So, assuming a price of $250/sqft. you get a price of $250K for a 1000 sqft. unit. Using traditional financing (20% down, 7% 30 yr fixed) you'll get a total monthly payment (excluding principal) of about $1,800/month including taxes, HOAs, etc. In other words, at $250K most of these units will actually cash flow pretty well.
You're assuming that in the next year rates on a 30 yr fixed are still going to be 7% or south… Take a look at how the MBS bond market is unwinding and the possible outcome of 1.4T dollars in bonds getting marked to market. Real interest rates are likely to nearly double in the next 12-18 months and with that goes south the prices on all housing. Downtown doesn't have the business it needs to support people wanting to live down there. On the front page of the UT yesterday it stated how California job growth has now officially stalled. We're near or currently in a recession and I don't think that will bode well for all the high end restaurants/$30 cover clubs that have sprouted up recently downtown. Business down there isn't doing as well as it has been in the last few years of hayday. Less business leads to fewer businesses which leads to less desirability to live there. Couple this with a recession and possibly double rates on the mortgage and you've got massive depreciation and roughly equivalent mortgage payments to rental payments. Just watch and be patient. I could eat my hat on this prediction but I’m willing to sit with money in my pocket to wait and see. In the end I will have a great deal or at least still have the money in my pocket.
