than it is worth.
Let me translate. The secret is in “potential for residential or other development.” If you pay more than it is worth now the county will give you some free zoning concessions.
I cnnot tell you how often and how much it sickens me to see the public trust abused in the fashion.
I predict a quick, nobid auction.
Yeah, it would be great to live beside the under-construction Loop 303 freeway. And when it is finished, you can sleep soundly with the soothing jake brake noises from what will then be part of the CANAMEX Corridor. Of course, proximity to the active freight train tracks on Grand Avenue is another selling point.
“However, residents strongly support the parcel’s zoning for any type of residential or other low-key use, such as a cemetery, according to the community’s association of property owners and residents.”
WTF? I never understand an auction with a minimum bid… Is it really capitalism? or some kind of joke pretending to be a fair trade?
Is Microsoft real capitalism ?
“WTF? I never understand an auction with a minimum bid… Is it really capitalism? or some kind of joke pretending to be a fair trade?”
Eh? The seller always has the right to set a reserve price (or any other legal conditions of sale). If it’s too high, then no one buys.
“‘There are just too many of these luxury condos,’ said Bob Kammrath, a Phoenix commercial real estate analyst. ‘For the life of me I can’t fathom why they would be appealing here.’”
It sure smells like the result of government subsidy to me. When the government subsidizes something, the usual result is oversupply.
“‘With more urban product, you create a critical mass and create a community where people can live, work and play in places that are walking distance for them.’”
Walking??? In car-centric Phoenix? Where the average daytime temp six months out of the year is over 100 degrees? Yeah, that’s going to take some effective ‘lifestyle’ selling.
Was going to make the same comment. The only place Phoenicians walk is from their car to their front door. I’ve seen people in Phoenix drive to their mailboxes (no joke).
Do you blame them during the summer 113 degrees in the shade. No thanks.
I drink hot coffee on the 115 degree days. No problem. Just bring it into my air conditioned office and it’s like Redondo Beach, CA…minus $640,000
I put my money to better use in the market and not real estate. Mostly women are the ones who complain about the heat. The men who complain are the wussies.
We have 3.7 million people here who came for many reasons. I earn $83 per hour and cleared $210,000 Year to Date and most of that was here in Phoenix (with overtime). We have all sorts of high tech industsries: Orbital Sciences, Honeywell, Boeing, Motorola, General Dynamics, Intel, Lockheed, and a bunch of small high tech companies, including the client I’m contracted out to. We have the headquarters of US Airways, all sorts of hospitals and clinics (Mayo Clinic, and that’s not a symposium on how to make sandwiches). This is the fifth largest metropolitan area in the U.S., edging out San Diego.
So we are a bunch of idiots for living here. You can have your snow and ice. I’ll take sunshine and heat. That means bikinis around the pool. Now what sort of red blooded American guy would not want that?
Well, right. That’s why “az_lender” summers in Maine.
yes, laughed at that too. There’s also somewhat of a different feel in Phoenix - even in PV and Scottsdale. They really really like their pick-up trucks.
Plus it will probably be the usual suburban condo disaster, where either the thing is surrounded by walls or the entrances to the condos face only the inner gated parking lot and not the street itself. This means that pedestrians get to walk a long convoluted route, just to get to the street, which usually has 6 lanes of cars speeding along at 55 miles per hour and any business within nominal walking distance is also surrounded by huge parking lots and barriers to foot traffic. (Using Irvine, California as an example here.)
What the hell is the point of living in a condo in such an environment?
Reason to live there: ’cause it’s cheap. Which means that there’s NO reason to pay these sort of prices.
I am trying to envision a bunch of people who make 250k a year walking to work in pheonix. This will happen but it will be in year2086
That guy relating condo building to critical mass is amusing. I’m sure he is aware that too small a mass and you get non-sustainable decay, too large a mass and you get a supercritical response with potentially violent disassembly.
