Builders See A ‘Quicker Buck’ In ‘Residential Reincarnation’
A pair of reports on developers trying to catch the last of the housing bubble. “Imagine a grain elevator, once the biggest and fastest in the world, jutting 290 feet in the air. Now imagine that elevator sheathed in glass and metal and converted into about 230 condominiums. Hard to picture? Not for Baltimore developer Patrick Turner, who envisions a residential reincarnation of the boxy elevator building and silos.”
“‘You can live in a historic condo anywhere in the world, but there is no other grain elevator in the world where you can live,’ Turner said.”
“The Baltimore complex, Silo Point, sits in Locust Point, a once-gritty blue-collar neighborhood. A deteriorating terminal is across the train tracks from the complex on the harbor side, with abandoned piers and a rusting hospital ship, but Turner says the tracks are no longer used and the ship will soon be removed.”
“In a recent interview, he gushed about the condo units in the elevator building itself, he calls them ‘lofts in the sky.’ Silo Point is still a bit hard for visitors to comprehend initially, Turner says. But he’s taken ‘hundreds of them’ through the abandoned ‘lobby’ and then up 130 feet in an old claustrophobic workers’ elevator.”
“It is a jolt, though, to see the thin, boxy concrete structure now, standing in a mud field, with its crown of corrugated metal and steel girders and its banks of broken windows, which start halfway up the building.”
“(Architect) Chris Pfaeffle plans to reinforce the ‘industrial aesthetic’ with other touches, including landscaping with grasses or wheat. He also plans to build a mound of dirt on one side to show ‘the amount of grain that could be stored in one silo. It will be sort of like an obelisk in Rome.’”
And in Orange County. “A growing number of consumers who are buying condos at resorts, a trend that Orange County developers see as a way to make a quicker buck. With condos, a developer gets paid as soon as the units are sold. Lenders realize that and are more likely to extend money to a builder who plans some homes, said developer Paul Makarechian.”
“Though more popular, the condo-hotel mix remains limited. There are several reasons. The once-robust housing market has seen sluggish sales of late.”
“Also, cities enjoy tax revenue from hotels and are reluctant to see any revenue reduced. That’s especially important because hotel sites may lack zoning for condos. Developers and cities have struck a compromise. In some cities, a hotel owner can sell condos, but a buyer can only stay in the units 45 to 90 days per year.”
“Yet as projects mature, hotel developers could face lawsuits from homeowners just as traditional condo developers have seen, said (hotel broker) Alan Reay. ‘It’s inevitable,’ Reay said.”
“Some buyers just aren’t going to understand what they’re getting into, he said. ‘You can’t pick furnishings or paint. You have no say on management.’”
“Not for Baltimore developer Patrick Turner, who envisions a residential reincarnation of the boxy elevator building and silos.”
Brilliant! That should ease the condo shortage in Des Moines, Iowa…
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20060509/NEWS05/605090394/1001/NEWS
Wasn’t the reason Buckminster Fuller home designs never went anywhere, do to the lack of furnishing that would work in a round space. Most Sylos I’ve seen are round.
Hmm! “Most Sylos I’ve seen are round”.
You wouldn’t, by any chance, be one of those sleeper ‘Sylon’ agents we’ve heard so much about?
GS. There is a severe shortage of condos with “mounds of dirt” piled next to them in Baltimore.
OT But first time I’ve seen reference to local banks tightening their standards:
Some categories of real estate may fall farther than others. Take second homes and investment properties, for example. The National Association of Realtors reports that a record 40% of all homes bought last year were not a primary residence for the buyer. The trend is particularly strong among Baby Boomers — more than a quarter of them own at least two homes. “We’ve seen a lot of entrepreneurs, a lot of customers trek to that market,” says Kevin Kane, a senior vice-president at Fox Chase Bank in suburban Philadelphia. On the New Jersey Shore, Kane had been seeing customers buying $750,000 beachfront homes, tearing them down and building two homes on the lot. “They’d flip one and live in the other mortgage free,” he says.
“MAKING A BUNDLE.” That game is almost over, Kane says. For one thing, his bank has tightened lending standards, requiring at least 30% down in equity, up from just 10% a couple of years ago. Those buyers now have to come up with a larger percentage of cash for a more expensive home. Kane is predicting a decline of as much as 50% in sales of second homes. “The large scale appreciation, I don’t think we’re going to see it,” he says
OT - I hear this question about once a month from my lovely wife, and I don’t have an answer: How long do we need to wait before we can buy? Next year?
