downtown condo market (from P&L Condo thread)

CityLiving · Post by **CityLiving** » Mon Mar 19, 2007 2:28 pm

Not too surprising though. The real estate market has been slow. It probably won't pick up again until after the P&L District and arena are complete. It wouldn't look very good to market a new condo now and have no one sign up....just ask the Broadway folks! Eventually they will sell and do well, but its just not the right time now. Its like the calm before the storm.

Maitre D · Post by **Maitre D** » Mon Mar 19, 2007 3:22 pm

Notice how they pull out right when the Pens announce they're spurning KC's offer to move.

Coincidence?

CityLiving · Post by **CityLiving** » Mon Mar 19, 2007 3:31 pm

pittsburghparoyal wrote: Notice how they pull out right when the Pens announce they're spurning KC's offer to move.

Coincidence?

I doubt it was related, more likely the result of the already slow real estate market. That's the more direct impact and influencing factor. They had probably made the decision already regardless of landing an NHL team. Its not like this was a major media announcement, let's not read to much into this one.

Gretz · Post by **Gretz** » Mon Mar 19, 2007 3:43 pm

I thought I had read earlier in a bizjournals article somewhere that they had already had 50-60% of these reserved. That seems like enough interest to at least continue marketing. The Broadway still only has 36 marked reserved on it's site.

loftguy · Post by **loftguy** » Mon Mar 19, 2007 4:07 pm

I've got to ask again, what makes you (anyone) think the downtown residential real estate market is slow?

Housing downtown is turning pretty quickly, especially considering that many developers are pursuing absolute top-of-the-current-market sales prices. I'm not encouraging that tactic, in fact I feel that they are jumping the gun and are having fair success in spite of themselves.

We also have several developers who have developed product arrogantly, without reasonable regard for the marketplace and the emerging buyer profile. But, that is a much longer story and this type of housing does not represent the bulk of what has been developed.

One thing I do agree with "It's like the calm before the storm".

CityLiving · Post by **CityLiving** » Mon Mar 19, 2007 4:24 pm

loftguy wrote: I've got to ask again, what makes you (anyone) think the downtown residential real estate market is slow?

Housing downtown is turning pretty quickly, especially considering that many developers are pursuing absolute top-of-the-current-market sales prices. I'm not encouraging that tactic, in fact I feel that they are jumping the gun and are having fair success in spite of themselves.

We also have several developers who have developed product arrogantly, without reasonable regard for the marketplace and the emerging buyer profile. But, that is a much longer story and this type of housing does not represent the bulk of what has been developed.

One thing I do agree with "It's like the calm before the storm".

First hand knowledge. Personally, I've seen many listings with reduced prices and the same inventory in new developments on the market for months. Its not the end of the world, they will sell eventually and appreciate well over time, but its most definitely slow right now and I wouldn't want to be the developer that puts new inventory on the market right now. What makes you think the downtown residential real estate market is turning pretty quickly? Are you a real estate agent?

GRID · Post by **GRID** » Mon Mar 19, 2007 4:26 pm

It's just one more sign that KC missed a lot of "boats" during the 90's urban boom that hit every city in the USA except KC. Sure we are trying to catch up, but it's going to be tough.

chingon · Post by **chingon** » Mon Mar 19, 2007 4:30 pm

every city in the USA except KC

...and almost every other city between appalachia and the rockies.

Gretz · Post by **Gretz** » Mon Mar 19, 2007 4:32 pm

CityLiving wrote: First hand knowledge. Personally, I've seen many listings with reduced prices and the same inventory in new developments on the market for months. Its not the end of the world, they will sell eventually and appreciate well over time, but its most definitely slow right now and I wouldn't want to be the developer that puts new inventory on the market right now. What makes you think the downtown residential real estate market is turning pretty quickly? Are you a real estate agent?

Yes, loftguy is an agent.