The Emperor has no clothes:
“‘There are just too many of these luxury condos,’ said Bob Kammrath, a Phoenix commercial real estate analyst. ‘For the life of me I can’t fathom why they would be appealing here. People with that kind of money can buy a nice house and hire someone to take care of the yard.’”
This commercial analyst is not alone. Wonder if he reads this blog? Seriously, in places like NYC, SF, Chicago, etc., this high end product might be desired. But Phoenix? Give me a break. This bubble has produced some of the absolute lamest developments ever known to man.
And how about this Einstein?
‘With more urban product, you create a critical mass and create a community where people can live, work and play in places that are walking distance for them.’”
Talk about drinking the Kool Aid! I guess he has to believe in the dream since that is where he gets his paycheck. I can’t think of a much worse area for urban condos. Jesus, when will this madness stop? Phoenix is going to get bitch slapped so hard it isn’t even funny.
It’s amazing how all of these wannabe cities think they can be the next New York City. They are sprawled out with no central core, no public transportation and not nearly the selection of nightlife that New York has but hey who is counting?
New York may be a toilet in many respects but Phoenix, Miami, Vegas and all the rest can only hope to be such a toilet. Yes, I included Vegas. Leave the strip and there isn’t much else there, especially for the social phonies these places are trying to attract.
Yes. I live in the Phoenix area, and the only reason to live in a condo would be if it were super cheap, which isn’t the case.
By the way, I keep hearing these commercials on the radio for a condo development in Flagstaff. “Just a short drive from Phoenix.” “Studios are priced affordably starting in the 120s.” Flagstaff living for $300/sf!!! Good freaking luck…
And the Strip is far from a general purpose shopping street (and it’s not particularly friendly to pedestrians, either). If you lived there, you’d still need to drive somewhere if you wanted to buy a loaf of bread or a stapler.
LOL.
Yeah… those will be nice “communities”. But first we need a thousands of upwardly mobile wealthy families to move out here for some odd reason and buy all these expensive condos…
“It is difficult to get a man to understand something when his salary depends upon his NOT understanding it!”. I think this quote directly applies to Mr. Mishken (quote previously pulled off of this blog).
Or - more to the point - how about asking him if that’s his dream? I’m sure the answer is “oh no - I’m happy in SF house in (whatever decent suburb/neighborhood).”
Ponder the mindset that looks at the Sonoran Desert and visualizes endless high density housing, that can only be accomplished by ripping up resources and dragging them there. At this rate Niagara Falls will be a water slide in no time.
Until Canada builds a wall to safeguard its ressources
Just back from Tucson for Holidays. No ther mountains like Catalinas and surrounding Sonoran. Runining that in someways sticks a stake in my heart even more than building along scenic coastal 101.
I was vacationing in Scottsdale in July a few years ago. Went for a jog during the afternoon and started getting heat stroke. I’m used to running in Los Angeles in the ‘heat’ but they have a monopoly on heat out in AZ.
I hear winter is nice though, I bet its ok now.
If you are looking to buy property that really takes a bad hammering in a real estate slump then buy a condo. Condo’s are the first to tank (badly) and the last to climb out of a slump (slowly).
I owned and lived in a condo in West Hollywood until 2003 when I sold, other condo owners in good standing ended up paying for roof repairs, insurance and other expenses for two condo owners who went bankrupt, I decided NEVER to own a condo ever again. Add in the fact that if you have “community facilities” like a pool or sauna or workout gym and don’t use them, you are paying for those that do. Add in the fact that if you have several condo owners who have children, then you are subsidizing their larger water expenses, etc. Add in the fact that a condo fb might try renting out their condo and thus you never know who they might be. In the condo complex I lived in (15 condo’s) one of the owners who eventually went bankrupt, rented to a drug dealer and his part time hooker girl friend. Strange people in and out of the building at all hours of the day and NIGHT. Some high on drugs coming to buy more. And it’s not much use trying to get the bad guys out even if the condo rules say you cannot rent. It can takes months to get the rule enforced. Let them keep their million dollar condo’s or their $200,000 condo’s. Too much aggravation.
