The Avenue

[RiverwoodCLT]

Yesterday

[monsoon]

What do you think the sustainable market value for uptown property is? At the moment the standard seems to be $300/sq ft, but that number could easily reach $325 or $350 by the end of the year. Do you anticipate the market value of uptown properties to fall below $300 in the future?

In the short term, the prices will hold, but I think in a year or so, prices are going to drop to around $255 or so sq/ft. Prices in the CBD are very high compared to similar property in Charlotte's peer cities. Even Atlanta Midtown doesn't cost as much.

I'd say if you like the place as a place to live then buy it. But if you are buying it for investment purposes, then I hope you have done your figures because these nosebleed prices are really high for a city like Charlotte. The ones making a lot of money on condos in Charlotte are the ones that are selling right now.

Of course you are asking for an opinion, and we all know what those are worth.

[ElricSeven]

Sorry about that I'm still new to this forum and didn't realize that was out of bounds. I've removed it. I do however have another question for you or whomever has thought about this.

What do you think the sustainable market value for uptown property is? At the moment the standard seems to be $300/sq ft, but that number could easily reach $325 or $350 by the end of the year. Do you anticipate the market value of uptown properties to fall below $300 in the future?

Legitimization of Uptown as a place to live and influx of more people, and then retail, will be supportive of prices. Larger number of units on the market due to investors selling out will suppress prices. Shortage of raw materials for building in the post-Katrina buildup will put a damper on announcements of new projects, or will keep those prices high.

My prediction, prices won't drop, but will stay level or static for quite some time at or around the $300 per square foot mark. Buy to live, not to invest.

[dubone]

i don't put forth a "vs" argument... but perhaps charlotte's cbd is a nicer place to live and has a more wealth than other cities that aren't sustaining the same prices.

i'm not saying you aren't right... it seems like these high prices are just begging for more supply of units... which might lead to a bit of a drop in prices next year, but will be good for the health of downtown and other multiplier projects like retail and perhaps even office.

[SmellyCat]

Larger number of units on the market due to investors selling out will suppress prices.

Yes, and rising interest rates, waning consumer confidence....

[ElricSeven]

Yes, and rising interest rates, waning consumer confidence....

Thinking about it some more, probably the biggest factor is Charlotte's increasing population. I think we can be relatively confident that average prices would be at least static or better in any 3 to 5 year period. I do agree, though, that the rises we've seen are not going to be seen unless/until Uptown is pretty much all built out.

[monsoon]

I chalk a lot of it to being a fad. Charlotteans are all too willing to go pay top dollar for something brand new only to find out later that it wasn't worth that much. Case in point the PSLs for the NFL stadium. When these were going, there were lotteries for them and speculators were buying and selling them for more than than list because everyone had to have one. (even with rules to stop it) A few years later, with the "newness" of the NFL worn off, people found it a hard time to sell these things anywhere close to the price they originally paid for them. Living in an urban setting is also something "new" in Charlotte.

As long as they can keep building new condos, then the price of the condos will eventually come down. Maybe dramatically. The only guarantees that I see in the Charlotte market for property is lake front property and the historic neighborhoods as the developers are locked out of creating more of these.

And as mentioned above, the economy is teeter tottering on getting to be very bad. The signs are there. First the high oil prices, next is high inflation, and that will be followed by high interest if the inflation persists which will kill the highend market in CLT. It should be noted that last month's inflation was 1.2%. The highest it as been since Jimmy Carter was in office.

[Skyybutter]

I think many people that choose to actually live in uptown and surrounding might not make it more then a few years. Others however will find the lifestyle very fulfilling. People in large cities such as nyc, boston etc have lived in urban environments for generation after generation.

Having said that, I dont think uptown living will be a fad here in Charlotte. So long as the people have things to do , places to shop, and it stays relatively safe, I think uptown will remain strong for years to come.

[monsoon]

I agree that people will continue to want to live in the downtown area. Where it gets murkey is in the price they are willing to pay to do so in the long run. The issue here is the current pricing going to hold or is it a result of speculation and the newness of it? CLT is still quite aways from being a Boston or NYC.

[Skyybutter]

I agree that people will continue to want to live in the downtown area. Where it gets murkey is in the price they are willing to pay to do so in the long run. The issue here is the current pricing going to hold or is it a result of speculation and the newness of it? CLT is still quite aways from being a Boston or NYC.

Thats why I think its so important to have a mix of prices. Uptown has to offer housing from at least the 90s on up.

[atlrvr]

But how do you offer lower prices in a hot market.....assuming that a developer could offer a unit for $90k, and wasn't interested in the largest profit possible, what keeps the first buyer from flipping it for the current market rate......everything always adjusts based on supply and demand....artificially trying to create a market that isn't there simply can't succed.....what downtown needs is more rentals....though I'm not suggesting that a developer should look to minimize his profit out of social responsibility, but at least through roommates, it does allow more people the opportunity

[monsoon]

I am not suggesting that things be done to lower the prices in the CBD market. As you said it is supply and demand, and as long as interest rates are dirt cheap and people "believe" they are getting in on the ground floor, demand will be high in the CBD. It's what happens when developers continue to satisify this demand by building more units and the demand is finally met that it gets real interesting for current property owners.

It's interesting to note there was an article that suggests that 80,000 people will be living along the South LRT in 20 years. If so, there will be an enormous amount of construction along this line to accomidate so many people. Exactly what you want BTW, if the investment in light rail is going to pay off.

However this also suggests there will be a vast leveling in condo prices in the long run as they will be fairly common, and the train will negate the advantages of living right in the center city. And condos further out will not have some of the disadvantages. Luxury places such as the Radcliff and unique places such as very high condos, say units above 25 stories will hold their values, but the run of the mill condo, is simply not going to be worth $300 sq/ft in the long run. Not when there will be units built, with exactly the same amenities but costing a lot less, just a short train ride away. And developers have a knack for shifting attention to their new projects and away from re-sale.

