November 30, 2010 – 12:56 pm
We Know Urban Realty has been luke warm on Landmark on Central High Rise Condos for some time, largely due to reported problems with the infrastructure of the building. In fact, on our Landmark on Central info page we flat out say that we won’t represent people looking to buy there until they educate themselves on the problems in the building.
The issues that we had been concerned with were rumors of electrical and air conditioning problems. Now Fox News is reporting that residents are suffering with no heat in the building due to two broken boilers.
We say it all the time, hire an experienced and knowledgeable real estate agent. I think the issues at Landmark on Central drive that point home.
You might remember me writing about a purchase that fell through at The Vale because the Buyer’s lender would not make the loan because the Home Owner Association (HOA) at The Vale was in financial trouble with 25% of the condo owners behind on paying their fees. It was my opinion that until the HOA got its financial house in order, condo sellers would have an extremely difficult time selling there and prices would most likely drop. I learned last week that the same condo refernced in the post recently sold to a cash buyer for $22,000 less than it had previously “sold” for. Ouch!
Last week I learned of another sale that fell through for the same reason but at a different condo community; this time 525 Town Lake. In this case the HOA receipts at 525 Town Lake are 36% under budget. Expect prices there to drop as a result. But be careful not to get lured just by the low prices as there is potential risk in buying in a community where the HOA is unstable or at financial risk. I’m not saying not to buy there, just know what you’re getting into and know potential risk before doing so.
The AZ Rep reported today about problems at Summit at Copper Square. I’m not privy to the financial matters at Summit but I will say this; the owner David Wallach is very hands-on and working hard to see the high rise condo building through these tough times. He is currently renting out condos at very very competitive prices (contact us for details or to see the condos). The added cash flow from the rentals will hopefully keep things afloat. It’s amazing what a difference just a few months made during the boom/bust cycle. Summit delivered condos starting roughly December 2007 and closed approximately half the units. If construction had finished six months earlier I think that most of the condos would have closed. But then again, if construction had been completed six months later I bet only 10% of the condo buyers would have closed.
BTW, Mr. Wallach if you’d like a venue to refute or add to today’s article, feel free to e-mail me your observations or comments and I will gladly post them to this site.
Things have been pretty quiet at Century Plaza, at least in our circle. For a while there we were hearing from prospective investors every single week. Over the last month we have only heard from one party. The guy was very very confident that he and his company would soon own Century Plaza. IF they do buy the high rise and IF they are able to offer the condos at the prices he shared with me then expect some really great bargains in the future. Keep watching this web site or give us a call to learn more.
I swung by Stella to shoot more photos last week; what a great community! I’d put the quality, style and overall look up against ANY (except Galleries at Turney) infill row house style project in town. I’ll post the photos in the next couple days so you can see for yourself.
Stay tuned for more…
We just took a detailed look at Home Owner Association fees at all Phoenix high rise condo buildings for the last five years. For the most part you will see a gradual increase in the older established buildings while increases were somewhat extreme in the newer buildings. A cynic might believe that the reason the newer building HOA fees jumped so much was because the developers underestimated operating costs in order to promote sales of its condos. Of course an optimist might explain that HOA fees and operating expenses are very difficult to predict for a building that does not already exist. I’ll leave it to you to decide what makes the most sense to you.
Please know that I pulled the numbers from the MLS. HOA numbers on the MLS are compiled by real estate agents prior to their listing individual condominiums for sale. So the data, although pretty accurate may not be exact. Minor discrepancies may be statistical errors or anomalies. However, the numbers should be reasonably accurate to determine trends and general costs.
Here’s the data stated in dollars per square foot per month:
Buildings with a "-" did not exist during the time period.
March 22, 2009 – 11:10 am
Last week the press reported that Fannie Mae had changed its underwriting guidelines for condos. We first reported the problem a two weeks ago as it related to a deal we were working at The Vale Lofts in Tempe. Fannie Mae used to underwrite conventional loans in condo communities if 51% of the condos were either already sold or under contract with legitimate buyers. The new rules increases that percentage to 70%. So think about it. You are a major investor who is considering buying the bank note on a high rise condo building that is in trouble. You figured that you would have to offer seller financing to prospective buyers until you reached the 51% mark. Then, in one fell swoop Fannie Mae changes it to 70%. So in a building like Century Plaza the developer might have to finance an additional 30 condos before any buyer could get regular financing. I would imagine big investors have a trick up their sleeves but I don’t know what it might be.
