Downtown Condo Pricing Direction?

[wild.t.a.]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

[urbanrealtor]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]
That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let’s take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn’t get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

[urbanrealtor]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]
That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let’s take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn’t get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

[urbanrealtor]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]
That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let’s take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn’t get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

[urbanrealtor]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]
That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let’s take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn’t get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

[urbanrealtor]

[quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]
That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let’s take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn’t get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

[Eugene]

On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

[Eugene]

On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

[Eugene]

On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

[Eugene]

On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

[Author]

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