Boston Real Estate Observer, Author at Boston

Albert Pope Condo Sales in Boston

May 12, 2009 By Boston Real Estate Observer

There are several condo developments in the heart of the city that maintain their appeal over the years in the midst of new inventory and choice around Boston, and the Albert A. Pope Building is one of those developments. That said, it’s rather surprising to see that the latest sale in the luxury building came at $577 per square foot. Not so surprising is the fact that there has only been one sale in the development over the past six months – residents seem to stay longer in the Pope Building than in other developments, and coupled with the fact that there are only 25 units in the building, turnover is rather low.

Unit 203 in the development sold for $875,000 on April 30, 2009 after being on the market for 82 days with an original listing price of $949,000. Condo fees for the unit are $1,094, and the unit came with a deeded parking space in the onsite garage, and access to the building’s common roofdeck.

Unit 203’s lower price per square foot, compared to a 12-month moving average of over $600 per square foot, could be attributed to its placement within the building, level, and the fact that the Clarendon Back Bay will block views of the Hancock Tower from the Pope Building (see Clarendon Back Bay to Block Pope’s View).

Nonetheless, the real estate community will need to place assumptions on the sidelines until another unit in the building comes available, at present, no condos are listed for sale in the boutique concierge-served Albert Pope Building.

441 Stuart Street: What Happened?

May 2, 2009 By Boston Real Estate Observer

This week, the building at 441 Stuart Street was offered to the public through a foreclosure auction. The property was most recently purchased in 2004 for $37.5MM with the intent of converting the building to condominiums.

Recorded documents show that Corus Bank, a well-known condo conversion lender out of Chicago, placed $42MM in debt on the property in 2004. Corus Bank had received a “going concern” qualification from Ernst & Young, since then the bank has indicated that it is no longer “well capitalized” and the CEO has since announced resignation. Indications today are that it is very likely that Corus will fail in the very near term.

I’d estimate that there were 120 +/- attendees at the auction and I knew a number of the attendees who are high profile local developers. As I looked for bidders cards, I found eight. Manning, however, reported in another publication that there were 22 bidders. That’s a believable number, we had about the same at the foreclosure auction at the Broadluxe. The auctioner opened at $30MM and asked if there were any bids. There were not. Next he cut the bid in half and asked for $15MM, and the bids that followed were $15.1MM, $16MM, $16.1MM, and finally $17MM. There was only one 3rd party who bid the $15.1 and $16.1 against the bank. The lender bought the property back at $17MM.

Nevermind the fact that the highest 3rd party bid for the property was less than 40% of the known debt, consider the fact that the number represents only about $100/foot. Remember that this property is in Copley Square. If retail prices for completed condos are $600-900/SF and construction costs run $150-250 per foot then that’s a margin of 40% or better – isn’t it?

Where this market ends up remains to be seen, but one thing for certain is that we’re not out of the woods by a long shot. In fact we’re probably heading into the woods. Expect to see more auctions and more foreclosures on substantial properties like this as we move through the next 24-36 months. Developers and investors who act during this window will be the ones talked about and envied at the top of the next peak… just like those who bought in the early 90s and sold in the last few years.

Filed Under: Boston Condo Auctions Tagged With: Foreclosures

MA Offer to Purchase Contract

April 29, 2009 By Boston Real Estate Observer

The Offer to Purchase contract is generally regarded as the first step in the real estate transaction. The Offer to Purchase will include the purchase price, required deposits, a proposed closing date, and any terms which the purchase is contingent upon. Common examples of contingencies include the mortgage, inspection, and appraisal contingencies.

Unfortunately, many home buyers and sellers do not realize that with the acceptance of the Offer to Purchase, Buyer and Seller may very well have entered into a legally binding contract. Where the following three (3) elements are met, Buyer and Seller have entered into an enforceable contract: (i) the Offer to Purchase includes all of the essential terms of the contract; (ii) the Offer to Purchase is in writing and signed by the parties; and (iii) the parties intend to be bound by the Offer to Purchase.

