Making Condos ‘More Attractive In Terms Of Price’
Reports on Condo sales in two cities. “A planned $21 million Des Moines condominium project now deemed ‘economically infeasible’ is a sign that downtown’s housing boom has shifted from high-end to more affordable, a national expert said Monday. ‘The market has moderated somewhat on the demand side, and in some markets you have a lot of units coming on line,’ said Bernard Markstein, an economist with the National Association of Home Builders. ‘What you get is a temporary imbalance of supply and demand.’”
“Minneapolis developer George Sherman on Monday got council approval to change his planned $21 million, 80-unit condo development into a 105-unit apartment building.”
“More than 500 apartments or condos will be added to Des Moines’ downtown real estate market within the next year. Real estate agents and developers say sales remain strong across the board, city leaders acknowledge that some of the higher-priced condos have not sold as quickly as expected.”
“‘Personally, I don’t think the market is flooded,’ (spokeperson) Jackie Nickolaus said. ‘I’m very bullish about downtown housing. The question is how long it will take to absorb’ the influx.”
From the Boston Globe. “So far, Boston isn’t buying what Philippe Starck is selling. Marketing began almost a year ago, but buyers have agreed to purchase just six of the 26 condos Starck is designing. Agents in Boston’s clubby real estate community who have spoken with the developer and sales agents said even those six agreements are not firm commitments.”
“(Consultant) Stephen Chung said the slower housing market is also responsible for lagging sales, with fewer speculators quickly buying and flipping condos for profits. In the current market, homebuyers ‘are going to live there,’ he said, and ‘they bring tape measures. The market and the people are so different.’”
“But real estate agents said that because the project was initially overpriced, it also missed out on the sizzling 2005 condo market. Developers typically raise prices as a project attracts interest during construction and builds sales momentum. But some of YooD4’s asking prices have been lowered since last summer: The highest-priced unit is currently on the market for $1.71 million, down from $1.77 million in July. The price of the two-bedroom Unit 13 was cut $200,000, to $1.1 million.”
“Chung said he and the sales teams are amenable to negotiating over the details. ‘Maybe people didn’t want to pay for all that Starck finish,’ he said. ‘We said, ‘We’ll take it out. It’ll make it more attractive in terms of price.’”
It’ll take more than removing the Starck finish….
Starck has his name on a condo tower here in Big Dump (it’s called Yoo - how appropriate for a city where the motto is “Me First”). I don’t think it’s selling too well here either. Dallas is a “man’s man” kind of town you know - none of that French tweedledee stuff here.
they had 400k+ condos in Asheville NC
who would care ?
Asheville and Des Moines luxury condos for everyone!
I don’t know if you noticed, but the Des Moines condo developer now want to turn it into government subsidized housing.
“I don’t know if you noticed, but the Des Moines condo developer now want to turn it into government subsidized housing.”
is there a difference?
Subsidized affordable luxury condos for everyone!
Seriously, It just goes to show you how much the “experts” really know about the market. They put up this grand idea about how all the rich folk want to live in downtown Des Moines (WTF?) and then when it doesn’t sell suddenly it’s “economically infeasible” and they target a completely different market. Anything for a buck.
the developers here in Mpls have no idea what people want. they simply build and hope that customers will show up. And they build luxury condos because that on paper will make the biggest bang for the developers buck (until recently) NOT because that’s what people were really wanting.
People often on this board say things like “the builders make so much they can undercut the speculators. given the earnings restatements over just the last few weeks by a lot of builders, that obviously isn’t the case. I think they’re simply playing the “lose money to gain market share” game.
oh well, we’ll have lots of overbuilt areas that will increase supply, putting further downward pressure on prices, and we’ll get our non-subsidized affordable housing. Yay!
clouseau
Projects smack dab in the middle of downtown Iowa a 21 million dollar project at that. I’m surprised that got approved. For some reason I get the vision of L.A. and skid row.
From my foreclosure blog today:
‘Carl George, the chairman of the American Institute of Certified Public Accountants’ Financial Literacy Commission, has recently seen a big increase in people putting their house payments on credit cards. (I didn’t know you could even do that.) ‘These families’ balance sheets are quickly become cockeyed, assets are going down while liabilities are going up,’ Mr. George said. ‘People are literally buying borrowed time.’
