Downtown Condos: Grinding it Out

by Alex Stenback on June 28, 2006

Behold the latest on the downtown condo pipeline from the always excellent Downtown Journal, which points out that there is indeed a limit to the number for units Downtown can absorb.  As the real estate market cools, a number of projects, (some high-profile, others not so much) struggle to meet pre-sale requirements and secure financing. And there is a lot of inventory, both proposed and under construction, to work through:

nearly 2,500
Downtown housing units are currently under construction or awaiting
construction. Meanwhile, at least 5,430 units are planned, proposed or
considered for city approval.

Is this bad news for the downtown real estate market?  Hardly – this is simply how a healthy real estate market regulates supply.  No doubt, the market will simply blow off a good bit of this inventory – some of it will never be built, some of it will sell, eventually, at a discount. But the only losers in this equation are the developers, who’s significant up-front costs are lost if a project never happens.  But this is OK, because those that do own downtown units are left with a healthier market.

If there is a cautionary tale here at all, it is this: If you have a purchase agreememt or reservation downtown, there is no guarantee you’ll close on schedule, or close at all, so tread carefully, and plan accordingly.
· Stuck in the Pipeline [downtownjournal]
· Downtown Journal Condo Pipeline [PDF via Downtownjournal]

{ 4 comments… read them below or add one }

Teresa Boardman June 29, 2006 at 7:32 am

Since I was born and raised in St. Paul, I know that downtown always means downtown Minneapolis. We have a similar situation here, there are several new developments, and renovations, condos downtown and along the river front. There are more projects on the drawing board. We have the huge Victoria Park project a couple of miles from downtown. My theory is that we need the housing but have too much on the market at one time. It may take some time to absorb it all. Right now St. Paul is a great place to go condo shopping.

mbarl July 14, 2006 at 7:07 pm

My name is Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending. http://www.mbarl.org I have a letter in a word document form that highlights the risks of the current loan industry unrealized by regulators and economists alike, mainly due to stated income loans.
Email me at contact@mbarl.org if you want me to send you a copy.

~ Steve Krystofiak
13 main points in the letter are;
1. Stated income loans are associated with fraud, and started to become popular in 2002.
2. Banks originate these loans because they are profitable and then sell them to reduce their risk.
3. Fraud is encouraged by the banks
4. Stated income loans help no one.
5. Exotic loans originated with stated income are now causing foreclosures or forcing homeowners to refinance into negatively amortized loans.
6. Stated income loans are why home prices have skyrocketed. They have caused a large demand in the US housing supply.
7. Banks have sold their loans and have already made their profit. Investors will soon realize stated income loans are too risky and stop purchasing them.
8. Almost anyone can get a stated income loan for $950,000.
9. Stated income loans cost consumers hundreds of dollars a year because of higher interest rates.
10. Stated income loans allow tax cheats to purchase homes easier.
11. Stated income loans are not always faster than fully documented loans.
12. Appraised values are often inflated. Underwriters are basing their decision on inflated home values, inflated incomes and inflated assets. The only “real” number is the FICO (credit) score. This is why underwriters have become focused on FICO scores.
13. Rules are not enough, they must be enforced.

FAA December 9, 2006 at 8:11 am

I know I am late in sharing my concerns, however I live in Centre Village Condos, actually recently purchased a unit on one of the top levels facing east. Part of my reasons for purchasing this unit is the view from the unit; with the Sexton II under construction, it now appears that I would be losing a big part of my current view because of the 23 flrs the Sexton II plans to have. My point is this is not positive for everyone and that’s not considering what this would do for the property value of the Centre Village Condos.

INGY BINGLEBOP April 13, 2007 at 12:03 pm

I LIVE WITH SHAWN’TAY MY GIIIIIRL IN ONE OF THESE N DAAAAAAAAAMN THEY GET EXPENSIVE!!! HOW AM I SUPPOSE TO AFFORD TO SUPPORT BY 4 CHILDREN? I ALREADY WORK 4 JOBS. AINT NOBODY GONNA GIVE A CHANCE TO A BLACK WOMAN THESE DAYS! DON IMUS DESERVED EVERYTHING HE GET

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