Moreover, the general conception appears to be that any errors or omissions in the Offer to Purchase can be rectified in the more formal Purchase and Sale Agreement (“P&S”). However, this is somewhat erroneous as it is the Offer to Purchase that sets the outer parameters for the P&S. For example, should the Offer to Purchase fail to include a mortgage contingency, it will be extremely difficult to convince the Seller to agree to such a contingency in the P&S. Why? Because the Seller has based acceptance of the Offer to Purchase on the terms presented in said offer. To change the terms after acceptance is to change the rules of the game. This is not to say that additional terms and contingencies are categorically denied during the negotiation of the P&S. They are not. However, to ensure the inclusion of these contingencies, the Buyer will want to be absolutely sure that they are addressed in the Offer to Purchase.

To best achieve a properly structured Offer to Purchase, the Buyer should consider having their real estate attorney review the offer prior to transmitting it to the Seller. Most real estate attorneys will include this service as part of their flat fee, which has become the industry standard. Likewise, the Seller would be wise to have his attorney review the Offer to Purchase prior to the Seller’s acceptance – learn more about “When Does an Offer to Purchase Terminate“.

With a properly structured Offer to Purchase and acceptance of that offer, the Buyer and Seller will have identified the terms of the agreement and thereby established the expectations of the parties; a critical first step in what is often one’s single largest investment.

Filed Under: Buyer Advice

Developers Consider Accelerated Marketing Plans

April 23, 2009 By Boston Real Estate Observer

In light of my most recent conversations with various constituencies across the industry, I have identified 5 reasons condo developers should consider an accelerated marketing plan today, versus postponing to a future date.

We are still in a declining market. A number of reports just came out today confirming this. To claim otherwise is to be simply whistling past the graveyard. IHS Global Insight of Lexington announced an expectation that prices will drop through 2009. The IMF downgraded its worldwide and US economic forecasts today for 2009 placing the US at a -2.8% decline for 2009. Home prices will not rise amid a deepening recession.
There is still time. A proper campaign can still be mounted to liquidate inventory between now and the week of the 4th of July. The Boston real estate market goes on vacation in late July and August. Now is the time to sell while the market is active.
Lenders are getting impatient. Many banks need to get their money off the street. Workout officers are pulling back from offering extensions. An accelerated marketing plan can be an attractive offer for negotiating with a lender. If you are a developer with a note coming due in the next 12 months act sooner rather than later. Lenders are very likely to cooperate in instances where it’s possible that they would otherwise own the project. Carrying and disposition costs for fractured or broken condo developments are unpleasant and unpredictable. In my travels and in speaking with special assets and workout groups I can tell you they are not expecting it to get better soon and they are getting impatient.
If you’re going to be short, tis better to be less short sooner than more short later. There is more value in a project today than there is next quarter or next year, that is the nature of a declining market. If you’re forecasting that you’ll be short or close to it today, you’ll be really short next quarter and wicked short next year. Take the pain, pull off the band-aid with one quick swipe, don’t opt for the slow bleed.
Certainty in this market ephemeral. If things aren’t going as well as you’d hoped wouldn’t it be nice to forecast a conclusion? You might actually be able to sleep at night if there was some reasonably firm date upon which you could be assured that the thing you fear has come pass.

Filed Under: Condo Developer News

Boston Real Estate Observer Poised to Launch

April 20, 2009 By Boston Real Estate Observer

In a continued effort to drive towards providing deeper and wider coverage of the Boston real estate market, the Boston Condo Blog will soon be rebranded and remissioned into the Boston Real Estate Observer.

The goal of the Boston Real Estate Observer is to serve as a comprehensive and exclusive news source for Boston real estate. The mission and focus of the site will begin to slowly expand from simply residential real estate sales coverage to also include commercial real estate, lending and capital markets, rentals, condo developer news, the auction field, and real estate law.

Our focus on providing quality content will remain unchanged, and we are bringing additional contributors into the fold who specialize in unique niches of the real estate market in an effort to both maintain that focus on quality and provide the depth of coverage that our readers have come to expect.

We thank you for your continued readership. In the short term, you will begin to see that the look and feel of the website will remain relatively the same, but with an updated logo (below) and new URL.

