Sacramento: 301 Capitol Mall: A New Plan for The Towers Site

[Los_Lobo]

Originally Posted by mechanico

The Deutshe Bank is not going to allow Saca to cut his prices.
If the 12/31 deadline is true and Saca doesn't meet it I think that will be it.
There are people who bought these condos as investments that are nervous right now. There are those like dcox20,but did buy, that are watching their equity (that they took out lines of credit against for the deposit) disappear.

That deadline changes everything.

OK, OK, about that deadline.... dcox20 was incorrect. If Saca doesn't have financing in place by 12/31/06 then it allows *Saca* to back out of the project (and return all the deposits). It doesn't allow the buyers to back out. The deadline is for the sole purpose of the seller. Sales have slowed but the project is fine.

I think you're right though about people watching their equity disappear. I'm hoping the housing market will improve within the next couple of years.

[mechanico]

Hey dcox20,
Where did you get the deadline info from?

[enigma99a]

Where is the weakening market? I'm actually trying to buy now, and nothing really has changed. Last month the median was $495,164 in Placer Co. (not sure about Sacramento Co)

[TowerDistrict]

Originally Posted by enigma99a

Where is the weakening market?

mostly in peoples' heads. they all thought their homes were worth more than they actually are.

[enigma99a]

^ Yeah that's right. All of these people who say their house is sitting, either has a dump that nobody wants or the price is just a little too high.

[dcox20]

Originally Posted by Los_Lobo

OK, OK, about that deadline.... dcox20 was incorrect. If Saca doesn't have financing in place by 12/31/06 then it allows *Saca* to back out of the project (and return all the deposits). It doesn't allow the buyers to back out. The deadline is for the sole purpose of the seller. Sales have slowed but the project is fine.

I think you're right though about people watching their equity disappear. I'm hoping the housing market will improve within the next couple of years.

I'll take a look at my binder when I get home tonight - If I misread it, my apologies to everyone, no harm was meant - the way these things are written makes it easy to misinterpret their meaning.

I will check tonight and try to post the language verbatim.

[joninsac]

I wonder if sales at the Towers have really slowed as much as the Bee suggests. Obviously, sales have tailed off greatly since August and aren't where Saca would like them to be, but in the period of time that phase 4 units have been available (about 5 weeks), Saca has sold 28 units, which is roughly 25 or so units per month, a bit more than the lowly 14 per month suggested by the September sales total. Just wondering.

[mechanico]

Originally Posted by enigma99a

Where is the weakening market? I'm actually trying to buy now, and nothing really has changed. Last month the median was $495,164 in Placer Co. (not sure about Sacramento Co)

El Dorado County's September median of $434,000 compares with a September 2005 high of $475,000.

Placer County's $454,000 median sales price compares with an August 2005 peak of $502,000.

Sacramento County's $350,000 median price in September is off its August 2005 peak of $372,000.

Yolo County's $411,000 median is below its November 2005 peak of $436,500...


http://www.sacbee.com/101/story/41282.html

[Phillip]

Folks, it's over. My condolences to the many good people involved with selling, designing, and building this project. But it's done.

So what if an additional 36 units sell by December 31? There are still 400 empties after that. Everyone who wants to buy into this project has bought. There aren't dozens of new millionaires moving to Sacramento every month.

I can't believe dcox20 is the only buyer out of 364 who's backed out since the real estate market started tanking. There are an unknown number of buyers who want out but haven't said so because they'll only get their deposit back if Saca cancels, not the buyer.

This project was ego driven, not market driven. Someone wanted to build the tallest condo on the West Coast and name it after himself. Nobody stopped to consider whether there were 800 people in Sacramento willing and able to live in a place like this. It turns out the market for downtown highrise in Sac is more like 300-450 now, including Aura.

No doubt the sudden real estate downturn hurt SacaTower (and many other projects, including some I liked and will be sorry not to see happen). But I don't think SacaTower would ever have sold out even if the market had held firm. SacaTower was just preposterously, ridiculously WAY TOO BIG for Sacramento. And I still maintain that Capitol Mall isn't a great location for a highrise, even one properly sized. Any of these projects would do better east of the Capitol, where the liveability factor is much higher.