It’s called borrowing from Peter to pay Paul. Only in this case Peter has a much higher and oppressive rate.
Careful, you’ll end up with a sore Peter.
I will never, EVER feel ashamed for ANY bad pun I post here. EVER.
LMAO!!!!!!!
30% rate if you’re ever late or forgetful. NASTY.
OTOH, I have a credit card from Chase that gives me 3.99 for the life of the balance, for balance transfers. I really like that.
Yeah, their tagline for those ads is “Are you taking advantage of US?”
Well now that you mention it Chase, why yes, yes I am.
I tend to do the 0% for 6 months. Every 6 months. They charge you about $70 in fees each time… for $27K.
I have no debt of any kind. I really like that.
Yea, you can. A practice I have never understood. House note on credit card means time to sell. At some point you have to pull your head out and realize your in trouble. A lot of folks haven’t acquired yet that level of understanding. Which is why I believe these new bk laws are going to be traumatic for a lot of people.
I’ve heard credit cards explained. If you can’t get financing but you can buy your house on a card, pay for it outright. You own your house outright for about 30 days. Scramble like hell to get a bank to give you a home equity line at a lower rate. But who has enough credit cards to buy a 400k house on them?
I think Ben was talking about making your monthly payments after the house was purchased. Which in my mind is a big no-no.
“But who has enough credit cards to buy a 400k house on them? ”
Anyone who takes the time to collect them. I probably get 5 credit card offers a week. They just go in the shredder, but if I starting applying in earnest, with an average line of 10K, it would take me about 2 months to have enough for a 400K home.
I knew people who built houses on plastic. This was in the 90’s, pre bubble and in Kentucky, so they weren’t financing much over 100K. They used credit cards to finance construction, kept getting new credit cards with initial zero interest rates on balance transfers, and then got a bank loan when the house was finished.
For those of us that can manage money, credit cards a long-term interest free loan of tens of thousands of dollars. And no, I don’t spend that. It’s in CDs… but why pay the cards off? The banks are paying you to take their money, hoping you’ll be a sucker.
That’s a pretty clever arbitrage manuever you’ve found. A nearly riskless profit, pretty sweet.
The AICPA guy said more people are making mortgage payments with their cards.
I once had a girlfriend who actually purchased a new car with her credit card. Definitely not marriage material!
I purchased a car with a credit card too. Paid it off at the end of the month. Got a free trip to San Juan this winter from the credit card so it worked out pretty well for me. If you are charging a car to pay the minimum payments, it could work well if one was planning to default. Car loan would be secured by the car, credit card secured by your good name might be easier to keep the car.
Lets see borrow on CC for groceries, a new diamond ring, patek phillipe watch, etc…then take out a HELOC to “pay them off” (this is a lie, but I digress) and then max out your CC for the house payment then take out a HELOC for the house payment?!?!?! Sounds like the only winner here is - NO ONE!
You’ve got to recognize your truly screwed at that point. How much time does your scenario really buy 3-6 mo’s at most
I didn’t think you could put it on the card as I had a customer who wanted to put the payments for his apartment buildings on his card for the miles and was told he couldn’t. I told he to go to a bank and buy a cashiers or cert check but don’t knowe if he ever followed through.
At some point these bumpkins from Iowa need to realize the gold mine they’re sitting on. The developable land is surrounded by hundreds of thousands of acres of corn fields and unoccupied land, so the developable land is obviously scarce.
If there’s one certainty in life it’s this: They ain’t makin’ any more land so you better buy now or you’ll be part of the landless serf class of the future which I think was featured either in some HG Wells novel, or maybe it was Asimov.
I hadn’t thought about that; why on earth do they need condos in Des Moines? Hopefully some locals can let us know.
They’re corn-locked.
LOL, House, that made my day! “corn-locked”
Clouseau,
Have you really been reading here long enough to remember that joke?
Yep!
I TOLD you I was a longtime lurker. From the original housingbubble blog before it went to housingbubble2 and then over to the non-blogspot site.
