In previous posts, I have mentioned Jonathan Osman’s Real Estate Update , a blog that I follow very closely each and every month. I would urge all to read the October 2010 update in full. Once again, it is another month of absymal sales. A 50% year over year fall with only 6 condos (yes I said 6) closing in September. Three of these condos were foreclosures. And to make matters worse, the article explains there is 16+ months of inventory, and this does NOT INCLUDE the Vue Charlotte units that just came on the market!
Here is a paragraph on the price per square foot for condos uptown that I have excerpted from his post:
During September 2006, units were selling at $299.29 per square foot. By 2009, that number had retreated to $233.58. By September, that number had fallen again to just $202.17 per-square foot. When you take just the equity sales, the average price leaps back to $272 – which goes to show the influence of the REO’s. [foreclosures]
The Vue is mentioned in the post, as many in real estate circles hope that the sales of the Vue help lift the price per square foot values in Uptown.
How much of a premium can the VUE Charlotte units command over the existing inventory in Uptown Charlotte after the pre-sales close? How does an appraiser, in this economic environment, appraise these units that have no sales track record? As a layman, and not knowing the ins and out of how appraisals work, I ask myself, what would be the factors that would be considered in an appraisal? How much of a factor would it be, if say, someone pays contract price in the VUE…and that is used for appraising the next unit? And say the next unit sells for contract price and so the 2 become the basis of the 3rd unit. And so on…until all the contracts that are going to close, close. And what happens if only a small fraction of those pre-sales actually close at contract price? What happens to values and the appraisals after that? And do the appraisers even think this far out or factor these risks in?
I don’t have the answers yet, just have lots of questions. But I am working on them. And if our audience can chime in with some insights, they would be greatly appreciated!
P.S. In my last post it might have sounded like I was giving legal advice. I am in no position to provide anything of the sort. Sorry about that. Also, what is going on in the condo market, while currently awful in terms of sales, does not impact my contract in any way. It doesn’t change my legal obligation to close on my contract, and the legal remedies open to MCL if I default.