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Who is going to buy all the Condos, (Part II)


monsoon

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I fully recognize and appreciate the "American Dream of Homeownership" I really do (and I own my home). But too sadly it was greed and a LOT of young, financially unsophisticated (and older, financially unsophisticated people) who fueled this price appreciation. What happened to the good old days of saving up and putting 20% down???

People living in this time and place don't really understand the idea of waiting for something. Most have this "I want it, and I want it NOW!" mentality which is why you see high credit card debts, and people being overextended. It's kind of sad to watch...

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Don't you think perhaps some of the "tough guidelines" should remain in place? Of dozens, scores of people I know own uptown condos in Charlotte, so so very many have openly sat around and chatted about their "piggyback loans." I was sitting around at a complex BBQ/pool party, and it was as though every single neighbor of mine had done that to obtain financing. Two or three fellas were bragging about how they "knew this great accountant who does mortgages on the side" and got them 103%, even 105% financing -- so that they didn't even need to come to the table with money for closing costs -- or in the case of one guy: 0 down, 0 at closing, and the realtors finagled the sale price so he could get a few extra thousand dollars from the mortgage to buy furniture!! .....

Indeed, and this was the reason there were proposals for 3 50 story and a dozen more 25+ story residential towers in a city that has absolutely no reason to build such structures. And now the apparent collapse of this market along with people now fearing for their jobs is the reason that two of these towers have stopped work and are embroiled in lawsuits, why one can't break 20% in sales, and why dozens of high profile projects are on permanent hold which is basically a euphemism for canceled. I am watching with great interest as to what is going to happen with The Vue. If it remains at 40% unsold, I predict some pretty big problems there too.

What we have seen over the last 5 years was unsustainable, the bottom has dropped out, people who rolled the dice, like the ones you mentioned, got snake eyes and are paying dearly for it now.

It's also the reason this signals the end of this kind of thing in downtown Charlotte for very long time in my estimation. There won't be construction projects like this again until the population/land pressures in Charlotte force it. Given the absolute absence of any kind of comprehensive urban development strategy that would slow down low density development, it's just not going to happen as they predicted. i.e. there won't be 35,000 people living inside I-277 by 2010. My guess is they will be very lucky to hit 1/3 this by the next census.

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Indeed, and this was the reason there were proposals for 3 50 story and a dozen more 25+ story residential towers in a city that has absolutely no reason to build such structures. And now the apparent collapse of this market along with people now fearing for their jobs is the reason that two of these towers have stopped work and are embroiled in lawsuits, why one can't break 20% in sales, and why dozens of high profile projects are on permanent hold which is basically a euphemism for canceled. I am watching with great interest as to what is going to happen with The Vue. If it remains at 40% unsold, I predict some pretty big problems there too.

What we have seen over the last 5 years was unsustainable, the bottom has dropped out, people who rolled the dice, like the ones you mentioned, got snake eyes and are paying dearly for it now.

It's also the reason this signals the end of this kind of thing in downtown Charlotte for very long time in my estimation. There won't be construction projects like this again until the population/land pressures in Charlotte force it. Given the absolute absence of any kind of comprehensive urban development strategy that would slow down low density development, it's just not going to happen as they predicted. i.e. there won't be 35,000 people living inside I-277 by 2010. My guess is they will be very lucky to hit 1/3 this by the next census.

Agree with your assessment, but it is may not as bleak as you point out. The fact that the projects are getting canceled actually helps buyers such as myself. I live at the Avenue, and plan to be here for a long time. Rents are increasing as people still want to live up-town, but can not afford to put 20% down. If supply is further limited, the value of the property from a rental or ownership perspective will at least stabilize. A major difference between Miami/Las Vegas and Charlotte is that Charlotte was just starting to boom uptown, and thankfully did not overbuild as much as these cities. Also, the rents are not completely out of line. If an investor puts down 20%, rents can get close to covering interest, HOA and taxes, with a little left over. In Miami, a condo with a mortgage of $3k a month, would rent out for $1k. Prices have to fall a lot in order for this to even out. I am not a pollyanna, but think some of the developments that people view as negative (projects not getting done), is better than a problem where all the projects got done but no one able to afford it and they sat vacant. Market is working itself out, and price depreciation will likely be no more than 5 to 10%.

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I have a friend who just bought a condo at Trademark. When he started looking at the beginning of summer they (the developer) had a remaining inventory of 17 or 18 units. They are now down to 5. At Avenue the developer remaining units have dropped from 9 to 3 as well. Though I'm not answering the 'who' of this thread, at least we can see that who is someone. Personally I was actually surprised that they've gotten these sold through what has been a slow few months to say the least, but happily surprised.

