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Frankie811

Downtown Condo Market

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Now explain to me how the Westin is going to sell condos at more $$$$ per sft than the RITZ in BOSTON with taxes being 3 times as high?

Because there are people who want to live in high end units in Providence who don't want to live in Boston. There's that Rhode Island doubt that we keep hearing. So it's more expansive than a random luxury unit in Boston. My two-bed apartment on Federal Hill is far more than a similar apartment in New London or Bridgeport, that doesn't mean I have to rush to move, I'm choosing to live here. Why the doubt that people would be willing to pay a premium to live in Providence?

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My father just looked at a condo at the Ritz in Boston and it was of the most average kind there. 2 bed, 1860sf, $1.6 mil. $860 psf. This is (but as Pete notes, not too significantly) below the MEAN Westin asking price and the Ritz is certainly a higher end product in a more expensive area. Taxes however are in line with Providence taxes at $19,309 per year (on an assessed value of $1.32 million).

So we agree? The epicenter of this dot condo bust is in Miami which also brings my favorite quote so far

Miami city commisioner Johnny Winton said, "Build 'em, if they fail, we're going to end up with affordable housing."

Which I guess is applicable to Providence, talk to any RE agent ,loan originator, appraiser. RI went off a cliff this fall. I have driven by homes on the east side that I know are for sale, and now the signs are gone. Thats even more laughable then all the signs everywhere in Oct/Nov. Oh if your trying to sell and your being told to wait til spring, think for a second. Why are so many broker/Agent owned homes listed. and why would you wait until interest rates are certainly higher. Not to mention the fact that these suicide loans will be at there end. I think if people keep building we might have a solution to affordable housing A free market.

P.S. tell your dad, if he pays that on tremont st. he's nuts. Firstly I think that area is going to drop the hardest in that area, plus there are many units for rent in that building O+H might list them or BRA. If he has to buy, Trinity, Belvedere. colonnade, 4 seasons Rowes Wharf, are all much better bets, They will also take a haircut but not like the "ladder district"

Not investment advice just my opinion.

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Because there are people who want to live in high end units in Providence who don't want to live in Boston. There's that Rhode Island doubt that we keep hearing. So it's more expansive than a random luxury unit in Boston. My two-bed apartment on Federal Hill is far more than a similar apartment in New London or Bridgeport, that doesn't mean I have to rush to move, I'm choosing to live here. Why the doubt that people would be willing to pay a premium to live in Providence?

Not to be argumentative, but the amount of jobs in Boston compared to Providence that allow people to afford these prices is so far off its not even worthy of debate. Secondly that market is tanking and everythings already built

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Not to be argumentative, but the amount of jobs in Boston compared to Providence that allow people to afford these prices is so far off its not even worthy of debate. Secondly that market is tanking and everythings already built

Pete, I have to be honest with you here. I think you are a tiny bit overly negative. I can tell you I know of three couples (two from East Greenwich and one from Lincoln) that are dying to move downtown once their places are finished. How do you think I got interested in my search? I think you are underestimating the local market. Where do you think I live now? Rhode Island! Sure it's not Boston, but there most certainly is a market for these places here. If I may say, you seem to be looking for the negative quite a bit. If that's all you do you certainly will find it. Remember, we're not talking about the amount of construction that has gone on in Miami and Boston. I think it was quoted somewhere that we're only talking about .8% of our total real estate market. The world is not going to come to an end here.

Also, you made the comment about why someone would pay 3 times the amount of money for the same amenities. That's because it's not the same amenities. If I were in the market for a $200k condo, I'd be looking at $200k condos. But I'm not. I'm looking for a $600k (or less he says keeping his fingers crossed) condo and I can assure you the living style is quite different. I'm looking for that because it's what I want and what I can afford...and I want it in Providence, not Boston. It's all a scale of economies...and I'm not alone.

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Not to be argumentative, but the amount of jobs in Boston compared to Providence that allow people to afford these prices is so far off its not even worthy of debate. Secondly that market is tanking and everythings already built

Yes, Boston is a much bigger city than Providence. But you seem to be assuming that the two markets are mutually exclusive. They aren't. Providence is very close to Boston, and I'm sure a these developers are counting on more than a few commuters who hold posh jobs in Boston but want to live in Providence.

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Pete, join the positive band wagon with me and look around. Rhode Island has rich communities, not to mention our bordering states and New York. There are really no signs or reaons to believe IMO that our condos will fail. Not yet.

