Thursday, October 19, 2006

Troubled Towers, Alms Granted

Friday Update - Sacramento Bee:

Higher interest rates and a softening home market may be holding back some buyers, Saca said. "Some people may have planned to use home equity to pay the deposit," Saca said. "A lot of people don't have that kind of cash laying around. But we expect the market to turn back in our favor soon."

The sales slowdown may also reflect a change in buyer psychology stoked by negative news about the weakening housing market, said Bob Bronswick, president and chief executive officer of Coldwell Banker Residential Mortgage's Sacramento-Tahoe region. "A lot of people are sitting on the sidelines, waiting to see what will happen next," he said.
From the Sacramento Bee:
California's slowing housing market has dampened sales at Sacramento's largest high-rise condominium and hotel project, although its developer expects sales will improve next year.

John Saca's 53-story project at Capitol Mall and Third Street, the Towers, has presold a little less than 50 percent of the 799 units to date, and sales in August and September have been particularly slow. "Our sales are slower than I'd like," Saca said, "but I think that things will get better when the housing market improves."
Also from the Bee:
The Sacramento City Council approved an $11 million subsidy Tuesday to developer John Saca for construction of a lavish downtown hotel that is part of the Towers project...Council members voted unanimously in favor of the subsidy, lauding the project as "iconic," "dynamic" and part of a downtown resurgence that "will take Sacramento to the next level..."

"People ask me, 'Why would you want to give $11 million to a developer?'" Councilman Robbie Waters said. "I look at it as an astute investment..."

Saca said the hotel needed the money because of rising construction costs and a slumping housing market. "This has been a very difficult project," Saca told the council. "Without support of the city and city staff I'm not sure this would happen."
KCRA also reported on this story. Hat tip Patient Renter. Prior posts on this story here and here.

16 comments:

RMB said...

Go and read the comments in the Bee on this article. If you don't think people are delusional that should open your eyes. There are a large number of people who think this subsidy is a good thing. Using thier logic, every person who lives in the city should get a check each year, because they will spend more money and produce more taxes.
Sacramento is going to get what it deserves once this thing is done and only half full.

Anonymous said...

Twin Towers are looking like Twin holes in the ground. Did that project ever get financed by Deustch Bank? I bet half the buyers are straw buyers. The other half are going to lose their axx.

Anonymous said...

Since he sold half can he build one tower?

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

LOL...

you failed to mention that the "builder" bailed on Saca and he's in "negotiations" with another builder...

LOL...

gee, I wonder what that means?

LOL....

max said...

There are a large number of people who think this subsidy is a good thing.

Who want's to bet that he'll use the subsidy money to "buy" enough units to secure funding? Let’s do some math:

809 total units
364 sold so far
40 sales needed for funding

Assuming a $500,000 average price, that’s $20,000,000 needed, or $2,000,000 in deposits. What should scare the city is the fact that Saca can’t find 40 more buyers anywhere, and Deutsche isn’t being flexible with its 50% requirement.

This whole house of cards hinges on Deutsche coming through, and I think they’re dragging their feet while they gauge the market.

Anonymous said...

you assume that Saca has that number lined up already...which in not something you can "bank" on...

you guys run these "bubble" web sites, you know how these guys "work"...

Happy Renter said...

"Who want's to bet that he'll use the subsidy money to "buy" enough units to secure funding?"
The original stipulation was he would not get the money until the building is complete. Have things changed?

Anonymous said...

Tell you what, I'll trade my sales rate for either of theirs - their worst is selling 8 per month for a building that isn't even out of the ground yet.

The city will be much better in having tax paying citizens living downtown instead of a Target/KMart.

Anonymous said...

Buy your imaginary Saca Condo in the sky, and every weekend walk over to the Capitol Mall, and meet with all the homeless people, and then you can walk over to the K Street Mall and look at all the empty storefronts, and then walk up K Street and meet with all the rest of the homeless people, and then walk over to the Maloof Stadium that wasn't built because of the incompetence of City Government (shhhh, it's a secret!), and then you can get in your car and drive to Midtown...

and when you get back to your Saca condo in the sky you can just thank your lucky stars you weren't mugged on your journey

and that's Living Urban in Sacramento

Karl Marx Brothers said...

Speaking of the Maloofs

anyone notice the bad timing of the Karl's Jr commercial showing them acting like a bunch of wannabe Hugh Hefners in their casino while eating Karls Burger?
( yeah right - like they dont have their casino chef catered meals )
I'm sure the CK commercial was filmed in advance but still ...
Thats all the average working class Sacramentoites need is to see a couple of spoiled rich kids parading around on TV to get
those much needed votes for their new stadium !!
I like sports but this is just too much. I say let the Kings go to Las Vegas if need be.
I sure as hell cant afford tickets now, much less with the guaranteed hikes to pay for the new stadium.
If you sports fanatics want to go see em fine but pay your true cost instead of having everyone else subsidize.

sliding off soapbox now

Anonymous said...

Saca if you leave two holes in the ground you can throw yourself in one of them and your mercedes in the other. Who starts building without getting proper funding. If you leave some half built structure in our City's skyline so help you.

Anonymous said...

"...and that's Living Urban in Sacramento."

Well that's what they are trying to change by introducing upscale housing. However, I really do think the project is overambitious and ill-timed. They'd be better off allowing somewhat more affordable condos to be built so that Sacramentans can actually afford it.

Anonymous said...

ALL FIRST TIME HOMEBUYERS BEFORE YOU BUY PLEASE GO TO THE SACRAMENO POLICE WEBSITE AND USE THEIR SEARCH TOOL FOR CRIMES REPORTED NEAR THE HOUSE YOU ARE LOOKING AT. YOU WILL BE SUPRISED!!!! IT ONLY TAKES A SECOND AND IS VERY INFORMATIVE. IF YOU BUY IN ONE OF THESE CRIME INFESTED AREAS AS MARKET PRICES ARE GOING FURTHER AND FURTHER DOWN, YOU WILL BE STUCK IN A NEIGHBORHOOD THAT IS CRIME INFESTED AND YOU WILL NEVER BE ABLE TO SELL YOUR HOUSE TO GET OUT!!!!!!

DO NOT LET SOME REALTOR WHORE TRY TO TELL YOU SOME AREAS ARE GOOD WHEN THEY ARE NOT. ALL THEY CARE ABOUT IS THE COMMISSION.

Anonymous said...

Presales of about 400 units at an average price of $500K pretty much amazes me. These are not big units, and the condo maintenance fees are steep.

I'm having trouble seeing it. Anyone else think the same way?

Anonymous said...

yes, these HOA and excessive monthly maintenence fees, will bite these Sac pseudo-tycoons in the axx. when these FBs aren't able to "cash out their equity," most of these trump wannabees will be gasping for air.