ComandanteCero · Post by **ComandanteCero** » Mon Mar 19, 2007 4:33 pm

On the one hand it kind of sucks, on the other, this may help make the real P+L district condos more feasible.

moderne · Post by **moderne** » Mon Mar 19, 2007 4:45 pm

I think many people are reluctant to reserve a unit in a building that has yet to break ground. Who wants to sell there present place and then have nowhere to go if it turns quickly(or not). From what I have seen, product that is already on the market and available has done well and choice is getting scarce. There are only 14 units available in the View, not bad for a project that had its first move ins less than 2 years ago. I am sure interest will surge once downtown is open for business again in year.

CityLiving · Post by **CityLiving** » Mon Mar 19, 2007 5:02 pm

moderne wrote: I think many people are reluctant to reserve a unit in a building that has yet to break ground. Who wants to sell there present place and then have nowhere to go if it turns quickly(or not). From what I have seen, product that is already on the market and available has done well and choice is getting scarce. There are only 14 units available in the View, not bad for a project that had its first move ins less than 2 years ago. I am sure interest will surge once downtown is open for business again in year.

Keep in mind, a reservation doesn't mean much as far as commitment. You can get your money back if you ultimately decide not to sign a contract. The only thing that is lost is the interest on the money you put down for the reservation (and the loss of use of that capital). The scary part is after you sign the contract and have to wait it out for the new building to be built. If you wait to sell your current place you are "doubled up" on your exposure to the real estate market and could end up paying more than the unit is worth at the time of delivery while getting less for the unit you are selling. If you sell now and wait for the new place to get built, you are inconvenienced for an extended period. The Broadway is only taking reservations right now and has not gone to the contract phase yet.

As far as 14 units still being on the market at the View. I guess that's the difference between the KC market and many other markets. In most other cities, new buildings have been completely sold out well before delivery of the first units. Those days appear to be behind in every market now, not just KC.

GRID · Post by **GRID** » Mon Mar 19, 2007 5:22 pm

CityLiving wrote: As far as 14 units still being on the market at the View. I guess that's the difference between the KC market and many other markets. In most other cities, new buildings have been completely sold out well before delivery of the first units. Those days appear to be behind in every market now, not just KC.

bingo on both counts.

again, kc may have missed the boat and by the time, if ever, the condo market bounces back, the largest market for new downtown residents (baby boomers) will have found other alternatives in the suburbs or in other markets. KC just jacked around too long while every other big city was building stadiums, condo towers and corporate skyscrapers, we were building nascar tracks and suburban campuses to empty out 1/4 of our office market.

Well, I'm going to head off to another transit "forum". They are going to brainstorm and take ideas about what KC should do with its transit system. Whoa, 1992 all over again...

lock+load · Post by **lock+load** » Mon Mar 19, 2007 5:29 pm

moderne wrote: I think many people are reluctant to reserve a unit in a building that has yet to break ground. Who wants to sell there present place and then have nowhere to go if it turns quickly(or not). From what I have seen, product that is already on the market and available has done well and choice is getting scarce. There are only 14 units available in the View, not bad for a project that had its first move ins less than 2 years ago. I am sure interest will surge once downtown is open for business again in year.

Exactly. Even if you can get your money back, not many want to hand cash over to someone and trust they'll be able to get it back. Start building and you'll have a lot better luck selling the things.

GRID · Post by **GRID** » Mon Mar 19, 2007 5:38 pm

lock+load wrote: Exactly. Even if you can get your money back, not many want to hand cash over to someone and trust they'll be able to get it back. Start building and you'll have a lot better luck selling the things.

Dude, there has to be a proven market demand to get financing and in a market where there is demand for urban condos, it's no problem getting that first 25% commitment in order to secure financing and begin construction.

There are no Trumps in KC. I would bet there has only been a handful of spec upscale condo towers built in the country in the past few years. Why in the world would KC, an unproven urban condo market be different? The (first) Cordish tower will go up because it is heavily subsidized and rightfully so, the others will be market driven. But again, the first needs to be subsidized. Downtown KCMO DESPARATLEY NEEDS to get a couple of new towers up at whatever cost or risk to the city and others will follow. Condos will do better once we get the inventory (and demand) up. The more supply and choices, the better chances of finding tenants that fit.