Edited by Charlotte_native
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  • 3 weeks later...

With all the bad news surrounding us, I thought it would be interesting to see if anyone is still buying these condos...

Since August 1 there have been 46 condos sold/closed in Uptown (area 99) ranging in price from $160,000 to $1,650,000 with most being between $200,000 and $275,000 then another cluster of units right around $400,000.

There are 59 condos under contract in uptown and 304 units on the market (most in the under $300,000 price range).

A healthy market (supply and demand) would have about 1/3 as many units under contract as on the market. Considering the economy, having the ratio above isn't bad at all. Having 46 units close in a two month period with 304 units still on the market isn't too bad either considering many in the general public think the market is dead.

Prices for these uptown units, on average, haven't risen or fallen but are about the same as they were (per foot and simply by price in a given project) as they were this past Spring.

Not trying to say anything other than wanting to take a look at what is going on in the uptown market based on actual sales and listings. Also not commenting about whether the sales will dry up or prices will fall in the coming months -- time will tell and I'll update next month...

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With all the bad news surrounding us, I thought it would be interesting to see if anyone is still buying these condos...

Since August 1 there have been 46 condos sold/closed in Uptown (area 99) ranging in price from $160,000 to $1,650,000 with most being between $200,000 and $275,000 then another cluster of units right around $400,000.

There are 59 condos under contract in uptown and 304 units on the market (most in the under $300,000 price range).

A healthy market (supply and demand) would have about 1/3 as many units under contract as on the market. Considering the economy, having the ratio above isn't bad at all. Having 46 units close in a two month period with 304 units still on the market isn't too bad either considering many in the general public think the market is dead.

Prices for these uptown units, on average, haven't risen or fallen but are about the same as they were (per foot and simply by price in a given project) as they were this past Spring.

Not trying to say anything other than wanting to take a look at what is going on in the uptown market based on actual sales and listings. Also not commenting about whether the sales will dry up or prices will fall in the coming months -- time will tell and I'll update next month...

I wonder how many of the condos on the market are not yet built. That could skew your statistics considerably.

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Zillow isn't showing that many re-sales in downtown and where they are, that are showing estimating an average 9%-12% in decline in value from the highs over the past year. There are also currently 4 fairly expensive foreclosures on the market.

Zillow depends on tax records - those are often about 1 - 2 months behind. New condo sales in new projects are often longer to get recorded (I don't mean the deeds recorded, but the tax assessors office -- they don't show up until they are assessed tax value), sometimes as long as 3 - 6 months. These aren't all resales - -some are, some are new units in new projects. This is all MLS data from today.

I'm sure there are some foreclosures, they are everywhere, I've seen a couple in The Pink Building and Courtside.

Edited by Charlotte_native
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  • 6 months later...

It is still early in the typical spring real estate season where sales traditionally pick up (mid-March thru June) so the next two months will wrap up what happened or didn't happen and will give the ability to draw any real conclusions. Little update though:

8 condos in uptown closed/sold in March (the way the data is accessed you can't pull out how many were added that month or went under contract).

In the past 15 days since the beginning of the month:

50 new listings for condos in uptown

8 have gone under contract with prices ranging from $139,900 to $489,000

5 have closed/sold with prices ranging from $160,000 to $406,000

**projects like The Citaden and The Vue aren't represented in these numbers since they don't post on the MLS, so add at least 58 more under contract for the last 15 days.

Edited by Charlotte_native
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Out of personal curiosity I checked out Southend as well for April 1 to present:

10 new listings for condos

6 units have gone under contract

2 have closed/sold

Same for NoDa:

9 new listings

2 have gone under contract

3 closed/sold units

Since I live in the SouthEnd/Dilworth area, I regularly check the developments in my area for sales. I can say that every Sunday in the paper for at least the last month, there's been a minimum of 2 sales per week at SouthBorough as well...

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Since I live in the SouthEnd/Dilworth area, I regularly check the developments in my area for sales. I can say that every Sunday in the paper for at least the last month, there's been a minimum of 2 sales per week at SouthBorough as well...

Thanks for adding that -- a lot of new projects don't list on the MLS so it's hard to know what is or isn't happening with them (and no, they don't do this for any reason or current situation, its been like this for years!). Many, like The Vue, only put a sampling of their listings on the MLS -- they want you to come in the sales office to see everything and to get the full on pitch.