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There are people far more learned on these topics than I on this board, but I remember reading something not too long ago in BusinessWeek that talked about which housing markets looked to be bubbles and which NOT be bubbles.

Boston was #1 on the bubble list.

In the top three on the NOT bubble list (partly determined by the low level of the riskiest mortgage types obtained there, partly determined by whether price increases seemed to reflect a real correction) Providence ranked in the top 3. I believe only 8-12% of loans in this area are of the riskiest type, vs upwards of 50-70% for markets like San Diego.

My $0.02...

- Garris

PS: I'm certainly one of those in the silent minority would would definitely look to move downtown...

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I have 4 questions for those looking to buy.

1. What about Downcity would want to make you move here?

2. How would you pay for the unit (Cash, 20% down, 15 year fixed, 30yr other)

3. would you expect the unit to appreciate over 7 yrs, if so how much?

4. Why is renting not an option?

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I have 4 questions for those looking to buy.

1. What about Downcity would want to make you move here?

What makes anyone want to live in the center of an urban area? Easy, walkable access to mass transit, restaurants, arts, culture, and (hopefully in the future) vital services such as pharmacies and markets... The vibrancy of a city center. To be surrounded by diversity every day in all spheres... Architecture, sounds, shapes, people...

2. How would you pay for the unit (Cash, 20% down, 15 year fixed, 30yr other)

Probably traditional 20% down, 30 yr...

3. would you expect the unit to appreciate over 7 yrs, if so how much?

In my particular situation, probably not much... I wouldn't be looking at it so much as an investment, but as to not loose money...

4. Why is renting not an option?

I rented for years and hated the idea of throwing the money away and not getting any of the tax benefits of a mortgage. In the areas I was living (Minnesota previously and now here), what I would pay for a mortgage would be only slightly higher than area rents but get me much, much more home in the neighborhoods I was looking at.

This is all somewhat academic for me. If I'm successful at finding a job here in the Providence area, I'll probably stay in my Wayland Square condo. I'm quite happy with the neighborhood.

- Garris

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I have 4 questions for those looking to buy.

1. What about Downcity would want to make you move here?

2. How would you pay for the unit (Cash, 20% down, 15 year fixed, 30yr other)

3. would you expect the unit to appreciate over 7 yrs, if so how much?

4. Why is renting not an option?

1. It's a managable, hip place that is on the move and Providence (indeed Rhode Island) has one of the strongest feelings of community of anyplace I have ever lived. I truly love living here and can tell you that I will not leave...willingly anyway. :)

2. Only my business, but trust me, I'll be putting more than 20% down and 15 yrs. is the most I'll go on a mortgage.

3. I don't care. It'll be my home, which is what most people looking to buy are doing here. At least the few I know who are in the same market. 7 years from now I'll be worring about redecorating, not selling.

4. I rented in my 20's, now I own in my 30's. It's just the American way. Besides, I own where I live now.

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3. I don't care. It'll be my home, which is what most people looking to buy are doing here. At least the few I know who are in the same market. 7 years from now I'll be worring about redecorating, not selling.

This gets to one of pete's points, I think, though he hasn't stated it explicitly. One of the things driving the condo market over the last two years is speculative buyers. Now as prices stagnate people won't be making as much money (or any) flipping condos so the speculators have to go elsewhere. This isn't a bad thing for people that are just looking for a home but it can be a bad thing for the housing market in general. And in turn what can happen is that building a $100 MM tower can start to look like a bad idea because the return on investment isn't high enough.

I am hopeful that the Providence condo market is truly based on people wanting to live in the city and that people are looking for homes and not looking to turn their investment over. The length of time it has taken to get Providence rolling has probably closed a lot of the window for speculators and therefore the market might be a little softer than it would be otherwise, though.

Like pete, I do also wonder how much demand there is for the higher priced units. My guess is that they would have an easier time selling twice as many 400-600K units, but I have to assume that my guess is wrong based on the development plans and word on the street that the penthouses at Westin and 110 all already have significant interest.

Also, to drive home a final point, imagine again if Fidelity were putting their high salaried execs in a nice downtown office and further that those execs being close to empty nest age all decided to live in downtown condos. Instead they will buy megaboxes west of 295 and speed the development of more open land.