Thing is, KC may be about 10-15 years late because of our lack of vision for having a real downtown and the condo market has dried up for a while across the country. When I say condo market, I'm talking about the $450,000 condos with massive homes association fees etc to support new construction, not View and Metropolitan or even Wallstreet rehabs which are great, but a totally different market.

I think KC will be ok, but it will always be 10-15 years behind, or more. We just got started late.

chingon · Post by **chingon** » Mon Mar 19, 2007 5:46 pm

I am much more comfortable with government subsidization of amenities for residents (LIKE HOUSING and TRANSPORTATION) than I am with subsidizing entertainment venues. I think the TSC bullshit is disgraceful, but providing subsidize for increased density housing in the city should be a priority now and for the foreseeable future.

CityLiving · Post by **CityLiving** » Mon Mar 19, 2007 6:19 pm

chingon wrote: I am much more comfortable with government subsidization of amenities for residents (LIKE HOUSING and TRANSPORTATION) than I am with subsidizing entertainment venues. I think the TSC bullshit is disgraceful, but providing subsidize for increased density housing in the city should be a priority now and for the foreseeable future.

KC had to subsidize something downtown for all the residents to have a decent lifestyle. In a free market, retail/entertainment always follows residential, but KC was so far behind the curve it had to subsidize retail (i.e. the entertainment distict) to attract any residents. KC was also losing conventions due to a lack of downtown vibrancy as well. Now that KC started the ball rolling on retail, it should focus on subsidizing residential growth. At a certain point in time, enough of a residential base will be built that retail will move in on its own and subsidies can be lifted on housing because the additional retail vibrancy by itself will attract more residents. I hope this is the scenario that plays out in the next 3 to 5 years.

loftguy · Post by **loftguy** » Tue Mar 20, 2007 9:29 am

Gretz wrote: Yes, loftguy is an agent.

Wrong Gretz. I was a residential agent years ago. Glad to say.

Careful how you answer for people.

Maitre D · Post by **Maitre D** » Tue Mar 20, 2007 9:38 am

You'd think the P&L condos would sell out by Block employees alone.

loftguy · Post by **loftguy** » Tue Mar 20, 2007 10:14 am

CityLiving wrote: First hand knowledge. Personally, I've seen many listings with reduced prices and the same inventory in new developments on the market for months. Its not the end of the world, they will sell eventually and appreciate well over time, but its most definitely slow right now and I wouldn't want to be the developer that puts new inventory on the market right now. What makes you think the downtown residential real estate market is turning pretty quickly? Are you a real estate agent?

The market is humming. There are more real estate agents working downtown than anytime since the 1940's and there were more housing units sold in downtown KC over the last 12 months than in the past four years combined.

Yeah, there are prices being reduced on some housing. Some developers miscalculate the value of their product and underestimate the impact of the many competitors that they face.
However, in 2006 the average sale price of downtown housing increased nearly 26 percent.

I can quote all kinds of statistics, but the most telling number is that a buyer in downtown Kansas City can today choose from over 2,000 available living spaces currently available to purchase. There is a lot of choice, finally. It is an emerging, now competitive marketplace, and you know what, in "normal" real estate markets, property should be on the market for months. If it sells immediately, you've underpriced it.

There is a lot happening at once. A few years ago there were very limited choices for housing purchases downtown, but at that time there were only a few people who were interested in purchasing.

It amazes me to hear people talk about how overpriced our downtown housing is. True, you won't see me building half-million dollar plus condos anytime soon. Our development community built too much of this price point, too soon and it really will take a while for those units to get absorbed. However, hundreds of housing units are getting sold under the $300,000 price point. It makes sense, that's what the largest part of the market can afford.

I understand that it's hard to grasp that we are now at these price points when fewer than ten years ago prices were less than 1/3 of current levels. You have to realize that at that time people were saying that it was outrageous to pay $50 per square foot for a loft condo downtown.

Oh, and they were saying that the condo market is dead, too.