Prices in the Market Today
When you write in a blog, sometimes you will make statements that are right and other times you may be wrong. This is the risk that you make when you put yourself out there. At times I will mention that I think a unit that comes on the market might be overpriced, underpriced or priced just right. In the case of the new Cosmopolitan, the market has spoken! From the very beginning, I have said that I felt the Cosmopolitan was overpriced. Was I wrong? Well, the Cosmo is now about 85% sold out. The market has absorbed those high prices, prices that I mentioned were higher than Seattle’s Insignia development. How could I be so wrong? For the developer, Hoyt Street Properties, their timing was the perfect storm, in a good way. Not only did interest rates not go up as many have feared, they actually went down. The biggest reason the developer was able to capture these high prices… LACK of INVENTORY. This is where I was dead wrong in predicting what would happen in the market. I don’t believe anybody would have guessed we would have continued with the low inventory that we have continued to have.
Typically, as prices rise, owners who were underwater begin to see some equity and sell as prices begin to go up. This time around, it has not happened! This was the perfect storm for Hoyt. In regards to pricing, it really is the market that determines the price. Because buyers had no other options, they were forced to pay the high prices at The Cosmopolitan. In doing so, the developer never had to reduce prices like I thought they were going to need to do. So was I wrong in my saying they were priced too high? I am sticking to my guns in terms of my opinion on pricing. Again, I don’t determine prices nor does the developer, it is the market. Is Portland ready for $1000 a square foot prices? I still don’t believe so. Several agents have tried pricing a couple nice penthouses in town at the $1000 a ft. level and they are not selling. The real determination of pricing will come when these units go into the resale market. This has been my biggest fear in not wanting to put my clients in this building. While some are certainly willing to take that risk, it is hard to determine what the market will do between now and then. What I do believe though, is if the market were to turn around, I believe it will be very difficult to get the $800 to $1200 a sq. ft that the buyers paid. When things aren’t shiny and new it is more difficult. Will the extra height of the building justify those prices then? I am not so sure. The new Overton apartment building, which is slated for 26 floors, takes away some of the theory of not getting views blocked by being in a 28 story tower.
So was I wrong on pricing? Like I said, the market has spoken and the developer has won! However, somebody asked me the other day if my parents moved up from San Diego, would I sell them a unit there? My answer… NO! I would do exactly what I said was an option early on. I would rather find them a nice unit at The Metropolitan, Park Place, The Henry or The Casey at $600 to $800 a sq. ft and have them put $100,000 to $150,000 into it. That way they would have the dream kitchen they want (which is not ultra contemporary) and they could do some other things to make it exactly how they want it. They could have a unit that I believe would far exceed, in terms of finishes and design, what they would be getting at the Cosmopolitan. And not that the ultra contemporary finishes at the Cosmopolitan are not nice, Pedini cabinets, your only choice, are just not for everybody’s taste.
To finish up I want to add just one thing. Everybody that is buying at The Cosmopolitan is not just buying an investment, they are buying their new home that they plan on living in for many years. So for those people who don’t have plans or need to sell anytime soon, they will be living in a very nice building in a very nice part of the Pearl District. They will be in a building that offers many nice views and a building near several close by parks…it will be a nice place to call home!
Brad Golik is a condominium specialist with Pearl District Properties. I you are thinking about listing your Portland condominium, give Brad a call and learn about Portland’s best condo marketing program.
503-896-8856 l WWW.LuxuryCondosofPortland.com