goodfella
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Guys (and gals), It is possible (and I heard true) that the work they are doing on the north retaining wall has to do with the fact that they screwed up the foundation of north trust back when they were excavating. Whether they build or not, they still have to shore up the bank's foundation. I still think this is dead in the water. Credit, lenders aside - either a product is the product for the market, positioned correctly and at the right price or it will tank. I think this just tanked.
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Houstonfella - I have seen the progress made at Mosaic. That doesn't mean they are selling units though. The project was financed as an apt. project and not a condo project and thus they did not need any pre-sales to start construction. I believe that Mosaic will be exactly what it is financed to be when finished - apartments. In the previous twelve months, their have only been 700 condo sales in the city in ALL buildings - including the older resales and the new launches. Why someone thinks they can sell 400 in two years is beyond me, esp. in such a transitional neighborhood. but that is only my cheap $.02 Look maybe you are right about 2727 - but, I'd make a fair wager right now that building is not more than 50% sold when they finish construction unless they drastically reduce their prices. That is if they actually start building. I study this market quite a bit and I am just saying that I would be surprised to find out they have that many sales right now. As to the comment made by Niche - a construction crane is about $20K/month. It accomplishes what ads do not - which is what is happening here - giving the perception that construction is moving forward and that it is ok to buy. I have met many developers who push dirt etc. when there is speculation that the project is going to fold.
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Another one bites the dust....
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I am just curious why everyone assumes that just b/c a crane goes up that a project is actually real? It would not be uneard of for a developer who is losing the confidence of his buying public to try and regain that confidence by pushing dirt or erecting a crane. Until I see substantial foundation work being done, i.e. piers being drilled and poured, I still have serious doubts about whether this project is real. I'm not saying it isn't a nice project. The architects did a really nice job. I just think that their prices are absurdly high for this market, and knowing a little bit about condominium development, even if they do make it out of the ground I see serious issues down the road for them. The absorption rate for units at that price in this city is ridiculously low and, if they do commence construction I'd wager that half of the building will be empty when they finish. They are also about to have serious competition in the high-end, ultra-luxury market with Turnberry coming in. That is a company who has tremendous experience in that sector of the market, really knows how to run a sales and marketing program and will be averaging less psf than 2727. The only condo project that is getting under construction currently is Cosmopolitan, who have sold out more than 65 of 75 units and recently added three floors to the building. There is talk of another project starting sales in three months in the Highland Village area and Randall Davis is about to launch one just up the street from 2727 in Rice Village. BTW - Comparing Houston to NY is really not the way it works. Houston sells for what Houston sells for and NYC sells for what that market can bear.
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I understand montebello is not a Randall Davis project. I can rent a 1000 SF apartment for $1000 - 1300/month - and even less in some decent neighborhoods. The cost of owning a 1000 sf place in mosaic (with 20%) down is closer to $2,500/month. Listen, you could be right, but I spend a lot of time studying this market, and I would not want to be invested in this project. Almeda is still transitional at best. Their prices (300+/SF) are absurdly high for that neghborhood. They are not anchored by either high-end residential, or high end retail - which are the keys to success in this condo market here in Houston. I agree it has a chance to be succesful - but I think it is at least a decade early.
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skies, I'd wager a nice dinner that they don't sell 60 units in the first year of marketing that project (unless they sell huge blocks to out-of-town investors). I think Houston-dev is probably right - and Randall Davis' floor plans have gotten smaller and smaller, averaging about 1700 SF at Cosmo. Still larger than Mosaic, but nowhere near the average at his older projects or montbello.
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Most realtors don't put up a sold sign until all the contigencies are removed from the contract (i.e. the option period has lapsed and loan approval is in place). Most of the sold signs only get put up once the house is closed and the new owner allows them to leave it there for a few weeks. But the vast majority of the time, a realtor will not put up that sign unless it is a done deal - or they risk losing too many good potential customers.
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Generally, what you want to ask is whether those contracts are hard earnest money deposits and have been put in title. Also, it helps to know whether the contracts have specific performance (which means that the buyer is legally obliged to actually close on the unit). These are "sold" units, or as sold s you can be before actually closing. It may seem shady, but ultimately the developer suffers the most when his 50% sold becomes 15% sold when he converts to contracts and loses the confidence of the general public. That is why many experienced developers advertise "80% reserved" and only advertise "sold" once they get into title.
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23 floors it is. Plus, the penthouse owner on the top floor gets a private roof terrace above his unit on the 24th floor with a private glass recreation room/lounge. The mechanical tower extends up another 2 stories about from the looks of the model.
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They are just finishing their pre-sales and have sold 75% of the building in preconstruction and had to add three floors as it sold so quickly.
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TNJ, He is advertising reservations as "sold". Because this is his first building, I think he is overestimating the conversion rate from reservation to contract. Even with small, non-refundable reservations ($3K-10K) only 60-70% of your buyers move forward. With refundable res. (which he has) typically only about 30-40% of your buyers actually get into into title. You are absolutely right. The biggest problem is that your buyers wait nd wait and begin to lose confidence in the project, the timing of it and the ability of the developer to deliver.
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Kinkaid, They may be experienced, but in my opinion they have grossly overestimated the depths of the Houston condo market. Remember that every project that flopped had one thing in common - too many units. The succesful developers here build small, small buildings - Randall Davis always builds 65-85 units. Montebello is about 100 units. In 2005, only about 500 condo units sold in all of Houston, including new and old buildings. It would take them 7 - 10 years to sell 400 given that type of absorption. And the location doesn't compare to Cosmo, Montebello or 22 Kirby. It really is still a bit ghetto.
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Yes, Mosaic is going up - but only because they are seeking financing for the project as a rental property, not a condo property. They expected 20 sales/month and in the first few months they were open they only got 4 or 5 sales. Not encouraging for a project that is 400 units.
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Holiday/Days/Heaven On Earth Inn At 801 St. Joseph Pkwy.
goodfella replied to MontroseNeighborhoodCafe's topic in Downtown
Think seller financing. That may be where the confusion is. -
Musicman - LOL. Thanks for introducing some reality to the discussion.