More troubled waters ahead?
Just some observations…
- Spoke with King5’s Bernard Choy today about some major price decreases, namely Madison Lofts and Cosmo. Check out unit #210 at Madison Lofts, SW corner unit – was $549,000 now $429,950. In his report, Bernard stated ML is taking some pretty steep decreases, up to $200,000.
- Pre-sale investors are jumping ship. I’m hearing more and more cases where pre-sale buyers aren’t going to be able to close on their purchases. Already, people have foregone their huge deposits at Washington Square in order to get out of their contracts. Now, I’m hearing the same with Gallery and 1521. Gallery, at least, unofficially, is letting buyers assign their contracts rather than default on the purchase. Makes sense…with rising inventory developers don’t want to be stuck with unsold units. Heard that Vulcan may do the same with one of its projects.
- Noticed R/UC/WOS has significantly decreased its advertising in the Sunday Seattle Times. Just a few months ago they had two full-color pages…now they’re down to a 1/2 page.
- The rumor that won’t go way – the big hole on 2nd between Stewart and Pine might be there a little while longer. Update: It was announced on 6/24 that Starwood has acquired Avalon’s share of the project.
On the other hand, there’s activity at Insignia Towers – additional materials have been delivered and Insignia’s signage is now up.
Hi Ben,
Please tell us more about 1521 — I believe they say that only five units are available in the entire building.
What do you mean by “assign their contracts”?
Starwood bought out Avalon’s shares on the project. Starwood could do the deal themselves capital wise. (all hotel?) I called this 6+ months ago and was chastised. Don’t Ever Dig too deep -you’ll put your own coffin down there.
Could someone please explain the meaining of R/UC/WOS?
I presume it is marketing company’s?
Define R/UC/WOS please
Sorry about that….R/UC/WOS is what I use to refer to the Realogics, Urban Condominiums, Windermere Onsite condo marketing trinity.
Assignment is where another buyer takes over the purchase and sale contract. The original buyers are looking to essentially “sell” their contract to another buyer (usually at the original pre-sale price), thus allowing the original buyer to get out and re-coup their earnest money deposits, as opposed to defaulting on the contract and losing their EM. The benefit for the new buyer is being able to purchase in the development at an early pre-sale price and/or a unit that may not otherwise be available.
Honestly, though, appreciation has been flat and its unlikely there’s any “pre-sale” price advantage. I haven’t confirmed whether 1521 is allowing assignments, just that there are buyers looking to opt out of their contracts. But, with 1521, it might be a decent investment given that competing projects are now several years out, if they can even get started.
The most common reason I’m hearing for buyers looking to assign their contracts have been predominately financial (no longer being able to qualify).
For people interested in assignable contracts the hard part is learning about them. I had the idea of providing space on this site for sellers to promote their assignable contracts (I would not be involved in the transaction at all), but unfortunately, that puts me in a position of promoting pocket listings which is a major NWMLS no-no. I’m still looking into options.
The 1 Hotel & Residences deal is obviously on hold and not dead. I believe they’ll move forward with a hotel and condominiums. Although there is discussion around still keeping a couple of floors of “city suites” and nixing the rest of the floors of city suites, converting them to standard hotel rooms, I sincerely doubt this will happen. The project will become a standard hotel and condo (absolutely no city suites) project if they have any sense about themselves. There is too much money to be made at this location to make this a hotel-only project. Starwood Capital is smarter than that and will probably close down their doors of the showroom for a time period, re-vamp the entire showroom and product offering (including finishes), re-evaluate the lousy job R/UC/WOS has done in marketing, and re-open with a focused approach to our market that makes sense.
Thanks for the clarification. A secondary market for contracts sounds interesting economically. I don’t doubt Starwood can do the deal especially at this location. There is a ticking time-bomb on the deal. There is a time limit on how long you can have a hole in the ground in the City -I think 1 year then fines start accruing. Not sure how big or how often but some proforma in Starwood offices is gettng a serious work over with sensitivity analysis.