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This gets to one of pete's points, I think, though he hasn't stated it explicitly. One of the things driving the condo market over the last two years is speculative buyers. Now as prices stagnate people won't be making as much money (or any) flipping condos so the speculators have to go elsewhere. This isn't a bad thing for people that are just looking for a home but it can be a bad thing for the housing market in general. And in turn what can happen is that building a $100 MM tower can start to look like a bad idea because the return on investment isn't high enough.

Also, to drive home a final point, imagine again if Fidelity were putting their high salaried execs in a nice downtown office and further that those execs being close to empty nest age all decided to live in downtown condos. Instead they will buy megaboxes west of 295 and speed the development of more open land.

I don't think developers really care about the after market once they get the units sold originally. If I build a tower and sell all of the units, my portion of the investment is done. Whether or not a flipper makes money afterwards doesn't seem to matter then. Of course, I'm not a developer and I really don't know all the ins and outs of the market so I could be wrong.

RE: Fideltiy. I agree. Let's see what happens. It does seem like the city and state are finally getting the message and making some real progress toward making this area attractive to the types of businesses we want. Only time will tell, but my feeling about this today is better than it has been since I moved here.

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I don't think developers really care about the after market once they get the units sold originally. If I build a tower and sell all of the units, my portion of the investment is done. Whether or not a flipper makes money afterwards doesn't seem to matter then. Of course, I'm not a developer and I really don't know all the ins and outs of the market so I could be wrong.

The point on speculators it that in the recent past they have been the ones who have been making the commitments, deposits, etc. So when the building opens, you are already have all of the units sold, even if it isn't with the "final" tenants. The risk goes onto the speculators and their personal leveraged finances rather than the builders. If you are selling direct, you are taking on that risk until the actual residents sign the P&S.

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1. It's a managable, hip place that is on the move and Providence (indeed Rhode Island) has one of the strongest feelings of community of anyplace I have ever lived. I truly love living here and can tell you that I will not leave...willingly anyway. :)

2. Only my business, but trust me, I'll be putting more than 20% down and 15 yrs. is the most I'll go on a mortgage.

3. I don't care. It'll be my home, which is what most people looking to buy are doing here. At least the few I know who are in the same market. 7 years from now I'll be worring about redecorating, not selling.

4. I rented in my 20's, now I own in my 30's. It's just the American way. Besides, I own where I live now.

Ok KRC, Taking everyhting you said at face value.

You are telling us that you have $120k liquid and have a household income in the $200 -$250K range (to afford this unit within FHA guidlines for affordability). This puts you in the top 1% in terms of household Income in RI. I just don't see many other people in this position making there primary housing choice, an entry-level condo, in a non-gentrified area.

Secondly with this type of liquidty, those exotic loan instruments that have become so common to "afford" properties, are actually made for people like you. Especially since you don't believe it will appreciate much in 7 years. You should put no money down, and the opportunity cost on that $120k should easily net you 6-7% post tax (higher depending on interest rates) wich over 7 years would more than double that money, not to mention housing affordability is not an issue for you.

4. I rented in my 20's, now I own in my 30's. It's just the American way. Besides, I own where I live now.

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I don't think developers really care about the after market once they get the units sold originally. If I build a tower and sell all of the units, my portion of the investment is done. Whether or not a flipper makes money afterwards doesn't seem to matter then. Of course, I'm not a developer and I really don't know all the ins and outs of the market so I could be wrong.

You're right developers don't care ,nor do their financiers. They are in business to make money. That leads to another point, read your condo agreement carefully. Most condo fees are based on 100% ownership, so if it is less than that individual fees will go up accordingly, and once again developers don't care.

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i think a big point that is being missed by pete is that for many people, buying a home or condo isn't necessarily a starting point or an investment, but buying a home with no real intentions of leaving. when i go to buy a home (once i reach that point in my life, probably about 5 years from now), i plan on buying a home where i will stay (or maybe move again within the first 5 years, but after that i won't). i won't be looking to capitalize off it. i'll want something that suits me and my family and falls in my price range (whatever that might be at the time). that's all i care about, i don't care about making money off it.

downtown providence is not yet gentrified, you need people to move there for the gentrification to start. they're looking to start at the top. there are people interested in buying these condos. i don't see what the issue is here. the difference between downtown providence and many other neighborhoods is that currently, downtown isn't really a residential neighborhood. so it's not going through the norm that other cities go through. they're looking to make it into a residential neighborhood. and if things fall through, well, we have affordable housing downtown. the developers and investors seem to think it's going to work, otherwise they wouldn't be putting so much money into it.

yes, the biggest issue facing these places is that there are very few major businesses downtown, but that could change.

the one comment i did not understand was about an increase in surface lots in the city... there are already a ton of them, please explain that comment... are they goingn to knock down buildings and just make parking lots?

unrelated to this... someone mentioned going to boston for concerts... if you drive into boston towards the end of rush hour (leaving providence around 5:30-6), you will not hit much traffic once you get beyond the 95/93 interchange. i've done it many times (girlfriend used to live up there). i've also done the reverse many times (boston to providence during morning rush hour, same thing). allow for 1.5 hours, but it probably won't take that long. and for the cheapest parking (that i've found) in boston... park under the common.