I just tell her “I’m not sure…but not this year.” She gets a little frustrated, but understands I’m just trying to protect us from getting into an asset that rapidly loses value and vaporizes our down payment. By the looks of things so far this year, in this blog and in the media, my guess is that the second half of 2006 will get pretty bad in some areas. 2007 will probably be even worse, IMO. It could extend into 2008 and beyond, but I would think by 2008 there will be many “bargains”…which aren’t really bargains at all, just where the prices should be if things never got out of control. So I guess I’ll tell my wife “2008 is the year”…I could be wrong, but we’ll see. Any thoughts?
nobody knows the exact date of the exact bottom. you have to buy when the numbers/economics make sense. you may find this useful/interesting:
http://www.files.bz/files/11251/RealEstateValuationMethods.xls
good luck.
2008 is as good a guess as any I’ve heard. I think you will have an excellent idea by this time next year on how this is panning out. You can always buy if you feel the time is right. It’s easier to buy than sell so don’t be in a hurry. There is an above average risk of a serious recession/depression before this has run its course. You will feel fortunate that you have cash if that is the case so don’t eat your seed corn by purchasing too early. That would encapsulate my feelings on the matter.
Auger - you are the trader. The one that bought in 1998 and sold in 2004. So smart and with a crystal ball too!
Now, you’re in metals. Great. Tell this guy how you do it. If your predictions of a 50% decline come true - this guy won’t have a job or a stock portfolio.
But, of course, metals! This for people who are too intimidated to buy a house.
do i dtect a bit of anger in that post va inv.seems the re portfolia has lost somwe value latley
No. I am pissed at auger’s arrogance on another thread.
Then why confuse the poor guy who had an innocent, honest question?
point taken.
No , don’t say anything ,she will hold you to it .Its hard to tell right now when the timing will be right .You will still be saving money while you are waiting . Both parties in a marriage have to be comfortable with the purchase price , the house itself ,and the timing . Do what you want, just my 2 cents .
I have to agree with you on not getting pinned down to a year yet. I get the exact same question from my wife just about every month as well. My answer is…I don’t know, but not now. She hates that, but if there is any subject that I will put my foot down on, it’s this one because of the risks involved. I’ll buy when I know people are hurting. I’ll begin to consider buying when PITI is within shouting distance of market rents. Not any sooner…regardless of how many divorce threats I get.
“No , don’t say anything ,she will hold you to it ”
Wizard…I see you’ve met my wife…LOL.
Historic Busts
http://money.cnn.com/2005/11/14/real_estate/buying_selling/prices_going_south/index.htm
And don’t forget Japan: http://shop.ceps.be/BookDetail.php?item_id=1295m
[see figure 5 of the PDF].
the real estate prices have been on a decline for 15+ years [and still counting]. You can’t call bottom until there is a clear several months if not years of price increases — which hasn’t happened in Japan yet….
‘Richard DeKaser, chief economist for mortgage banker National City, has been reluctant to call the top, but thinks it has finally passed.
“We’re coming down the other side of the mountain,” said DeKaser.’
I am alone in my suspicions that this is a quote of a former regular, “Mr D”?
I think it will be 2008 as well. By the end of 2006 it will be apparant that the boom has ended to just about every body. Alot of pain will come in 2007, you may be tempted to but then, but resist the temptation. I think 2008 will be a full scale bust and you l will be able to get a nice home for 30-50% less than now(depending on the area and price range). I know it is frustrating watching this unfold in slow motion, but tell your wife your patience and prudence will be rewarded. Good luck!
Judicious — the important thing you didn’t mention is, are you now renting or an owner? Best if you are a renter. My guess is you are not. IMO, all bets are off re the future if you are burdened with a home to sell before you buy another. I sold out and rented. Will buy back in when the time is right, which means when the price is right. I agree with the others that it probably will be 2008 or later, but no one knows. Bottom line, though, is that if you currently own a property that is worth more than, say, 50% of what you wish to buy, at today’s prices, I think you could be in a very bad position if you don’t unload the existing home first. Unless you are in a boonies town where rentals are only for poor people, I strongly recommend you consider renting. You asked; I gave my opinion. Its value: worthless, unless you take it and it ends up helping you.