Anybody know anything about Laguna Woods, CA., aka Leisure World aka Seizure World in Orange County? Prices seem reasonable, though fees are high. In some cases, they include property taxes. Foreign to me, but looks like a safe, clean, pleasant place to retire.
MiL lived there. Very quiet. Most leave feet first. You can get a good deal from family in probate and plenty of estate sale booty.
One thing, when they say senior… well, 75 is a youngster.
Always has been, and still is the premier community for +55 in US. My mother and father lived there. More expensive digs are in Gate 11 which are free standing small homes ranging 600-750K. Dues were 450 monthly for those. But other gates start at 250-300 with lessser dues. If you golf and use all the facilities, the dues are a good deal. Extremely well run place, but to get into LW now, you must have 70K annual income - which means investment income for most. Laguna woods itself is a very pretty community all round. There are older people there, but also plenty of younger and many still working.
forgot to mention, (not sure if allowed here), very honorable, talented realtor there is Ann Richards, Leisure World Realty, Laguna Woods.
condos end up,paying retail for everything- you’ld think there was economy to scale but it works out more like GSA purchasing a 600$ toilet seat
Yep… same here: I don’t give a damn about “luxurious” crap I have no intent on using and facilities that do not interest me a bit. Yet maintaining that pool and all those (artificial) full time jobs requires plenty of money.
All I can see useful for a condo tower is a guard. Maintenance should be on a contractual basis with lowest bidder selected.
Maintenance should be on a contractual basis with lowest bidder selected.
Having had several landlords in the past who hired the cheapest assclowns they could find to repair things in my apartment, I cannot agree with this very bad idea.
Ok… let me rephrase: cheapest assclowns with references who get their stuff at Ikea.
Yep, went to Phoenix in August. The temperature never went below 90 for the entire day. Bet you the pools are not even refreshing from all that sunshine and heat.
Walking around Phoenix in the daytime, or even nightime, is just asking for trouble.
One of the few times I was in Phoenix, I was driving on the edge of downtown and saw a crackhead attacking a prostitute in the middle of the day, on the sidewalk.
And there was no one crazier enough to be outside walking at the time!
Hey just like SF and LA! No one so many CA people move there, they feel right at home.
Hey Ben, how were you so sure she was a prostitute?
Bwwwaaaahhhaaaa. That wasn’t nice. But funny as hell.
she must have been wearing a yellow century 21 blazer…
and the crackhead was saying “research THIS suzanne”
ROFLMAO!
Posted ” I was driving on the edge of downtown and saw a crackhead attacking a prostitute in the middle of the day, on the sidewalk.”
I could fill in the blanks and get kicked off the Board but since in still early in ” Happy Hour” I will spare myself.
never below ninety even at 5am.
Air conditioner works well at 5 am in the summer. BFD
I lived in Phoenix for 3 years. With rare exception, nobody will actually want to live in one of these things. Just 4 years ago $1 million would buy you a 2 acre estate with beautiful pool and land in the mountains of Paradise Valley. Noboby is going to lay down $1 million to live in a high rise $-itbox to be in central Phoenix. Talk about bubble mentality.
Another way of looking at it - who wants to spend $1 mil to live n a high-rise hotel room?
Well for that much money you COULD live in a highrise hotel and get maid service in the bargain.
Wow, a RE/MAX ad on Ben’s blog. Ben must be moving up in the world.
I thought the same thing. Wow. What is that guy thinking to put an ad here, now?
Without free money they were nothing.
They built a house of straw. The thundering machines sputtered and stopped. Their leaders talked and talked and talked. But nothing could stem the avalanche……
Their world crumbled. The cities exploded. A whirlwind of looting, a firestorm of fear. Men began to feed on men.