An all of this assumes that interest rates remain as they are.

[ElricSeven]

I am not suggesting that things be done to lower the prices in the CBD market. As you said it is supply and demand, and as long as interest rates are dirt cheap and people "believe" they are getting in on the ground floor, demand will be high in the CBD. It's what happens when developers continue to satisify this demand by building more units and the demand is finally met that it gets real interesting for current property owners.

I don't think people are as naive about this stuff as you're inferring. Most people are going to be very, very careful when spending this kind of money.

[monsoon]

I don't think people are as naive about this stuff as you're inferring. Most people are going to be very, very careful when spending this kind of money.

Is that is why we have to delete numerous posts/week off UrbanPlanet that concern real estate questions? Is it because people are being careful in the advice they seek out? And you should read some of the endless silly email we get from people looking to buy property. I don't see all of it, but some that I have seen suggests that common sense is something that has been lost on much of current society. It's the primary reason that we are usually very strict about limiting discussions of buying and selling specific property and keeping real estate people from conducting business on the site.

This whole conversation was sparked by a property buyer being a bit concerned about the high property prices in the CBD and he is seeking out my opinion on the subject. This isn't where I would see out advice but I think that says a lot about what is going on with the buying public.

As a side note, there were about 100,000 independant topic views of this section of UP in the last 3 months.

[ElricSeven]

Is that is why we have to delete numerous posts/week off UrbanPlanet that concern real estate questions? Is it because people are being careful in the advice they seek out? And you should read some of the endless silly email we get from people looking to buy property. I don't see all of it, but some that I have seen suggests that common sense is something that has been lost on much of current society. It's the primary reason that we are usually very strict about limiting discussions of buying and selling specific property and keeping real estate people from conducting business on the site.

This whole conversation was sparked by a property buyer being a bit concerned about the high property prices in the CBD and he is seeking out my opinion on the subject. This isn't where I would see out advice but I think that says a lot about what is going on with the buying public.

As a side note, there were about 100,000 independant topic views of this section of UP in the last 3 months.

There are always fools that ask silly question (which one would wonder if it is better to ask than labor in ignorance), but that is a long way from those that actually buy. I still maintain that most folks are going to consider any multi-100,000 dollar expenditure pretty carefully. Of course my disposition is relatively optimistic on a day-to-day basis.

[monsoon]

We have received threats upon removing real estate stuff from the site. We've even been stalked by people searching us down through the domain registration system so some people are pretty serious about the stuff they post here.

Sure, most people are not this extreme, but it is an example of the hysteria that exists out there in real estate right now. I would compare it to the people who were willing to plunk down tens of thousands, sometimes the entire life savings, on Internet stocks a few years ago. (only to see that money go up in smoke). NASDAQ did not make it up above 5000 by people taking time and effort to research out what they were doing first.

[dubone]

i'm starting to get the sense of a bubble more in the last few weeks than ever before.

isn't the saying that if the paperboy starts talking about his investments that there is a bubble? anyway, the most random friends of mine that have zero interest in business or investments are now talking about making real estate investments.

[ElricSeven]

i'm starting to get the sense of a bubble more in the last few weeks than ever before.

isn't the saying that if the paperboy starts talking about his investments that there is a bubble? anyway, the most random friends of mine that have zero interest in business or investments are now talking about making real estate investments.

Talking a good game is a lot different than actually investing in the real estate.

Unlike stocks, it is a lot tougher to find, get under contract, get financing and close on a real estate investment than it is a stock trade. Although banks have been a bit more adventuresome in their lending practices, they still aren't going to lend money for the purchase of a home that doesn't reflect comparable values. Also, people won't just panic and dump their houses on the market if they're currently occupied. They need a place to live and will continue to pay the mortgage and stay where they're at if not offered a fair price for their house.

All that being said, if there are a significant amount of speculators that purchase with loans, then that might cause a problem. At least temporarily while those bankrupted speculators sell out to cut their losses.

Compare real estate to stock investing where any old mook can get a trading account and get themselves into trouble without the banks oversight. I think there is a much, much bigger difference.

I see maybe Vegas and Miami as being a problem, since many of those are second homes and estimates are that 40% of the buyers are speculators. I really think that more than a modest sigh in prices is unlikely to happen in Charlotte. Buying to occupy is pretty safe, IMHO.

[monsoon]

Buying to occupy is alway save as one's only objective is to find a place to satisfy their current needs.

[dman379]

The Avenue's website just enhanced their floorplan selection page to include a rotating rendering of the building...check it out!

[DigitalSky]

The people in back are going to be able to peek in at the IJL workers, or visa versa.

[MZT]

I doodled a bit graphing the mean property values from one of the real estate websites. It looks like most parts of suburban Charlotte appreciated at 7 to 9 percent this past year. It's strong, but not bubblicious.

[atlrvr]

Avenue got it's building permit for the tower portion FINALLY. I was told yesterday that the delay has been in the city not approving the post-tensioned design of the tower, and they had to re-engineer the building adding about $1M to the cost. I'm not sure if they will suck up the cost, otherwise it should add about $2,500 per unit.

[dubone]

was it a cheap-skate construction method, or is it just an unproven construction method? does that have any impact on the likelihood that the Vue's construction method would be approved?

[atlrvr]

It was probably a bit cheaper, and unproven in Charlotte, though I would it assume it was the same method used in the Atlanta towers.....

I don't know a lot about construction, but I would assume they had to add more or larger support columns and not rely on the precast facade attached to tensioning cables.