Chip -
We’re currently renting in LA. We have a nice little place at the beach that only takes a small (
arrgh! I guess you need to be careful of the characters you use here. Anyway:
less that 5% of our combined income. The problem is that it’s a house, not an apartment, in a somewhat affluent area. So we’re the “renters” of the neighborhood! Haha! I couldn’t care less, but it frustrates my wife a little bit. We’ll continue to save our pennies, and who knows if the beach in LA is the place for us long term. I’ve been here 10 years and the traffic has gone from bad to worse. That’s the other reason I hesitate…fear of being “locked in” for years. Thanks for the advice.
IMHO-I believe you may not have to wait too long. I think the hottest markets and most overbuilt will fall as quickly as they rose and just as fast or more so.
Patience…life is not about just owning a house. Find a nice place to rent, save money, enjoy living, and be patient. Do things together, and enjoy not having to clean out gutters and mow grass. There’ll be time for that later. What goes up must come down. Dont endanger the financial future of both of you.
Grain elevator Condos? 50 Year Mortgages? Surely, this is the beginning of the end.
the other wapo article is pretty good.
Today’s Housing Model Is Unsustainable for the Long Haul
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/19/AR2006051900649.html?nav=hcmodule
peak oil will do a number on the suburbs. it already is.
More “peak oil” bs. Job growth is occuring in suburbs, not downtowns.
Don’t know nothing about no ‘peak oil’.
I do know I paid $3.40 a gallon…
Job growth occurs in suburbs currently because people can afford to commute. As energy costs go up, businesses will have an incentive to locate closer to city centers, or at least near major public transportation hubs, lest they lose ground to competitors who do so before them.
Remember, unlike home-debtors, most businesses lease property.
peak oil will occur, sooner than later. but its effect will be gradual over a very long period. it’s not something like next year there will be 10% less oil available worldwide. supply will dwindle instead of increase, price of oil will shot up, thus decreasing demand. there will probably be enough to satisfy demand for a long long time but at an increasing price.
This may have been influenced by a similar proposal that was designed for Louisville KY in 1970 by Jasper Ward.
In 1968, three louisville real estate developers purchased a big milling plant on the firnge of th e downtown area from Pillsbury Co. for %550,000. Milling operations at the plant had ceased in 1961 and included in the deal were 24 huge (98 feet high) interconnected silos which once stored a million bushels of wheat and a grain elevator.
The silos were to be transformed into twelve-story apartment buildings at a cost of $2,000,000. Floors would be installed by pouring concrete into suspended forms starting at the top floor, dropping floor to floor. Holes cut through the 8-inch thick walls would become windows. A total of 132 circular apartments (including 84 split-levels, each 23 feed in diameter) would be incorporated into the silos, and 24 rectangular apartments in the grain elevator. The top of the silos would contain a restaurant and bar. A swimming pool at the roof level under a dome would be sunk into the center of hte bar with port holes to view the swimmers or drinkers. The entire complex would include storage buildings on the property converted into office space.
Construction on the project was to be completed in 1971. Rents, including utilities and furnishings (even the beds in the circular apartments were to be circular), were to range from $150-$175 a month. In 1969 cash deposits for the apartments were already coming in, and the local newspapers had titled the prospective tenants “Flour Children.”
“It will look like a bunch of silos with bay windows. We will do as little as possible not to destroy the natural form of the silos,” -Jasper D. Ward
source - Alison Sky and Michelle Stone, Unbuilt America: Forgotten architecture in the United States form Thomas Jefferson to the Space Age,McGraw Hill 1976. A fascinating book IMHO.
Fascinating, where do I sent my deposit.
-
They can call the residents of this new place “Children of the Corn”.
I’m guessing that this property, like the Baltimore one, is right next to a bunch of train tracks (gotta move the grain, right?). Not exactly a spiffy location.
The other thing I think of about silos is “loose grain = rats”.
rats AND roaches!!!!!!!!!
A lot of grain chaff in the air is highly explosive. I wouldn’t be smoking in there.
“each 23 feed in diameter”
ok…..you did that on purpose
Might have missed it, but I didn’t see any mention of whether or not this project actually worked/sold out. I can guess.
Well, good ol’ Irvine’s already done the silo thing. The La Quinta Inn is right next to I-5, and is in an old lima bean silo. BUUUTTT ugly.
Sorry, that project was never built. I guess I wasn’t clear. Again, the book is alot of fun.