Filed Under: Boston

Latest Sales at FP3 Boston

April 18, 2009 By Boston Real Estate Observer

We’ve been receiving inquiries related to the latest sales at FP3. Over the past 6 months, according to LINK (which does a scan of the Registry of Deeds on a regular basis), the only units that have closed in the building have been the affordable housing units. Condo developers, by choice, opt-in to the affordable housing program sponsored by the Boston Redevelopment Authority (BRA). FP3 participated in the affordable housing program, and units deemed affordable went to a lottery and since have closed – no further affordable housing options are available at FP3.

On the market-rate front, list prices were lowered on several units this week. For instance, unit 311, an 850 square foot one-bedroom one-bathroom was reduced from $489,000 to $449,000, unit 205, a 1,031 square foot one-bedroom two-bathroom unit was reduced from $599,000 to $499,000, and unit 215, a 1,382 square foot two-bedroom two-bathroom unit was reduced from $719,000 to $699,000. According to LINK, 16 of the 92 loft-style condos at FP3 have sold (17%).

Filed Under: Seaport District Condos Tagged With: 02110 Boston Condos, Boston Lofts, FP3 Boston

Construction at Harbor Towers Increases Boston Waterfront Apartment Rentals

April 13, 2009 By Boston Real Estate Observer

With most of the heavy lifting of a 2007-2009 systems renovation project completed, Harbor Towers has become a haven for Boston Waterfront rental apartments. Whether it was the cost of the special condo fee assessments, the state of the real estate market, or a mixture of both, there is no doubt that more condos are available for rent at Harbor Towers now than ever before.

According to MLS PIN only 7 condos were rented in 2006, in 2007 that number was pushed up to 19, and in 2008 to 25. While these numbers are imperfect -not all rentals are listed on or trade through the MLS – they are indicative of a trend that has followed the most extensive HVAC renovation any Boston condo development has seen.

Currently, there are 25 rental apartments on the market at Harbor Towers. Apart from the two large penthouse units available for $10,000 and $11,000 per month – most units are 1 or 2 bedrooms and range between $1,700 and $4,500. The units are most closely comparable to those at Emerson and Longfellow Place at the West End Apartments in that they generally offer parquet floors, galley kitchens and lots of space. However, at Harbor Towers every unit has its own personal touches added to it by unit owners – some have granite counters or an open kitchen. What brings most renters and buyers to Harbor Towers are the panoramic views of the Harbor and the city from two of Boston’s tallest residential buildings. The Harbor-side pool certainly adds to the appeal for renters, and with the additional supply of available units, the prices have become more affordable.

Filed Under: Boston Rentals Tagged With: Harbor Towers

Fannie Guidelines Drive Boston Condo Auction Activity

April 8, 2009 By Boston Real Estate Observer

New Fannie Mae condo guidelines present a new significant hurdle to sales for Boston condo developers. In the face of these hurdles and with increasingly less patient lenders it is likely that the Boston area will see more condo auctions in 2009. The Wall Street Journal reports a summary of the changes:

“The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity…The new policy became effective March 1, and most lenders have started to implement Fannie’s guidelines.”

In my business I work mainly with lenders and attorneys. Except in cases where developers have failed (often repeatedly) to reach the prescribed milestones, lenders to this point have been very generous with extensions and have been inclined to work with developers through slower than expected sales. Lately, as pressure has been mounting, I’m hearing about a lot less patience. Until this fall it was easy to be optimistic that something would happen and sales would improve in a relatively short time but the fact is that today most of the people I’m talking to are now expecting a longer down cycle than they may have previously.

After just two short months we’ll be able to assess the spring market and whether or not its made a significant impact on inventory. While there are some positive signs in the residential market, many lenders will be unable or unwilling to extend construction loans without some concrete evidence of forward motion. If Fannie’s new rules stifle that motion over these next two months, you can count on a spate of condo auctions through the second half of the year.