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Why do developers ALWAYS build condos in the city with "high end" finishing which makes the condos more expensive? Some people want to live in the city without paying out the a$$ for amenities like that. I do think that there is a demand for condos for people who dont have a lot of money. It is just that most condos are maketed toward people with a decent amount of money.

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Add another 32 condos under contract -- the first phase of the Citadins new life (Fourth Ward Square) is now sold out -- all 90 units in less than a week.

This is a development that has been out there for 4 years. One might have hoped it would not have taken this long.

You didn't put your data in context relative to this topic, but if I take what you posted and assume that all sales from now on would be in one of the condos that just finished, it would take 9.89 years to sell it out. This is 100% of all sales going to that one property and doesn't take into account that some of this would be resales. It kinda proves the point of this topic that downtown was way overbuilt in this market.

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Why do developers ALWAYS build condos in the city with "high end" finishing which makes the condos more expensive? Some people want to live in the city without paying out the a$$ for amenities like that. I do think that there is a demand for condos for people who dont have a lot of money. It is just that most condos are maketed toward people with a decent amount of money.

Amen! Same thing goes for high-end dining and retail. I like sandwiches. I like bowling alleys. I like movie theaters. I don't require all of this luxury. I make enough money that I am a valuable retail demographic - one which feels shunned by the this luxury trend.

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Why do developers ALWAYS build condos in the city with "high end" finishing which makes the condos more expensive? Some people want to live in the city without paying out the a$ for amenities like that. I do think that there is a demand for condos for people who dont have a lot of money. It is just that most condos are maketed toward people with a decent amount of money.

The same is true of other "amenities." When apartment hunting, things like "Business Centers" and "Fitness Centers," etc send up a red flag to me that I'd be paying for a lot of crap I'm never going to use.

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This is a development that has been out there for 4 years. One might have hoped it would not have taken this long.

Clever way of trying to look at it and make it sound like something it isn't, but this just isn't accurate. A large project that included tearing down all these buildings and building new mid rises in their place was proposed a few years ago. That never occured.

A week ago they announced a thoroughly different project and concept, different condos, different pricing and it did sell out in less than a week. I know this doesn't fit what some might believe is possible, but it happened. :)

Right now there are quite a few uptown condos going under contract. It has picked up each consecutive month since January. The ratios that one would typically see in a strong or healthy market would be 1/3 under contract to the total number available for sale. Right now was are at almost 16% in uptown NOT INCLUDING these 90 units at the Citadin / Fourth Ward Square. Last year it was far less than that. It certainly could be a blip in the Spring, hence the comment in my post about the need to wait a couple more months to see if this is sustained, but the fact is the numbers are better than last year. I don't know if it will last and won't be upset if it doesn't -- it will just be what it is.

Edited by Charlotte_native
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Why do developers ALWAYS build condos in the city with "high end" finishing which makes the condos more expensive? Some people want to live in the city without paying out the a$$ for amenities like that. I do think that there is a demand for condos for people who dont have a lot of money. It is just that most condos are maketed toward people with a decent amount of money.

Because thats where the margins are and how they make their money. UPGRADES!!!!!! Beazer and its ilk proved the only way you can make money on low end new construction is through govmt subsidized lending... and of course a lil loan fraud too!

Edited by palmetto75
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  • 1 year later...

I think we now have an answer for the title of the thread (at least for the lower-end condo units)

At 462 units, the Catalyst sold for about $223,500 per unit. The previous record apartment deal in Charlotte was the sale of Promenade Park in 2007, according to industry watchers. At $40 million for 252 units, that represented a per-unit price of $159,000.

From today's business journal:

http://www.bizjournals.com/charlotte/print-edition/2011/04/15/Catalyst-tower-sells-for-record-price.html

Edited by kermit
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  • 7 months later...

For pure curiosity, I skim through projects on Bidclerk about once a week. I did come across one VERY interesting entry for Charlotte. It's for a mixed use building. The description says it's for over 2.3 million square feet of condo and office space and it's in the early fund raising stage with construction to start in early 2013. Anyone have any earthly idea what project this may be for? I can't imagine it's for a single building as that would be far bigger than anything Charlotte currently has.

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Maybe for the urban village planned for 1st ward around the UNC Charlotte building? Wasn't it supposed to be about that size?

That's like the exact size of the 1st ward urban village... Only other thing I could think of is the Village at Lake Norman, and I'm not sure if thats within the Charlotte City Limits.

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