I see some silver linings to this development though:

1) Construction will probably stop before the skeleton goes up. The hole in the ground with pilings sticking out is ugly, but think what a 20, 30, or 40 story abandoned skeleton would have looked like! Maybe we can salvage a Saca Plaza from this?

2) It's now more likely that a condo tower properly sized for the Sacramento market will be built Downtown, whether it's the Aura or something else. We now know there are 300-500 qualified buyers looking for a highrise home Downtown and they've got no place to go.

3) Hopefully this will knock out the unneeded Intercontinental Hotel, which was doomed to fail, even with an $11 million subsidy. Downtown hotel occupancy only runs about 75% now and Residence Inn and Joie de Vivre will be adding over 400 more rooms within the year.

With the Hyatt, Sheraton, and Embassy Suites those will be more highend rooms than Downtown needs for the foreseeable future, and especially since the Kings are leaving town. The room tax revenues generated by a new Intercontinental would NOT have been additional money for the city; they would just offset declining room tax revenues from other Downtown hotels losing business to the Intercontinental.

===========

Is it possible that Saca could go forward with a single 30 or 40 story tower and no hotel? Or is it two 53-story towers plus hotel or nothing?

[dcox20]

Originally Posted by TowerDistrict

mostly in peoples' heads. they all thought their homes were worth more than they actually are.

Therein lies the eternal issue... equity is not something you ever "have". The value of your home is whatever "joe blow" will pay you for it, regardless of what your realtor, appraiser, or website might tell you. As homeowners we get very invested in this amount of money that we're "losing" when the market slows... "oh my god my equity went from $80k to $20k!" you never "had" that money anyway... you didn't lose $60k, you bought you're house and lived in it for X years and made $20k while saving whatever portion of you payment goes to the principal (-interest).

The problem is that when values rise people get greedy or comfortable, they can't see past their own nose and they usually rape their house for all of it's "value" (equity) and use this funny money to pay down other debts or build a pool, or buy a car, whatever... then "oh my god" settles in when the value of thier house drops lower than what they owe... bummer for you oh short sighted one.

now our situation is not as dire as all of that... though we were short sighted. we bought at 312,800 2.5 yrs ago - at it's height our value was near $400k. So we put in a pool and full backyard (justifying that we'd be staying for a long time and that it adds value)... now our total loans are up to $355k and the house could sell rather quickly at $380k. Did we lose money? hell no. The plan is now to pay this place off and join our friends in the towers in about 8-10 years.

tada...

(Dave "king of punctuation" Cox)

[mechanico]

Originally Posted by Phillip

Is it possible that Saca could go forward with a single 30 or 40 story tower and no hotel? Or is it two 53-story towers plus hotel or nothing?

Downsize, what an amazing idea.
If he moves quickly he can secure the funding for a single building. It doesn't mean he has to abandon the two tower plan, just postpone the one unsold tower. I assume this has been the backup plan all along.

[sugit]

Feel better, Phillip? I bet you have been waiting to get that off your chest for a while, huh? lol

Assuming there is no out clause that dcox is referring to, Saca will get his 36 or so buyers and slowly sell the rest over the next TWO - THREE YEARS while they are under construction. That is a long time to sell those units. 400/30 (2 1/2 years) = 13ish a month on average.

IMO, as long as they do get built, I bet he sells the bulk of the remaining units after they are completed, or close to, and the market turns a bit. Plus, a lot of people still like kicking the proverbial tires before they drop the cash.

They will use the Saca and CalPERS money first (which I have to imagine is part of the financing agreement from DB), by that time they should be over the 50% mark

He won't make as much money as he probably originally thought, but he should be fine.

[innov8]

Just amazing… where do you come up with stuff Phillip? Just because the Bee writes a negative article doe’s not mean it’s all over… I would say there is a 10% chance of that ever happing. Common… get a grip man!

[urban_encounter]

Originally Posted by sugit

Assuming there is no out clause that dcox is referring to, Saca will get his 36 or so buyers and slowly sell the rest over the next TWO - THREE YEARS while they are under construction. That is a long time to sell those units. 400/30 (2 1/2 years) = 13ish a month on average.