Filed Under: Boston Condo Auctions

Economics Trumps Boston Foreclosure “Deals”

April 6, 2009 By Boston Real Estate Observer

Over 900,000 USA households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That pan-USA figure represents 2.04% of all mortgages in the USA, the highest rate in the report’s quarterly, 36-year history. What does that mean for those looking to buy downtown Boston real estate, especially a foreclosure “deal”? Not much.

Ultimately, USA foreclosure statistics have little applicability to downtown Boston for two reasons, the first revolves around the fact that the number of foreclosures in downtown Boston is quite low, and second, simple supply and demand economic forces in the city center prevent any foreclosure pricing “deal” opportunities – these forces erode any price point differentials between market and foreclosure prices. Foreclosed homes stay at their foreclosure list prices because of supply gluts, and the economics of Boston’s real estate market prevent the surges in supply of “cheap” homes to support the market dynamics that are being seen in the hardest hit housing markets in the USA.

A compilation of 2008 (January – October) Boston foreclosures by the Boston Globe shows that there was one foreclosure sale in downtown Boston during the first 10 months of 2008 – yes, many more outside the city center, but the downtown market demonstrates significant insulation to foreclosure pressure. The single unit was a Leather District loft-style condo that sold for $443 per square foot, more than $100 more per square foot than current high-end units at the newly renovated Beach Street Lofts are selling for.

Case in point for the economic forces of the downtown market on a bank-owned unit offered to the public was 10 Hanover Street unit 3, a one-bedroom one-bathroom 690 square foot condo in the North End. In June 2008, the condo hit the market for sale, and was listed at $274,900 ($395 per square foot), a very attractive price for the unit and the neighborhood. We worked with clients to move quickly on the property, despite this, there were over 20 offers on the unit, and it closed two months later for almost $100,000 more than the list price at $365,000 ($529 per square foot). In the end, the short sale property didn’t really end up offering the value for which Buyers were clamoring. In 2008, the average price per square foot in the North End was approximately $600. This example highlights that simply supply and demand in downtown Boston prevent foreclosure “deals” from occurring.

Unit 809 at the Ritz Carlton will be an interesting condo to follow to see if the theory checks out. Unit 809 is a 1+ bedroom 1.5 bathroom 1,357 square foot unit in the Ritz Carlton Millennium Towers that is a bank-owned property recently listed for sale at $679,900 ($501 per square foot), and represents almost a 50% discount on the average price per square foot in the building – granted, the average price per square foot is being inflated substantially by several other recently listed properties in the development, including Manny Ramirez’s Ritz Carlton condo. Unit 809 is being sold as is, and is competing against 8 other units that are priced under $700 per square foot, the others at “market prices”.

The economics of supply and demand in downtown Boston trumps any “deal” that a Buyer assumes can be had by finding a foreclosure. The first hurdle lies in the absolute number of foreclosures in the city center, there really are none, and when coupled with the supply and demand forces present in the city, the idea of a “deal” on a downtown Boston condo quickly becomes elusive.

Filed Under: Boston Condos

W Hotel Boston Condo Photos

March 31, 2009 By Boston Real Estate Observer

Exterior work at the Boston W Hotel & Condos mixed use development has shown great advances over the past several months, with the steel structure being topped off quite quickly. The glass and steel structure inserts a very unique feel to the area at the corners of Stuart and Tremont Streets (100 Stuart Street Boston, MA 02116 will be the development address), and continues on pace to be delivered to hotel guests and residents later this year. Reservations are currently being taken for units, for planning purposes, overall price points will be similar to new full-service luxury buildings such as the Intercontinental ($900+ per square foot) and the Clarendon Back Bay ($1,100+ per square foot). Condos at the W will begin on the 16th floor, and top out at the 28th floor penthouse. The approximate 235 hotel rooms will be on lower floors, garnering condo residents preferential city views. Floors 16 through 27 will house 9 to 10 units per floor, including an occasional 520 square foot studio unit, while the penthouse level will be home to 5 generously sized condos.

New exclusive photos of the Boston W development are below.

Filed Under: Theatre District Condos Tagged With: 02116 Boston Condos, Boston W Hotel Condos, Stuart Street Condos