For months, I’ve been keeping tabs on a Yahoo! message board that is devoted to a new downtown development – Vantage Pointe. The board has been a great source for tidbits not just about the development in question but also about the downtown condo market in general.
Yesterday, a message posted by one of the members of the group that caught my eye.
“Looks like my condo has recently dropped 20% in value,” it read.
Here’s the message in full, unedited:
The value of my unit had previously declined 10%-15%, but then the unit above me went into foreclosure and is now bank owned. When the bank listed it, they offered the unit for about $20,000 below market, presumably to move it quickly.
So did the strategy work?
No, it hasn’t. 75 days later, that condo remains on the market. Unfortunately, most of the other sellers in the complex have reduced prices to compete with the bank and are now offering their units in the same price range as the bank-owned property. I wonder what will happen if the bank slashes the price once again?
We’ve seen many projections that foreclosures may increase should interest rates continue to rise and/or real estate prices continue to soften, but I haven’t seen much written about the impact on prices when the banks try to unload forclosure properties at below market prices. Of course, the reality is that if those units don’t sell quickly, then the below market price may well become the market price eventually.
Of course, the developers of the crap condo conversion up the street are also knocking the heck out of their prices because, to their apparent surprise, not many are wanting to buy a dumpy old apartment just because you call it a condo and slap in stainless appliances
and granite countertops. I guess that lipstick isn’t helping the pig after all.
Oh well. Hopefully we’ll see some recovery in prices by the time Vantage Pointe is (maybe) completed in late 2008.
The original message has garnered a few notes of support from fellow message-board members. The original poster has also had a few replies from people who find themselves in a similar position. Here’s an example:
I hear ya. I’m in a similar boat in my current Normal Heights condo (except I’m a lot worse off b/c I bought in 2004!) My complex has @ 100 1 BRs identical to mine, all conversions from 04.
About 6-8 units resold from July – Oct 05, then nothing until 1 more sold in Feb 06. And nothing since Feb. There have been 5-8 units on the market consistently since last fall and only 1 unit has sold in nearly a year. Right now is just not a good time to sell, period. Unless you have a really incredible place to sell or you drop your price drastically, its not happening right now.
I also hope things will turn a bit by 2008/09, but I’m not very optimistic.