On the roads it was a white line nightmare. Only those mobile enough to scavenge, brutal enough to pillage would survive. The gangs took over the highways, ready to wage war for a tank of juice.
And in this maelstrom of decay, ordinary men were battered and smashed.
Except for one man armed with an AK-47, and a Honda full of silver.
nice Mad Max reference. Mel should do a 4th mad max movie, make people love him again. That role made him anywayz
Yesterday’s Oregonian newspaper business section noted the turn of the condo market in Portland. Last year, people were in line, cutting in, buying multiple units. This year, hundreds of condos are available, and old high-rise apartment plans are being dusted off.
I live in phoenix and have been watching the progress of some condos which are being built down the street from where I work. They want $378k for a 3bd condo in the middle of a very “depressed” area. Leaving work at nights I would get accosted by panhandlers/hookers. The nearest restaurants and retail have signage which aren’t in English. Driving 32nd St. during any time of the day is called “running the gauntlet”, the quality of driving by most of the denizens of this area is like driving in Tijuana.
The project itself looks like it was designed by Hasbro/Playskool. It’s as out-of-place in the neighborhood as an Outback steakhouse in New Dehli. I’m thinking of doing a blog just dedicated to this development by itself. MLS #’s for all you ziprealty junkies are: 2648719 , 2665217 , & 2659975 .
Another thing is that these “luxury condos” typically have HOAs from $600 to $1000 per month. Sure, they have a lot of convienance, but you can hire a lot of people to take care of stuff around the house for that kind of money.
“Condo advocates sell the lifestyle. ‘I don’t think we have scratched the surface,’ said Keith Mishkin, founder of a Phoenix company specializing in urban condos. ‘With more urban product, you create a critical mass and create a community where people can live, work and play in places that are walking distance for them.’”
That’s probably what the developers said of the condo project that sits in a weedy field between the parking lot of the Dulles Town Center shopping mall in NoVA and the highway. Imagine that: every day you can slip on your tennis shoes and trudge over to the mall, where you can wander the halls, drop some dough on a gizmo you don’t need at The Sharper Image, and get a plate of General Tso’s Chicken at the food court. After that, you can take your shopping bag and trudge back through the parking lot to the condo complex. The next day you can do it all over again, except maybe you mix it up and go to the Yankee Candle Factory and then eat a pretzle instead. And the day after that…
The “condo lifestyle” has got to go down as the sick joke of this bubble madness. One could obtain the exact same lifestyle by renting an apartment, and do so for a lot less money. Except that no so long ago, people who were experiencing the “apartment lifestyle” dreamed of getting away from it and stepping up to a single family home.
I can understand a condo being expensive in New York ,but in Phoenix Ariz. ? Do these builders even consider who will be the buyers ? It just seems like everybody was marketing/building for speculators and rich baby boomers.
I think maybe one day condos in all major cities might be in demand ,but right now I don’t think the demand is there ,(at least not at absurb prices ), The world will alter as time goes buy ,but builders have to wait until the time has come . The recent building concepts were just based on the frenzy and not on a demand that had reached it’s time yet . This is especially true where you see condo projects that are dark because the owners just bought to sell off to a greater fool end user .
I contend that many projects were built simply to sell to speculators ,especially as the mania hit it’s peak .
I have lived in the Phoenix area for 20 years, and it’s my strong opinion that there are very few areas where the “condo lifestyle” makes any sense at all. Shopping, entertainment, dining, and night-life are very distributed, even in downtown Phoenix. I go to many night-time events downtown, and the only time you see people on the streets (other than those who live on the streets) is immediately before or after a major sporting or concert event. Maybe it would make sense on Mill Avenue, in Old Town Scottsdale, or in the Biltmore area (24th St and Camelback), but that’s about it. I think the higher-priced units are upper floors with a view. One thing about Phoenix, is that you have amazing visibility, and most of the city is single-story. So, if you have any altitude, you can have remarkable views.
Manhattan, San Francisco, or Boston make sense. Phoenix, not so much.