IMO, as long as they do get built, I bet he sells the bulk of the remaining units after they are completed, or close to, and the market turns a bit. Plus, a lot of people still like kicking the proverbial tires before they drop the cash.

The voice of reason.

One more reason the towers will continue construction??
Cal Pers isn't about to let their $100 million investment sink..

One tower is already sold out and the sales for tower two will be ongoing...

Some buyers are probably waiting to see what happens with construction and will no doubt come forward once the tower(s) begin to rise.

[tuy]

If they need to, they may release some of the smaller phase 5 units to push the number over 50%. They only need to sell half of the phase 4 units that are left to reach that 50% point. 72 phase 4 left, 36 to the half way mark.

[mechanico]

Originally Posted by sugit

Assuming there is no out clause that dcox is referring to, Saca will get his 36 or so buyers and slowly sell the rest over the next TWO - THREE YEARS while they are under construction. That is a long time to sell those units. 400/30 (2 1/2 years) = 13ish a month on average.

People are taking out lines of credit, against their depreciating home equity, to put down deposits on condos that won't be built for 2-3 years? Less than half of the condos are sold. Why would you put down a deposit now? Prices aren't going up anytime soon.

[brandon12]

just wondering if anyone can help me put together a list of high-rise luxury condo towers in the US that have sold more than 375 units (with hard deposits, not soft) before pile driving is finished? I would love to see that list. If there are too many to list, it may be nessary to use multiple posts. So on the count of three, start listing them. By the tone of some of the posts above, there must be THOUSANDS of condo towers in the US that have faired better with HARD DEPOSIT preconstruction sales. Okay, everyone: one, two three! start adding to the list!!!

[sugit]

Originally Posted by mechanico

People are taking out lines of credit, against their depreciating home equity, to put down deposits on condos that won't be built for 2-3 years?

Of course some people are, but I doubt everyone is or even a majority. These condos aren't exactly for the average state worker making 30K a year that barely had enough to put a down payment of 5% their first house where a downturn wips out any equity and puts them upside down.

Contrary to poplular belief, there are quite a few fairly well off people in this region, most of which don't live in the City of Sac...but are ready to cash out much much more money than a small downturn can wipe, out to a less expensive condo and live a different lifestyle. (Which is why I think many of these buyers are buying, not just to make money) Many of these people are the ones that are buying, along with some well to do younger people who are I'm sure taking equity for the deposit.

I would bet a lot of the people that are buying these very high end units really aren't going to go broke with a small (5-10%) downturn in the market. They have owned homes for many many years, built a ton of equity, and while it sucks to lose equity at anytime, they won't exactly be hurting or go upside down.

Why would you put down a deposit now? Prices aren't going up anytime soon.

I would hypothetically bet just about anything that the units that would be for sale 2-3 years from now will be more than the units for sale right now.

Brandon or Lobo - Maybe you can clarify, are prices for units now more than when you bought during the first phase? What about from phase 2 to phase 4? It's been less than a year between P1 and now, right?

When people see there is no turning back and it is 10000000000000000000% for sure it will be completed, I think everything will be fine. He only needs 36 more...that's nothing.

[Sacdelicious]

For the record, Phillip, Sacramento's hotel occupancy is WAY above the national average of 66.5%. In fact, we are on par with occupancy of Hawaii at our 'only' 75%, and we have consistently been above SF in rates. Most cities would do anything to have our near consistent rate of 75%. It is rather our room rates that are lagging behind Hawaii and SF. Expect that to change when the IC hotel is built.

Source: http://sanfrancisco.bizjournals.com/...9/daily57.html

And for the other record, there are not 400 'empties' in the Towers. They are being sold in phases in order to maximize profits. All the units cannot be purchased at this time.

Next time, please do some research. It just gets annoying after a while.

[mechanico]

I'll help you with your list brandon.

Here is a project that sold 285 units,in just 10 hours,before construction even started.
Now they sit empty.
That should count right?

http://www.marketwatch.com/News/Stor...&siteid=google