I really should proof my posts. Louisville should be capitalized, the cost was $550,000, and I meant to include the page #s pp.280-281.
” The path of the rightous man is beset on all sides by the inequities of the selfish and tyranny of evil men. Blessed is he who in the name of charity and good will shepherd the weak through the valley of darkness for he is truly his brother’s keeper and finder of lost children. And I will strike down with great vengeance and furious anger those who attempt to poison and destroy my brothers.And you will know my name is the Lord when I lay my vengeance upon Thee.”.
thank you, Jules.
Very Good my brother.
That is for the awful people who have led people astray both ethically and morally.
“you can’t cheat an honest man.”
Beautiful!
http://www.dqnews.com/ZIPLAT.shtm
San Diego condos go negative y/y, at -1.2% for April 2006
SFRs put in a stellar +1.7%
The line in that DQ report that caught my eye was for Santa Barbara County:
SFR = -4.0% YOY
Condos = -11.5% YOY
At least their affordable housing problem is going away!
BTW, I guess those SD prices are dropping if you compare to the peak, which was reached some time after last April. Does anyone have that data handy, so we can tell how far prices have fallen so far?
“Some buyers just aren’t going to understand what they’re getting into, he said. ‘You can’t pick furnishings or paint. You have no say on management.’”
No say on management? All else aside, that would be the deal breaker for me. I understand why they don’t let the “owners” choose their own decor/furnishings. What Joe Owner thinks will make him feel at home might not be what the average hotel guest is looking for. But what if management turns out to be corrupt or incompetent? Where’s the oversight? What if the manager decides each room needs to be repainted weekly and conveniently his brother is the only contractor who can do the job right? There’s nothing you as the owner can do?
Saw 5 sign flippers at a 4 corner stop light today.
Saw a guy flipping a homemade sign and was flipping it today for an OPEN HOUSE! Has anyone seen this one begore?
This is in Sacramento. Lots and lots and lots of new building still going on.
That’d be a classic picture.
Should’ve named it “Silo Pointe”–much classier.
Or maybe “Silo Centre”.
“Centre” was very popular in Houston circa 1984. Then it all went *pop*.
While you’re at it, given the infatuation with pompous, effeminate and incorrect English, why not “Siloe?”
““(Architect) Chris Pfaeffle plans to reinforce the ‘industrial aesthetic’”
I thought LSD went out in the 60’s…..
Now will you believe me when I tell you that drugs are a very severe problem in America today?
$2M for a condo in Des Moines? I hope the entire inside is made of solid gold. I can’t believe anything in Iowa would even approach $500K. Would take a lot of McD or Walmart jobs to pay for one of those. LOL
OT- Just finished arguing with my girlfriend about purchasing a house. She absolutely certain on buying and said that there is no bubble in Oregon…She absolutely thinks a bubble cant hit Oregon.
I agree that the bubble in parts of Oregon are much less pronounced than farther south, but other parts, such as southern Oregon (Medford, Ashland) and Bend are definitely inflated. Here are mean selling prices from Ashland 1999-2006 (April):
1999 $172000
2000 $210000
2001 $244000
2002 $260000
2003 $294000
2004 $349000
2005 $415000
2006 $475000
Pass the bubbly….
market conditions similar to 1987?
http://www.timesonline.co.uk/article/0,,2095-2189601,00.html
I was goofing around yesterday and sent emails to some people asking “You bought this house for xxx,xxx. What kind of upgrades did you do to substantiate the huge price increase? Here some of the reponses.
$699900 - Huntington Beach Beauty - Open Sunday 12 -4PM
You bought this house for 173,000. What kind of upgrades did you do to substantiate the huge price increase?
He said “And your point is?”
$730000 - Open House - Saturday, May 20th 12PM - 4PM!!!!
You bought this home for 640,000 last year. What kind of upgrades did you do? Zillow rates it to be worth 694,000. Please explain.
Her response: “Hi Melody,
I am the Real Estate Agent. I just looked up Zillow and noticed it had a value range of $604,313 - $757,128. There was a house in the area, same sqft, that sold for $740K recently. Are you interested in seeing it? They have done some upgrades. Please let me know.
Thanks,
Christina Ponich
I sent out 6 emails and got 2 replies.
First Title Realty
949-306-7027″
I didn’t think they used zillow. Didn’t they bash it?
