Based on my ongoing analysis of the downtown market it appears that Icon will be the first of the many new condo towers under construction to be completed and start closing escrows in early 2007.
Icon's tallest building is 24 stories and will house 327 condos.
They are advertising several units in the MLS with somewhat high prices, certainly not bargains. Typically this means there are a number of unsold, non-MLS listed units as the developers rarely expose their entire inventory, especially it if it relatively high.
I would like to understand how "sticky" the escrows are for this project. If early phase pricing is fairly high we may see a high cancellation rate.
Does anyone know what the early phase pricing was like on this project?
Does anyone know how many unsold units this project has?
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13 comments:
I've been looking at your blog and also inventory downtown. To me it sounds much wiser to wait and buy what you want on the resale side.
I got in on the 1st release....525,000.00.....2/2 1100sqft....thinking of backing out.
What floor?
How many/type of parking spots?
Do you plan to move into the unit or was it purchased as an investment?
2 parking spots/ tandem. 8th floor. Originally was going to move in....now not so sure. If I back out the builder keeps a portion of deposit....may take the loss...I guess I have a few more months to decide.
Given that Icon is first of several towers completing you have a pretty ton of competing condos coming after you close.
I wouldn't say your unit at that price is compelling enough to take it as an investment (unless it's a got a ballpark view). It would probably rent for max $2,300 which doesn't cover your payment.
To make closing remotely worthwile you'd probably need to be able to sell for 106% + your lost deposit percentage (let's say 2%) to make it worth considering. Just remember that the negative cash flow kicks in on day one and there are a thousand condos closing in 2007.
Here's the math:
$525,000 * 108% = $567,000
In the current market that's not compelling. Look at all the M2i and Faherenheight lofts in that range.
I do think ICON is a pretty nice project, better than Park Boulevard West and East and Metrome which are in the neighborhood.
Icon units with 1100 sq ft are listed $719K + on the MLS. Even with steep discounts it seems that $525K is reasonable. Why do you feel you are in trouble with the such a large gap in your price vs current listings?
I don't see the unit on the MLS, can you post the number? I do see some 18th floor units listed at $779K.
Keep in mind that water view tower units have sold for $725K with two parking spots.
We are talking about an 8th floor unit with tandem parking.
Also know that at the $525K price we're talking a solid negative $2,000 cash flow even if it's rented.
Since the concept of risk is coming back (my blog documents millions in losses on San Diego property) then the concept of risk vs. reward is sure to follow.
I don't think closing on this unit is a no-brainer.
You're right, low priced 1100 sq foot model is $779K. The 1200 sq foot model is $719K on the 11th floor, don't know if this one has water views but it better at this price.
By the way, I love your blog and read it everyday now.
Wife and I are waiting until this time next year to get in. What is your current opinion on how much downtown condos in general will come down from today's prices? 10%? 20%? They have already dropped ~10% this year in most buildings.
I think the market has at least a 20% price reduction waiting.
Also I'm hearing about a number of price cuts at the projects under development. I'm trying to substantiate this and will post when I figure it out.
I also got in on the first release, I had a 1+ den, around 700 sq. feet I think (SO long ago!) on the 4th floor at $392K. I pulled out over a year ago.
I have to say that these Phase 1 prices are not very good.
I'll speculatate that a lot of people are going to drop out of their escrows in March when the building starts to close.
Should be a very interesting 2007.
Mr. brightside,
Do you have a phone number where I can contact you?
:)
Hi Anon 7:12
You can contact me via email at:
brightside@inbox.com
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