Monday, August 28, 2006

'There's Nothing Great About This Market Right Now'

From the Modesto Bee:

It wasn't long ago that condominiums were hard to find in Stanislaus County. But now first-time buyers and others looking to buy small homes have lots to choose from, with prices starting as low as $149,000. That's particularly true in Modesto, where six former apartment complexes have converted to condos, one of which will have its grand opening Saturday. And another Modesto condo conversion is in the works, with plans to open this winter.

But condo sales throughout the nation are slumping, and industry experts say there's now an oversupply. That's certainly a switch for Stanislaus County. The county's largest new condo project, the 152-unit Balboa Park by Fitzpatrick Homes in Turlock, opened two years ago when the market was booming. Balboa Park had so many interested customers back then that it used a lottery to determine who would get to buy.

Now Balboa Park has about a dozen units left, but sales have slowed so much that it's trying to lure buyers by giving away a BMW Mini Cooper automobile with each purchase. Or, buyers can take $20,000 off the development's $290,000 starting price...

Yet to be priced are condos on Brighton Avenue, which had been rentals known as Continental Townhouses. Those 40 units range from 960 to 1,346 square feet and could be ready for sale in two months. "But we might wait until after Christmas to start selling them, because there's nothing great about this market right now," said Mike Baskauskas, whose company owns the Brighton project. "A lot of it is timing and luck."

Baskauskas said he's contemplating what price to ask, and he's considered cutting his original estimates to generate more buyer interest and sales. Lowering prices in developments where units have already been sold is rare, according to Rick Balbonado, regional director of sales for Hanley Wood Market Intelligence, which tracks new home and condo sales. "Once you lower the base prices, you create a domino effect," Balbonado said.

Even with such deals, condos are a tough sell this summer in Stanislaus County. Statistics gathered by Hanley Wood show that eight condos -- new or apartment conversions -- sold in the county in June, compared with 87 in June 2005. And two previously signed sales contracts canceled this June, so those condos must be resold. Prices are down, too. The average sales price for Stanislaus County condos was $258,270 in June 2005, but it fell nearly 16 percent to $217,323 in June 2006.


Anonymous said...

Rocklin, CA Condo-minimum update.... is a new condo project which started construction 12 months ago with 118 reservations. Today, the project is ABANDONED. The front doors are swinging open and shut in the wind (no door knobs) and no workers have been on the site in months. The lender should at least get all the doors and windows closed, because they will own the real estate soon.

Additionally, there are THREE other condo projects in a 1 mile radius with another +/-800 units.

D.R. Horton's project looks great, except it is completed and basically vacant. (hello, mr. lender..). Springview Apartments is in the conversion process and, after all the units are rehabbed, will probably lease up as apartments again (hello, mr. lender, you will own this too.) The Preserve at Creekside, about 450 apartments is ready to go condo and has DRE approvale, but with no demand for units, the owner would be a fool to pull the map and try to sell in this market.
So there are more than 800 condo units of housing in the Rocklin market that are undergoing SEVERE financial stress and the only hope is to bring them into the market as rental units. As the sale market crashes, there is going to be a very large supply of rental units and downward pressure on rental rates. Yes, yes, the MSM talks about how rental rates are rising 5% a year. Just wait for reality....last year in June 2005 Time Magazine talked about rising real estate prices too....

Anonymous said...

Modesto, frikin arm pit of the valley

norcal ray said...

Thanks for the update. This market is getting bad fast.

Soft Landing said...

I went to see the the Balboa Condos this weekend and found a current owner selling at $259,00.00.