Yesterday, in a comment to my post, CharlotteJW, one of whom I consider to be the most insightful contributors to these pages, wrote an extremely reasonable and persuasive rebuttal to the Vue Charlotte pre-sales buyers’ scenario for success that I proposed. After reading it, I said to myself, yep, he’s absolutely right, I am going to have to go eat crow in the morning and admit that his view is probably way more probable and rational than mine. That was, of course, until I heard from the MLS on the million dollar sale of #3307.
When I paired up CharlotteJWs reasoning with the breaking news of the cash sale, it somehow reminded me of investor meetings I attend from time to time where someone persuasively argues that the market is going to go up or down, using flawless reasoning and backing it up with voluminous data, only to watch in the coming weeks the market do the exact opposite. The market has a mind of its own sometimes.
And so, does it seem, did the buyer of 3307. We don’t know any of the circumstances of this buyer, or this transaction; we can only speculate. I will do so in a post on Monday. In the meantime, try to forget what happened yesterday because I think CharlotteJW’s comment here still stands to reason.
And for those of you not in the eastern time zone, it is still dark, the house is still asleep, so I am not reneging on my promise to rake leaves. That’s not to say I may not do so later!
I do admit though that I am reneging on my vow not to post this weekend. But how does one hold back when news like this rolls in? It’s impossible. It’s almost as impossible as the cash sale of #3307 for contract price!
Thanks again CharlotteJW for this comment I have now made a post!
So the key issue here with your hope that you get new buyers coming in to buy below current prices but above pre-sales prices is that the market is just not there.
1.) New buyers would still have to get appraisals (we know where those are coming out).
2.) At this point there is no mortgage availability unless you are putting down a massive deposit.
3.) All a new buyer would have to do is google “Vue Charlotte” and get the observer and other articles.
4.) Can you imagine a real estate agent in good faith selling someone on the Vue at above pre-sales prices?
5.) How many primarily cash buyers with limited knowledge of the uptown Charlotte market looking to spend $400-500 per square foot are there? This is a pretty niche market and you would think your best bet would be international buyers with the decline of the dollar, but Charlotte is not a good city for that (Miami, NYC, San Fran)
My conclusion from those and a myriad of other reasons; the higher sales traffic (if that is in fact the case, which I have reason to believe or doubt) is not from people looking to buy at anywhere near current prices. They could be looking in the expectation that prices will far further, it could be a shift in the focus of the developer as he was focusing on closing pre-sales buyers and that is not working out. The developer could be trying to get a set of buyers that are interested in the property in the event of a significant price drop. The lenders to the property may be exerting their influence, a lot of possibilities.
I would like the Vue to work… but hoping to sell people at inflated values just asks for foreclosure issues down the line as the market will eventually correct, that would be a band-aid at best. The only real solution here is that the developer gets people in at current market prices. How he does that and whether he drops the prices for people with existing contracts or chooses to sue people to close in up in the air. I like to think of myself as an unbiased opinion, but there is NO WAY any material number of people are going to buy at above pre-sales prices when the developer despite his best efforts can’t get depositors to close at a lower price with a significant stake on the line and potential legal liability, not happening.