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Pete,

I find your tone to be overly negative and somewhat condescending. As a mortgage broker for the better part of 4 years, I can assure you that there are many people that have taken risky mortgages. I've sold quite a few myself. Real estate prices are slowly dropping and rates are slowly increasing. The "upscale" developments that have come into Providence over the last couple of years has been because of market demand and the PERCEPTION that R.I. politics is evolving. The consumers in the market for these type of units exist. Development will not proceed as planned until they see how much demand there really is...I can tell you as a lifelong resident that this is the most buzz and positive flow that has echoed in this city in my memory. Development is flowing to the neighborhoods as much as the center city core. There is absolutely no doubt in my mind that the development buzz will slow down, but the level of civic pride will not. Foreclosures may rise , but it's effect will not be as great here as it may be in CA or greater Boston.(esp. people that are looking to buy upscale downtown Prov. locations) It is a complete myth to think that the majority of homeowners that took out loans in this area went with I/O loans to afford it ....and perhaps the ones that did may very well lose their homes. It will open up a market for people that want to get in and contribute to their community. (me & runawayjim)

Reading your post makes me feel like you think the Great Depression will strike and while I admire your opinion, but I can't help but feel upset. You've touched on a few points. My personal opinion is that it will evolve into becoming a buyer's market within the next few years. I think real estate prices will slowly come down and certain homeowners will be forced out. ( foreclosure )Development will slow down, but commercial rents and leases will as well. With that said, I think the city is as vibrant as it's ever been and with each new development, I feel we move in the right direction.

-Jerry_

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You guys are really missing my point. Wether I beleive that as a country, we are in an enormous credit bubble and its effect on housing is not the core issue. This is a board about urban development. If you are of the belief that we should put as many residential units downtown until a community develops so be it. I am more of the belief that growth should be organic. The city should probably focus on luring businesses that would be open past 6pm, if it believed Downcity is a viable residential neighborhood. There should be a stronger police presence. There should be some enforcement of noise ordinances. Now on this board people are cheerleading developers that will cater to the top 1% of its populus and see that as progress. The developers are not going to get hurt, the community as a whole might. The only difference is the society can't put letters like llc and lp after its name.

The great depression comment is cute and all, but the U.S. government has better "figure control" than that.

As a mortgage broker you probably understand t-yield inversion and the effetive core rate on the 30 yr after todays auction is 4.48. So what you say. The federal funds rate is 4.5, so Investors (mostly foriegn CB's) would rather lend to the Gov't for 30 years, then to banks and other lenders overnight.

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You guys are really missing my point. Wether I beleive that as a country, we are in an enormous credit bubble and its effect on housing is not the core issue. This is a board about urban development. If you are of the belief that we should put as many residential units downtown until a community develops so be it. I am more of the belief that growth should be organic. The city should probably focus on luring businesses that would be open past 6pm, if it believed Downcity is a viable residential neighborhood. There should be a stronger police presence. There should be some enforcement of noise ordinances. Now on this board people are cheerleading developers that will cater to the top 1% of its populus and see that as progress. The developers are not going to get hurt, the community as a whole might. The only difference is the society can't put letters like llc and lp after its name.

i still think you're missing the point that there is nearly NO residential neighborhood downtown. i have a firm belief that people want to live downtown, but there's not many options right now. once downtown becomes a residential area, businesses will stay open later and new businesses will come. there are already a bunch of restaurants and bars that will benefit from people moving there. more will come.

i don't know how you think businesses that would be open beyond 6 would want to move there now when there's not much of a residential market.

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It occurs to me that Providence has one other selling-point over Boston as well: in Providence, you can charge for the feeling of being a big fish in a smaller pond.