Arizona is gonna be burnt toast by next summer, $1 mil condos for $200K anyone? Please buy our condo……
The more important theme of the article should have been about how dead the condo market is in Phoenix right now. Just look at some of the completed buildings around the valley, like Optima, or Esplanade, or Orpheum downtown. Dozens and dozens of units for sale, and no buyers. Some of the DOM for these listings are over a year. So, if no one is buying the existing condos, who will buy the new ones. FBs…? Some of the new construction is at risk, too, due to slow sales. Portland Place is supposed to have 3 buildings, 6, 8, and 10 floors, and they cannot even sell half of the 6 story building. Soon these “luxury” condos will be section 8 housing. My two cents.
I agree with others… where are they putting these condos?
Phoenix may be the 5th largest city (but certainly not the 5th largest metro area), but it is clearly VERY spread out… kind of like a big suburb. We drove all over, but never could find where the “center” was if that makes any sense.
There would need to be immense planning to decide WHERE to condense all the urban condos to make something that approximates high density living.
Even the downtown area is quite small… I felt that it was maybe as big as like Charlotte (a much smaller city).
But the condo BS is everywhere. Mpls is no different. We have condos after condos going up, but at least (I guess) there is some amount of centralization (they are all going to fail miserably anyway). It’s the same baloney up here. “the boomers will come and want t low-hassle lifestyle”. Thus, starting condos go for $500k. Nice ones $750k. And the “luxury” ones $1 to $3 Mill. (maybe more)
rediculous.
Just got back from Charlotte for Xmas with the in-laws. they’re doing luxury condos in Charlotte too. For anybody who doesn’t know, CHarlotte is ONLY suburban sub-development. The entire city. That’s the way they built it. And yet, they’re gonna put up $500k to $1 Mill condos??? insanity.
Here’s a challenge: Does anybody live in a city that does NOT have major condo expansion going on now?
FWIW:
although Phoenix may be the 5th largest city, the city is so large that it is the same area as many cities AND their suburbs. (Houston does this too).
I have Phoenix as the 14th largest MSA (by census 2000 results… it has of course grown)
http://www.census.gov/population/cen2000/phc-t3/tab03.txt
5602 1 New York–Northern New Jersey–Long Island, NY–NJ–CT–PA CMSA 21,199,865
4472 2 Los Angeles–Riverside–Orange County, CA CMSA 16,373,645
1602 3 Chicago–Gary–Kenosha, IL–IN–WI CMSA 9,157,540
8872 4 Washington–Baltimore, DC–MD–VA–WV CMSA 7,608,070
7362 5 San Francisco–Oakland–San Jose, CA CMSA 7,039,362
6162 6 Philadelphia–Wilmington–Atlantic City, PA–NJ–DE–MD CMSA 6,188,463
1122 7 Boston–Worcester–Lawrence, MA–NH–ME–CT CMSA 5,819,100
2162 8 Detroit–Ann Arbor–Flint, MI CMSA 5,456,428
1922 9 Dallas–Fort Worth, TX CMSA 5,221,801
3362 10 Houston–Galveston–Brazoria, TX CMSA 4,669,571
0520 11 Atlanta, GA MSA 4,112,198
4992 12 Miami–Fort Lauderdale, FL CMSA 3,876,380
7602 13 Seattle–Tacoma–Bremerton, WA CMSA 3,554,760
6200 14 Phoenix–Mesa, AZ MSA 3,251,876
5120 15 Minneapolis–St. Paul, MN–WI MSA 2,968,806 2
ALSO:
Phoenix (city proper) population has changed by 5% from 2000 to 2003.
Population, percent change, April 1, 2000 to July 1, 2003 5.1%
No data available form July 2003 to present yet.
Maricopa county population went up too:
Population, 2005 estimate 3,635,528
Population, percent change, April 1, 2000 to July 1, 2005 18.3%
Population, 2000 3,072,149