Wednesday, June 14, 2006

Surrounded by "Repartments"

The Sacramento Bee has this article about condo conversions gone bad.

A national housing trend called "repartments" has hit the Sacramento area, leaving people like Violet Vernon wondering if she'll ever be able to sell her home. The 1,100-square-foot Folsom condominium she bought in January for $318,000 is surrounded by what the Wall Street Journal dubbed repartments.

The owner of the 324-unit Waterford Place, on Natoma Station Drive, sold about 40 units as condominiums and then reverted the rest back to rentals. "The prices in Folsom were out of my range and this represented an opportunity for me to gain home ownership," Vernon said. "My concern now is that I may not be able to sell or refinance. I don't know that I can find a buyer."

Real estate experts report slowing sales this year of single-family homes and condominiums...Three years ago, new condominiums and apartments converted to condos were a bare 2.2 percent of new-housing sales in the six-county Sacramento region -- El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. In 2005, they reached 18 percent, according to Costa Mesa-based housing analyst Hanley Wood Market Intelligence...

Waterford Place, formerly called Lakeridge, was the first, with units going on sale July 16, 2005. When sales slowed to a trickle, the sales office closed in May. Waterford Place executives said they understand residents' concerns and never intended to have rental units in the complex, but that the slowing condominium market prevented them from following through on sales...

Moss said his company is researching what problems, if any, owners may have with refinancing or selling their units. Ross said the challenge is not finding a lender but that the value of the unit often decreases if it is surrounded by rental properties.

Vernon has contacted Prometheus numerous times to no avail. She said the owners should have foreseen a slowdown in condominium sales when they purchased the complex in 2005. "They can always get another investor. I can't," Vernon said. "I don't know if I can rebound from this."

24 comments:

Lander said...

Thanks to Happy Renter for the link.

rocklin renter said...

Vernon has contacted Prometheus numerous times to no avail. She said the owners should have foreseen a slowdown in condominium sales when they purchased the complex in 2005. "They can always get another investor. I can't," Vernon said. "I don't know if I can rebound from this."


Why? Why? WHY? Why should they have foreseen the downturn, while she ignored it? How are they responsible for her bad decisions?

I can't wait till these people contact some of the dot-bomb law firms. Maybe they can call that law firm that is leading the "mesothelioma" (sp) class-action, or maybe 555-5555 for the "Accidentes" lawyer.

Wake up lady, own up to your mistakes. Oh wait, I forgot we live in the US, land of pointing fingers everywhere but backwards.

Anonymous said...

a lot more of this on the way,there are thousands of condo's being completed this summer in the cities of oakland and berkeley...and given the market,how do you sell them for a profit? we will probably end up with a lot of new rentals in marginal areas,oh boy.

Happy Renter said...

The laughable part is they are spending twice as much as if they had just rented. They are living in a rental for what $2000 a month.
They're probably sharing a laundry room with the complex. All the cost of ownership without a single benefit.

Happy Renter said...

The apartment owners will most likely buy her out so they can sell.

Wiley said...

"Own up to your mistakes."

Well, I would agree with this, but I bet the high and mighty Realtor (insert copyright symbol here) told Vernon prices will continue to soar like a Remax hot air balloon.

Putting myself in Vernon's shoes at the time of purchase I would ask myself...how could an all knowing, honest, reputable, "hurry up and say yes or you'll miss out", Realtor be wrong? And I'd ask...would someone representing the Board of Realtors (with a capital "R") actually lie to me????? But...but...they belong to the Board of Realtors...and it's impossible for them to lie. The Board of Realtors (with a capital "R") is the only expert on Real Estate in the country and they said we are going to have a soft landing and prices will "always" go up. So if my fiduciary lovin' agent is telling me this is a safe investment for my future...then I should trust them and buy it. I would be crazy not to because like they say I will only gain equity in the long term in this property and I'll have nothing to loose. ;) I'll buy it!!!!!

There are lots of flaws in the Real Estate industry--honesty to name one--and it's going to be interesting to see who gets 'scapegoated' in the coming years.

Vernon is in a real bad situation. Where's the "Realtor"-lapel-pen-wearing agent now?

Happy Renter said...

From Electronic News,

"The Intel spokesman said that the company has not yet made any decisions, and that it will “report out” the results of its review in Q3, which begins in July. Another online account of the Intel cuts said an internal webcast for employees with CEO Paul Otellini was scheduled for June 15."

Anyone who knows any insiders try to get the scoop, I'll do the same.

Happy Renter said...

Atleast one realtor thinks it's all falling apart.

http://realtytimes.com/rtmcrcond/California~Sacramento~jeffhoffman

Anonymous said...