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You guys are really missing my point. Wether I beleive that as a country, we are in an enormous credit bubble and its effect on housing is not the core issue. This is a board about urban development. If you are of the belief that we should put as many residential units downtown until a community develops so be it. I am more of the belief that growth should be organic. The city should probably focus on luring businesses that would be open past 6pm, if it believed Downcity is a viable residential neighborhood. There should be a stronger police presence. There should be some enforcement of noise ordinances. Now on this board people are cheerleading developers that will cater to the top 1% of its populus and see that as progress. The developers are not going to get hurt, the community as a whole might. The only difference is the society can't put letters like llc and lp after its name.

The great depression comment is cute and all, but the U.S. government has better "figure control" than that.

As a mortgage broker you probably understand t-yield inversion and the effetive core rate on the 30 yr after todays auction is 4.48. So what you say. The federal funds rate is 4.5, so Investors (mostly foriegn CB's) would rather lend to the Gov't for 30 years, then to banks and other lenders overnight.

"Organic"? I love that you misspell "wether" and "beleive" but throw around terms like "organic" and "t-yield inversion". But I digress (into snarkiness no less; forgive me). Long ago on this board we discussed at length the "chicken and egg" problem with creating a neighborhood downtown (which comes first, the business or the resident?). Providence has done an excellent job so far with creating a sense of place downtown that people want to visit, thanks to Waterplace park, the mall, etc. Now investors are moving ahead with building residences where people can live. Yes, rich people. Rich people who have the spending money to pay for the goods and services that are, at the moment, lacking in downcity. So in this case they are going with the egg first (wealthy people) and then waiting for the chicken (grocery stores, dry cleaners, etc.) that will turn downcity into a vibrant neighborhood. Will it work? Guess we will find out, but you have to start somewhere...

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"Organic"? I love that you misspell "wether" and "beleive" but throw around terms like "organic" and "t-yield inversion". But I digress (into snarkiness no less; forgive me). Long ago on this board we discussed at length the "chicken and egg" problem with creating a neighborhood downtown (which comes first, the business or the resident?). Providence has done an excellent job so far with creating a sense of place downtown that people want to visit, thanks to Waterplace park, the mall, etc. Now investors are moving ahead with building residences where people can live. Yes, rich people. Rich people who have the spending money to pay for the goods and services that are, at the moment, lacking in downcity. So in this case they are going with the egg first (wealthy people) and then waiting for the chicken (grocery stores, dry cleaners, etc.) that will turn downcity into a vibrant neighborhood. Will it work? Guess we will find out, but you have to start somewhere...

If you can't come up with a compelling argument attack me personally. Look there are units for sale/rent RIGHT NOW in Downcity that sit empty. When or where are these "rich people" coming from, and how many low to mid 6 figure jobs are down there?. Can someone please make an argument that doesn't involve attacking anyone? The fact that some people believe that Downcity is a desirable place to live have made those. The "rich people are coming" could use some explanation.

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If you can't come up with a compelling argument attack me personally. Look there are units for sale/rent RIGHT NOW in Downcity that sit empty. When or where are these "rich people" coming from, and how many low to mid 6 figure jobs are down there?. Can someone please make an argument that doesn't involve attacking anyone? The fact that some people believe that Downcity is a desirable place to live have made those. The "rich people are coming" could use some explanation.

Oh come on Pete, relax. Just poking a little fun at your constant use of Econ 305 language on a public board. If this was a general chat board on, say, popular literature, and a member came aboard and kept talking about "gender based semantics vis a vis the patriarchal hegemony of traditional western linear narrative..." then I would suspect sooner or later someone might have a little fun at their academic expense. Sorry if I offended you, however. I am a wise ass at heart. :whistling:

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Oh come on Pete, relax. Just poking a little fun at your constant use of Econ 305 language on a public board. If this was a general chat board on, say, popular literature, and a member came aboard and kept talking about "gender based semantics vis a vis the patriarchal hegemony of traditional western linear narrative..." then I would suspect sooner or later someone might have a little fun at their academic expense. Sorry if I offended you, however. I am a wise ass at heart. :whistling:

I have once or twice dabbled in the art of sarcasm. I'm just put off by people telling me "I don't get it". I'm trying to gauge interest in a Downcity neighborhood. I am slowly coming to the conclusion, that the only development being planned is residential units. I would wish people that cared, would push for tax relief in other areas (re: professional jobs) I do not discount developers ability to make money. I am of the belief (did I spell that right) that the plans will have to change, or walk away completely from some projects. I think the focus should be to raise the median income in the area, not the property tax base.

Sorry if I offended anyone.

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