Ben, some of those photos you have are hilarious.
I recently heard that we have 500,000 new homes for sale nationwide. Does that sound about right?
Read about Interesting Home Value Site.
Well that is interesting. It seems to be similar to Zillow. I just checked the two houses I sold in the last 6 months — one house has a very good set of data and the current value looks right, the other is a mess. It just sold a few weeks ago and that sales data isn’t there, but worse is that the comps all look right yet their current value for the house is $100K OVER the comps and coincidentally $100K over what I sold it for, not counting that I had to put $20K of updating and $8K of closing costs in to finish the deal.
So, I dunno. Underlying data looks good but the current values don’t. Also there is no way these systems can track the cash that floats around the sale price e.g. upgrades, updating, cash back, lowered commissions, etc. This stuff can add up to tens even hundreds of thousands of dollars. I don’t think in the true boom times — before fall ‘05 — that these kinds of benefits were being provided.
Now imagine finding out you paid a hidden tax of $66,000 as part of the purchase price of your new home.
Most buyers would regard this as unfair, yet that is exactly what is already happening in a number of communities in Orange County and Los Angeles. The hidden tax is called “inclusionary zoning” - and a number of cities such as Brea, Laguna Beach, San Clemente and San Juan Capistrano have already implemented it.
Inclusionary zoning is a price control that requires homebuilders to sell a portion of new homes in a development at below-market prices. A typical ordinance caps the maximum home value for 10 to 20 percent of a development so that it is “affordable” to families with low to moderate incomes.
It sounds harmless enough, but proponents of these programs mislead the public when they say there is no cost to these ordinances. Someone must pay for the subsidized units. That someone is you, when you buy a home.
What the hell is this?
Just more misguided California BS. Redistribution of $$$ from any people with it (including base middle class) is the ONLY way IMO that So. Calif. does not stop to a grinding halt. There are too many illegals and homeless and poor: SOMEONE HAS TO SUBSIDIZE SO THAT YOU HAVE A REMOTELY ACCEPTABLE WAY OF LIFE! Also, ZERO % of low income families can afford those prices, even if 60k is knocked off the price!
Increase taxes on housing to make housing more affordable. It is a classic example of progressive speak.
Read about John Talbott says the bubble has stretched about as far as it possibly can.
It just keeps getting better and better.
So when is our party? I’m ready!!!!
Read about Property flippers flopping and flapping in the US.
“My sense is that people who bought an investment in 2005 are probably not going to make money. A lot of them, I think, will lose money.”
Now that would make a nice bumper sticker - Property flippers flopping and flapping in the US.
Read about Property flippers flopping and flapping in the US.
“My sense is that people who bought an investment in 2005 are probably not going to make money. A lot of them, I think, will lose money.”
Now that would make a nice bumper sticker - Property flippers flopping and flapping in the US.
“‘You can live in a historic condo anywhere in the world, but there is no other grain elevator in the world where you can live,’ Turner said.”
No, and I can’t currently live in a sewage treatment plant, an abandoned slaughterhouse or a mailbox. This guy is a genius.
So true. The cliche about “lipstick on a pig” is overused these days, but it most definitely applies here.
Did anyone see this yet?
More lies from the liar-in-chief.
http://tinyurl.com/kp8po
Lereah
“And prices are too high in San Diego because it’s not an affordable city.” DOH! dude, get a refund on that mail order diploma, yeah, the one for high school!. My 8th grader has better logic and grasp on the facts.
No one has mentioned that this project is a sign of the end times. The cycle always does this right at the end. First traditional SFRs then high density SFRs then townhomes then condos then condo conversions then industrial/retail reuse then collapse. The target market for each appeals to an increasingly small segment and the only time the numbers work is when people are displaced from their prefered choices by distorted economics.
“(Architect) Chris Pfaeffle plans to reinforce the ‘industrial aesthetic’ with other touches, including landscaping with grasses or wheat. He also plans to build a mound of dirt on one side to show ‘the amount of grain that could be stored in one silo. It will be sort of like an obelisk in Rome.’”
did this douchbag just compare a Roman obelisk to a mound of dirt? i feel like i’m taking crazy pills.
Barnyard Humor:
Q. What did the calf say to the silo?
A. Is my fodder in there?
NEW TOPIC :
layoff alert
any observations ?
Just heard one of the talking heads on da TV say new job growth was good and the economy is strong.