Unwarrantable Downtown Projects

[staubio]

I have a friend that desperately wants to move downtown. He has exceptional credit and plenty of income. He has run into two properties so far where he can't get financing (save some shady split with an ARM) because the projects are unwarrantable, meaning the developer still owns too much of the building, is renting it or is controlling the HOA.

I'm guessing this is a consequence of the housing crisis but what does this mean for all of the inventory downtown? They will just keep renting and listing units that they can't sell? That leaves us with properties full of renters that are living on 30 days notice without a real sense of ownership.

I can't think of a worse situation for the neighborhood. How does this chicken/egg cycle get broken? Hope for enough people bringing cash to buy enough properties to put lenders at ease?

[heatherkay]

I certainly can't answer that question, and it does sound like a serious chicken/egg conundrum.  I don't know what your friends price range is, but I was talking with one of the real estate agents associated with City Homes, over at 5th and Oak.  Because they are standalone units, she said that the warrantability thing was not an issue.  With all the rebates, the tax abatement, and the seller's palpable desperation, he might be able to get a pretty good price.  I think once the market rebounds, the units will sell.

[dangerboy]

I can't think of a worse situation for the neighborhood. How does this chicken/egg cycle get broken? Hope for enough people bringing cash to buy enough properties to put lenders at ease?

You might have to wait for the economy to improve to the point will banks will once again write loans for these units.  There might also be an opportunity for Congress to pressure TARP recipients to be more lenient with these units.  If this is a problem then the City Council should be talking to Cleaver and Bond and McCaskill about it, since it's really a local symptom of a national issue.

[KCPowercat]

Has he tried different banks?

[staubio]

Has he tried different banks?

Yes. Multiple banks, credit unions and shadier outfits, all with the same results or wildly unattractive options.

[zonk]

I certainly can't answer that question, and it does sound like a serious chicken/egg conundrum.  I don't know what your friends price range is, but I was talking with one of the real estate agents associated with City Homes, over at 5th and Oak.  Because they are standalone units, she said that the warrantability thing was not an issue.  With all the rebates, the tax abatement, and the seller's palpable desperation, he might be able to get a pretty good price.  I think once the market rebounds, the units will sell.

this is true....City Homes does not have this problem as they are stand alone units.

[FangKC]

I know that many new buyers can't get mortgages at Quality Hill Square because of financing problems that have to do with some rule that so many of the units have to have been sold already in the condo complex. The fact that the vast majority are sitting empty makes the problem worse.

Adding to that, almost all the units have been gutted, and the Quality Hill developer, won't finish the condo unless they have a contract.  Most people won't buy unless they have a finished product.

Furthermore, Quality Hill Square can't rent out the units because they are now gutted.  So six buildings downtown are essentially sitting empty producing no income for the developer.

As it stands now, the developer can only sell to a cash buyer.