Hey Happy Renter,

I've learned from some of the Folsom Intel employees that jobs are on the line and layoffs may be in the pipeline. With earnings outlook suffering and stock price very weak, expect some cost-cutting on the horizon. Oh well, just another blow to the Folsom and surrounding real estate market. Anybody remember aerojets demise and subsequent house foreclosures in El Dorado Hills. No, most people don't remember history!

rocklin renter said...

wiley, even though these so-called realtors (more like used car salesmen) are "supposed to know better", there is only one person in charge of your wallet - YOU (well, and your husband/wife haha).

So anyhow, buyer beware....

Happy Renter said...

Anonymous,
Tommorrow we should be able to get a number as far as layoffs. The estimate is 16,000 out of the 100,000 employees will be layed off. Folsom Intel employs 6500, and is research based. Intel has wanted to cut engineering for awhile and move it to India. If the 16% holds, 1040 people in the sac area will lose their jobs and won't have real estate careers to fall back on this time.

And yeah, last time when it crashed Aerojet folded within a few years of the base closing. That was just a few thousand jobs, in a week economy, with a few savings and loan scandles, to make Sac real estate plummet 30%.

We have all that X 5 this time around!

Wiley said...

Well, there is no mistake in a first time home buyer making the biggest purchase of their life based on misleading reports from a crooked organization which "owns" a huge segment of the RE industry.

Blaming people like Vernon is 'scapegoating' in my opinion.

More information needs to made publicly available to buyers and sellers. No more of this MLS Crap!!

The Internet is opening things up big-time, but it's not enough yet to keep people from making really really bad purchasing decisions.

Getting the Realtor (with a capital "R") out of the loop will keep situations like Vernon's from happening.

That's my two cents. --Which, by the way, my wife let me spend!! :-)

James said...

It's not right what Prometheus did to Violet Vernon. She bought in good faith on the promise that all the units would become condos too.

I think there should be a law that says that if an apartment converts to condos, then they have to commit to converting all of them and they can't be converted back to apartments for at least 5 years.

norcal ray said...

A person should be self responsible that is true. But if a realtor mislead her in some way as first time buyer, she should be able to sue them somehow. Vernon definitely didn't have much knowledge and no match for the RE complex.

Fool me once, shame on you. Fool me twice, shame on me.

Burbed said...

It's hard to say - Prometheus also did this deal and it worked out amazingly:

http://www.burbed.com/2006/06/05/829000-for-a-cupertino-condo-used-to-be-only-2550-a-month/

I mean... taking $2550 a month apartments and now they sell for $830k.

But that's because the Bay Area is different than Sacramento - it's the Best Place On Earth

Burbed said...

Doh - long url got eaten

http://tinyurl.com/e6ael

Burbed said...

Doh - long url got eaten

http://tinyurl.com/e6ael

Anonymous said...
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rocklin renter said...

Everyone, let's also keep in mind the "quality" of "realtor" (haha) that typically sells these condos (or most tracts for that matter).

The ones I've met aren't exactly the sharpest tools in that shed.

I do agree that Prometheus should not have gone back to rentals.

However, I still firmly believe in buyer beware. Personally, I will NEVER chase a market - how can I make such a definitive statement? Because I do my due diligence, and double and triple and quadrupile check it, especially when it involves such a huge amount of money.

I feel that anyone making such a life-changing decision should have done the same level of due diligence. I have little sympathy.

If she is upset, she should contact a lawyer and seek retribution.

Anonymous said...
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Anonymous said...
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Lander said...

I have no problem with the content of your post. Just keep the language clean, please.

betsy sullivan said...

I'm a neighbor of Vernon's. Yes, we agree it's "buyer beware". Beware of what though. We aren't upset that we are living with renters, as Vernon lived here as a renter, as did others who purchased. It's that Prometheus stated in writing that this is a condominium project and would be sold over a two year timeframe. Our concern is he knew he was going to bail and didn't disclose it. There are 324 units and he sold 41. He let 30 buyers out prior to shutting down sales. He was selling approximately 15 units a month which is what the other condo developments were doing at the time. Just so you know it's not the renters that we are opposed to. Most of the homeowners were renters prior to purchase. However, living in a mixed use community does affect the value and the ability for a new buyer to get financing. Refinaicng is also a problem as most lendcers will not touch the loan as we are not a warranted cono. There are many more issues with this complex that would take too long to disclose - one being hazardous (toxic) mold that was not disclosed. Homewowners thougt they had found a beautiful place to live and it's really turned into a nightmare. If you'd like to know more, I'll ber ahppy to tel you.

Anonymous said...

I almost bought one of these condos! The part that said "WARNING" to me was when they (Waterford) would not allow me to bring my own realtor into the deal, but only use theirs. Plus the financing deal was being done by their preffered lender with a mad incentive, as opposed to using your own lender.

Fran made it seem like if I didin't pick this up, there was a line of other people behind me that would. So he gave me back my $5,000 earnest money when I changed my mind.

The other day I drive past the outlets and see a For Sale sign on one of the condos. I pull up closer and it says "For Sale Toxic Mold $250,000" in big letters.. then down below in small letters it says "Condo included".

Unbelieveable.