Weekend Open Thread
This is your open thread for the weekend. Please post random links and off-topic discussions here.
Off-topic comment? Interesting link?
Head over to the forums, or click here for open threads.
Head over to the forums, or click here for open threads.
11 comments:
Check out this website:
http://www.maisoncondos.com/
It is the condoification of an apartment complex on Greenwood Avenue N that my wife and I lived in last year. Shortly before we moved out in August 2005, the building was sold and workers put on a new roof. I can understand why after seeing this.
We paid $750/month for a top floor 1 bedroom apartment with Olympic views. This floorplan, "The Paris" is sold out, but the studio floorplan is selling for an estimated $917/month, based on a 5/1 interest-only ARM.
I find it incredible, almost to the point of disbelief, that they can take a run-of-the-mill apartment complex, make a few cosmetic adjustments, put out a slick French-themed website, and sell these former apartment units for sky-high prices!
The conversion of these apartments into condominiums is one more sign of the speculative blow-off in housing in the Seattle area. Ownership (and attendant risks thereof) of the condominiums is transferred from the complex owner to the individual buyers. The building owners are trading a fairly steady income stream (rent over time) for up-front money now. The complex owner (who is surely more knowledgeable about the situation than the individual buyers) has made the calculation that it is more profitable for them to get the money now (when they can command peak values due to the speculative mania surrounding housing) than to have it over time. That fact alone should tip any prospective buyer off that buying such a condo is a bad financial investment. The buyers of these places will come to regret their purchases in time, mark my words. You can put lipstick on a pig, but it's still a pig.
I find it incredible, almost to the point of disbelief, that they can take a run-of-the-mill apartment complex, make a few cosmetic adjustments, put out a slick French-themed website, and sell these former apartment units for sky-high prices!
Same story in Fremont. I especially enjoyed the one that was overgrown with mold, which now has a facelift and is selling for top dollar. The value equation is not balanced here, but the lemmings are not just stepping up to edge of the cliff -- they are hurling themselves over.
When the water heater bursts and requires professional cleanup and replacement: $0
Roof replacement: $0
Real Estate fees associated with moving: $0
Massive property tax hike: $0
Sleeping like a baby when your house loses $5000/mo in value: Priceless
There are some things in life you shouldn't worry about about, for everything else there are land lords.
How exactly do those Condo fees break down? I know it pays for new paint, landscaping etcetera, but a building of 10 condos with a $200/month fees, that's 2K a month? Does it really cost that to have some guy come by and pressure wash the driveways every now and then?
Isn't that money usually reserved for other repairs, like when the boiler breaks, the roof eventually needs to be repaired, electrical problems, etc. I can imagine a building of 10 units needing $5-10k in ongoing maintenance/year, plus a reserve for the bigger things.
If your condo doesn't collect enough in reserves, you can get socked with a huge one-time bill (usually coming right after you bought that new car) if there are major problems that need to be repaired later.
Of course, if your builder did shoddy work you can pay a lot in condo fees and still get a big bill.
Sitting out a bubble: pros and cons
Seattle YOY also down 0.2% this month.
Last month it ws flat, now down 0.2. Next month? It's a start!
How exactly do those Condo fees break down?
Here is my breakdown for a 58 unit building:
ADMINISTRATION
Office Expenses $7,018
Management Fees $21,118
Other Professional Fees $2,620
Income Tax, Fees & Licenses $10,144
Miscellaneous $400
Administrative Total $41,301
UTILITIES
Electricity $5,919
Water, Sewer & Trash Removal $35,845
Telephone (elevator & fire alarm) $2,185
Utilities Total $43,949
MAINTENANCE
Employee Wages, Benefits, Taxes & Expenses $27,016
General Maintenance & Repair $19,500
Building Systems $12,067
Maintenance Total $58,583
RESERVE FUNDING
Replacement Reserves $74,400
Insurance Reserve Funding $35,977
TOTAL RESERVE FUNDING & OPERATING EXPENSES $254,209
Here are the latest listing numbers (SFH, Condos, Land) for this week for King County with all figures relative to the start date of 5/7/06.
Date / King Co / Delta / %
07-May / 7302 / /
15-May / 7486 / 184 / 3%
21-May / 7665 / 179 / 5%
11-Jun / 8099 / 434 / 11%
18-Jun / 8154 / 55 / 12%
24-Jun / 8352 / 198 / 14%
01-Jul / 8417 / 65 / 15%
08-Jul / 8758 / 341 / 20%
15-Jul / 9057 / 299 / 24%
22-Jul / 9139 / 82 / 25%
29-Jul / 9044 / -95 / 24%
05-Aug / 9059 / 15 / 24%
12-Aug / 9191 / 132 / 26%
Similar increasing trends in adjacent counties:
Pierce - 29% (the winner!!)
Snohomish - 22%
Whatcom - 18%
Lots of houses coming on the market both for sale and for rent. We are looking to rent and have noticed that a lot of rental homes enter the list overpriced and then over time they have to reduce the rental price.
This isn't last year and the flippers are gonna find out quickly the joys of negative cash flow.
One other comment is that a lot of the rentals we have looked at are owned by people whose English is not very good (foreign investors or greater fools taken in by "the industry"?).
I check every potential house we are going to rent on Zillow to see if it was bought in the last 3 years and whether the owner actually ever occupied the home. Based on walk thrus of many homes, I estimate that about 75% of the houses we have looked at have been bought in the last 3 years and the owner never occupied the house (clue: flipper).
Based on what I have seen I would estimate that up to 50% of the homes bought in the last 3 years have been bought by "infestors" and a good chunk of the remaining percentage by CA equity locusts.
If so, then demand will dry up "overnight" as speculation is quickly ramping down and home sales to "potential" CA equity locusts are starting to fall thru as the CA ELs can't unload their CA homes in the suddenly dead CA markets.
Pretty soon the joke in CA is gonna be "how many mexicans does it take to buy a CA home"? Ans: yesterday 20, today 10, and tomorrow...1."
Oh my god, that maisoncondos.com site was so depressing.
I lived in an identical apt bldg just up the street when I moved to Seattle as a teenager in the early 90's. From what I recall, the walls of the apts were thin, walking across Arora was not exactly a vision of the European pedestrian village, and the surrounding neighborhoods were decidedly NW blue collar....
Now evidently Greenwood Ave N is a chic pricey area?
Depressing = Knowing that all these year later I'm now in the top 5% income bracket.... and I would have to put myself in financial servitude... just to buy the SAME apartment that I rented as a TEENAGER while working as a telemarketer and Northgate Mall retail clerk.
Anon 3:02-
You're right. That is one depressing story.
Cheer up though. These prices are coming down. Big-time.
Are you starting to feel the panic in the air about the economy? That will bleed over into the housing market.
Anyway, people are starting to wake up from this dream (or nightmare depending which side of the fence you're on) of ever-escalating housing prices.
Go to benengebreth.org and you'll see that inventory's climbing and prices fattening or falling in every US city, including Seattle, with the exception of 3 or 4.
Soon those last 3 or 4 will join the rest of us and the places that are flat will join those that are falling.
It's the typical cycle in action. This one's been a hell of a ride up. Hold on for a hell of a ride down once it picks up momentum.
benengebreth.org has a new site based on different census factors. It's kind of interesting. The medians/percentiles are quite a bit lower and there are some nice graphs.
To reach it just type .net instead of .org or access from the old site.
Post a Comment