I lasted months and months and months, and said “I will not become a blog addict. I will not post”
and now I’m posting.
clouseau
The only anecdotal evidence I have from IA is a cousin of hubby who is trying to unload a spec house near Waterloo. Apparently the real estate fever is alive and well in the Midwest. And no, it isn’t selling.
There are condos in the New Hampshire woods, too. Only pure speculation can explain this.
I drove through Des Moines a few weeks ago and was depressed to see exactly the same souless, cookie-cutter, high-density development going on there as you see in big cities. For pete’s sake, why do they need to build rowhouses and condo blocks right alongside the freeway when they’ve got a million miles of open land surrounding the entire city? Developers have all kinds of excuses for not building detached single family housing anymore, and one of their biggest excuses is the price of land. Bull. You can’t convince me that’s the reason for the Habitrail Housing stretched alongside interstate 35 through Des Moines. Who would willingly live in that, given the option to have some space and avoid the freeway noise?
Aw jeez now you’ve gone and given some real estate agents their next pitch: “yep now that we need all the fields we can get to grow corn for ethanol, they won’t be building any more houses…”
I am way OT here, but some may like this link about the collapse of the US dollar. It does mention RE prices, so I figure I can sneak this in.
http://www.geocities.com/northstarzone/EURO.html
Interesting article, possible scenario. But why is it that none of these articles ever present a hard core solution to what they see as the problem.
Just curious rambling on my part
because maybe there isn’t one? Just a thought.
Not one anyone would ever want to consider.
Consider the “cornered, wounded animal” scenario, only this animal is a country possessing the world’s largest, best equipped military… and more than enough precision nukes to go around. The US could plausibly tell the world “screw you”, take what it wants and/or needs, and totally get away with it. Think it can’t happen?
What would the rest of the world find worth taking. It’s pretty hard to reposess an idea which is the foundation of the majority of our wealth these days.
I keep trying to convince everyone that we have a fantastic deal. The rest of the world gives us real assets or goods for bits of paper (only now they are mostly database entries). One quick delete and problem solved, you just can’t do it again for a really long time.
Bluto,
You misinterpreted. I was saying that the U.S. takes what it wants and/or needs from the world, by force if necessary, after renouncing it’s obligations.
highly unlike to occur in the short term (within 5 years). but possible in the long term (10+ years). for one, US is still a major manufacturer. if the dollar declines by say 50% compared to other major currencies, it will be cheaper again to start producing here. you’ll probably start seeing made in USA again. at the same time, cheaper for other countries to buy made in USA goods. definitely there will be hardship for everyone except the rich. gas will be expensive and demand will decline substantially. may not be enough to get rid of imported oil (remember US is the 3rd largest producer of oil in the world, although less than 50 of current domestic demand).
“A planned $21 million Des Moines condominium project now deemed ‘economically infeasible’ is a sign that downtown’s housing boom has shifted from high-end to more affordable, a national expert said Monday.”
Des Moines is definitely headed towards a permanently high plateau in condo prices, because everyone wants to live there!
High end condos in Des Moines! LMAO! I’ve heard it all now. How can people doubt there’s a housing bubble!
Ha! Look what I found - this is my favorite article to date…and I think it will be printed in Fortune magazine…
If you’re a speculator … get out now
In 2005, investors accounted for 28 percent of the housing market, up from 23 percent in 2004, according to the National Association of Realtors. But the game of buying a home - or two or three or 17 - holding it for a bit, and then flipping it for a handsome profit has pretty much played itself out.
“Get out as fast as possible,” says Mark Zandi, chief economist with Moody’s Economy.com. “The market is moving away from the investor, and even when it stabilizes, I don’t think it’s going to come back anytime soon.”
So don’t repeat the mistake that tech investors made during the dot-com bubble. As stocks spiraled downward, they held on, thinking that the market would bounce back quickly. Just accept that you’re going to lose money on that Miami deal.
http://tinyurl.com/j7k2a
That was a good article, I was surprised at the bluntness
nah - they’ll all look around and say “One more dance.”