Another whammy is that any buyer, regardless of how good their credit score, will have to pay a .75% premium when buying a condo in a high rise building. This won’t be a deal breaker for a lot of people but it might persuade some to buy elsewhere.
Yet another challenge? Fannie Mae has also stated that it will no longer do loans in condominium communities where 15% or more of the homeowners are behind in their HOA fees. As we stated in our aforementioned blog post this will be a bigger and bigger issue in condo communities. This particular rule won’t affect buildings like Century Plaza or Safari Drive or one of the other failing buildings because the new owners will bring a large influx of cash to properly “fund” the HOA but it will adversely affect the communities where the developer has already moved on and the HOA is in financial trouble because of foreclosures (e.g. Landmark on Central, The Vale, and others).
So, although we are hopeful that the pending failures of several local buildings will bring much lower prices, renewed buyer interest and potential market recovery we are very concerned that Fannie Mae’s new guidelines might unravel everything.
Gang, there is something gigantic on the horizon for high rise condos here in the Valley. I can’t tell you anything about it (yet) but this will RADICALLY change our high rise condo market. If you are looking to buy a high rise condo right now, DON’T do it…until you talk to us (and even then it might be several weeks before we can give you any details). Sorry I’m being so criptic but believe me it will be worth the wait.
There are several large high rise condo buildings about to complete construction and “be delivered” in the next several months in Phoenix and Tempe. These are all gorgeous projects and we’re excited to see them completed. We also believe that they will truly add to the urban experience in the Valley as a whole.
We do have one concern however. How many buyers do these buildings really have and of the existing contracts how many buyers will actually close their purchase. Afterall, we have to believe that many of the contracts were written prior to the beginning of construction, or shortly thereafter, which means that the contract price was established during “the boom.”
IF this is correct then how many buyers will want to close a purchase in 2008 at a price that was established in 2005 (for example)? Certainly the more earnest money the buyer has to lose the higher the likelihood the buyer will close. This is why TYPICALLY high rise developers require earnest money equalling 20% of the purchase price. I have even seen 30%. Unfortunately, some of the buildings coming on line now only required 5 to 10% earnest money.
In your opinions, have prices for high rise condos gone down more than 5 – 10% over the last two to three years and if so, how might this affect the success of these projects?
December 23, 2007 – 10:19 pm
Crystal Point is one of my favorite buildings in all of Phoenix. It’s not the newest but it’s certainly one of the finest. Built in 1990 and located at 10th Street and Osborn it’s close to everything; Downtown and Midtown Phoenix and everything that the Biltmore area has to offer.
The building overlooks the Phoenix Country Club Golf Course it has without question THE best views of any building in the Valley (see photos below). On top of that the personnel are A-Cabin and make living at Crystal Point EASY. With a 24 hour doorman and on-site management Monday through Friday you can focus on what’s most important to you…making money, traveling, enjoying your family or ???? Buy here and you’ll NEVER have to worry about missing a postal shipment. You’ll NEVER have to worry about waiting for the cable guy or a furniture delivery. You’ll NEVER have to worry about finding a good plumber or electrician or appliance repair person. You’ll NEVER have to worry about managing your home as this is a true lock and leave building.
And, you’ll actually know your neighbors because Crystal Point is like a town within the city. Here you’ll find a real community where you’ll meet and chat with people at the mail boxes, or in the fitness center, or at the pool or in the elevator. This is what “urban” is all about. Convenience, lifestyle, community and more.
Call me, Will Daly, at 480 510-8755 for more information or for a private showing.
August 26, 2007 – 10:59 pm
OK, I absolutely HATE to admit it but I really do like the style of 44 Monroe.
I don’t know why I have had such a negative opinion of the project (maybe it’s the way the developer sold it one way and then switched directions under the initial buyers, maybe it’s the peculiar and potentially risky way they financed it, or maybe it’s because I stuck my foot in my mouth in the past and predicted that it would never be built…..oops). Anyway, what a sexy looking building. I love the color of the glass, I love the fact that it’s not a box but instead has a lot of angles and curves, and I like what it’s added to the Phoenix sky line.
