Sound Advice Regarding Simonini

As many of you know from reading the blog, I sometimes have a tendency to panic. I certainly feel justified in doing so, especially upon hearing that most of the Vue Orlando had been auctioned off! However, it is important to gain perspective and put these situations in context and one of my advisors suggested I do so with the Simonini situation. Simonini I was told narrowed his market to the very high end and the company has had its own set of problems some of which appeared previously in the press. The specifics are not crucial to the advice which was passed on to me, which was words have consequences and that the term  ‘catastrophic,’ while it certainly makes a good news headline, should be viewed as extreme or as this person said, “inflammatory”. In short, I was told DON”T PANIC!. OK, point taken!

If you have thoughts please share them with or in a comment. All news and feedback is appreciated!

Since the original post we received an excellent comment worth reading. Don’t miss it!

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3 Responses to Sound Advice Regarding Simonini

  1. Exactly! Simonini’s huge gaff is not watching what the market was doing. When the Charlotte market started to tank in August of 2007 and the luxury home market swelled to 2+ yrs of inventory, they should have shelved plans to build any more McMansions but they failed to. What I found “catastrophic” is that they believed the hype that Charlotte would rebound quickly and it just hasn’t happened. Many lower-end builders saw the light a lot earlier and shifted to build homes under $300,000. The comparison I see with The Vue and the Simonini situation is that they both are very niche products (the condo and the luxury markets) and as of the last few years, those markets that have fallen the hardest.

  2. Holly says:

    Jonathan, you say about “niche products” that “those markets have fallen the hardest”. Is this true? What evidence is there of that? Thank you.

    • @Holly: Most definitely! The million dollar market in the Charlotte area. From January through July 2006, 242 homes sold above one million dollars and they did so at an average price per square foot of $267.99. During the same period but in 2010, only 171 units sold averaging $227.40.

      In one of Simonini’s own neighborhoods, Heydon Hall, buyers paid $235.14 per square foot for one of their custom homes. Today, the same home can be had for only $199.53 (using the same January – July time period above). Our 4,011 sq. ft. home in that neighborhood, which sold new for $884k is now listed for $710,000 or $177 per sq ft.

      If you were buying a condo in Uptown during the first seven months of 2006, you likely paid $299.87 per square foot (284 people did). Today, those same units are selling for just $216.54.

      At the same time, your average single family home in Charlotte priced between of $200,000 – $300,000 still averages $108sq ft – the same as it did in 2006.

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