“Orgies tend to be wildest toward the end. It’s like being Cinderella at the ball. You know that at midnight everything’s going to turn back to pumpkins & mice. But you look around and say, ‘one more dance,’ and so does everyone else. The party does get to be more fun — and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice.” - Warren Buffett
There was an orgy in Cinderella? I think I must have seen a bowdlerized version in my youth. I want my money back!
an orgy in Cinderella? damn! I knew there were a few pages missing! I always thought there was more to that story!
I don’t understand why the Des Moines condo project didn’t work. I mean, the economics are different there, everyone wants to live in downtown Des Moines.
That is where I grew up. There is a massive outflow of young educated people to other states, partly because there is no city in the state with a downtown worth a crap. So, there has been a ton of focus groups with young people about to bail, and that is a big reason they give, so developers, with encouragement of the state, try to turn downtown Des Moines into something hip. Dead Moans has been this city’s monicker, the “downtown” turns into an absolute ghost town at night. But, there is a huge inferiority complex about this, many people who grew up in a town of 1500 people have moved there and gotten a white collar job with an insurance company and think they are on a big-city fasttrack. I honestly cannot believe, though, that anyone even conceived of a million dollar condo in that city. Seriously, anyone who is at a level of income to afford that could find so many other places to live.
only city planners (the most unhip people around) could think they could make their city hip by building condos.
Des F***ing Moines???!!!
This will surely become a case study in real estate books a couple years from now.
OT But Good:
Lansner at OC Register put out an article on his blog about homebuilder cancellation rates going up…..
http://blogs.ocregister.com/lansner/
We’ve got one of those Starck/Yoo condo towers planned for Dallas. My wife and jogged past the site over a year ago and I predicted failure. I still don’t know if they’ve broken ground on it yet. It’s exactly what we need, however - more condos in Dallas. You can’t have too many million dollar condos - the retiring, millionaire baby boomers from California will snatch all of the places up and turn them for a tidy profit. Sorry, I just had a 2005 flashback.
sorry, californian also can’t afford the condos.
About 2 years ago I heard that they were building somewhere along the river that way billed as the San Antonio of the corn belt? Maybe it was in Omaha, NE. Does that ring a bell with anyone? I think Gallop Corp was a big promoter.
Okay, first of all, there is nothing to do in Des Moines. But
everyone who
lives there thinks they are big shots living in a big city. The
attitude
gets really annoying. 75% of the nightlife involves going to
really crappy
bars/”nightclubs”. These establishments also have the notion
that they are
big city roller joints, and the crowd which frequents them are
beyond
pathetic. Not
only is there nothing to do in the town itself, but there is
nothing
interesting to do within a two hour drive of the town.
Seriously, the
biggest event is something called “Clive at Five.” Clive is some
tiny
suburb, and in the summer everyone goes to some empty grass
field there at
five o’clock on Fridays to drink. You pay something like 10
bucks to get in
this fenced off grass field and they give you two tickets good
for one beer
each. Some local radio station plays music and that’s about it.
So you have several types of people living in Des Moines:
The people that moved there from smaller Iowa towns and got
white collar
jobs and think they are big shots because they wear a suit to
work and live
in the biggest city in Iowa. They generally think they are
better than
everyone.
Then there are the people that grew up in Des Moines and work in
white
collar jobs. They think they are big shots, but feel they are
even better
than the first group since they’ve always lived in Des Moines
and are “city
people”.
Then there are blue collar types that grew up in Des Moines.
They generally
dislike everyone except other blue collar types that they went
to high
school with. They especially hate the next group.
Blue collar types that grew up in small towns and moved to Des
Moines
because the plant/factory/gas station they were working at in
their small
town went out of business. These people are nicer than the
previous group
but often a little slow.
Lastly are people stuck there from other places because their
job made them
move there or because their spouse is going to school. These are
good
people, but they have a high turnover rate as they generally do
not stick
around long.
And now, Whirlpool is closing the Newton, IA offices of Maytag. That won’t help the local economy any.
http://biz.yahoo.com/prnews/060510/dew015c.html?.v=1
iowa……
Idiots
Out
Walking
Around
i don’t think i can even find it on a map
At times like these I am reminded of the phrase used during the last condo meltdown, ” Condo’s are like luggage, you own it for life!”