The start of the bursting bubble
In echo of '90s bust, auction set for 34 unsold luxury condos in Hub
By Kimberly Blanton, Globe Staff | September 6, 2006
The developer of a new luxury condominium project in Boston's financial district is resorting to a tactic last seen in the real estate bust of the 1990s: It's holding an auction for the 34 remaining, unsold condominium
The units on Broad Street -- 11 of them penthouses -- will be sold in a live auction at the Seaport Hotel in South Boston on Oct. 7. The developer of the 14-story Folio Boston project hoped to capitalize on completion of the Big Dig tunnel and construction of the Rose Kennedy Greenway, which has been delayed but would clear the way to the waterfront for pedestrians.
A minimum bid will be required for each unit. A one-bedroom currently offered for sale at $480,000 will be sold at or above its $325,000 minimum price. The most expensive unit to be auctioned, a $1.76 million, two-bedroom with a wraparound terrace on the 14th floor with a waterfront view, has a $1.025 million minimum price.
``There's been a stalemate between the buyers and sellers," said Jon Gollinger, whose firm, Collaborative Cos., was the sales agent for Folio's condos, and who will handle the auction through his other firm, Velocity Marketing.
``We want the market to determine the value," he said. ``We're starting at a price that's laughably low."
Auctions often heighten interest among potential buyers who think they can get bargains. Homeowners and developers often resort to such one-day sales in a declining market to quickly dispose of properties, cut their losses, or repay lenders.
While more individual properties, such as single-family, vacation and retirement houses, have been auctioned recently, this is the first auction of multiple units in a single project in Boston. And it is one of the first high-rise condo auctions in the country.
The Folio auction, which is scheduled to be disclosed today, is sure to rattle competing downtown developers forced to deal with what could be low prices that would bring down sales prices for comparable condos in their projects.
Downtown condo sales, which had remained strong even after the suburban market began to slow, slumped 7.9 percent between January and the end of July, according to real estate research firm Listing Information Network. The median condo price in downtown Boston, $572,761, is 5.9 percent lower than a year earlier.
These prices seem real high for something not overlooking the Charles. I know it's downtown, but that location is deserted at night. But it is an overall trend of the overvalued coming down to earth.
posted by Steve @ 8:02:00 AM