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  #61  
Old Posted Sep 27, 2013, 1:13 PM
Solutioneur Solutioneur is offline
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Is $500 PSF "Moderately Priced?"

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Last edited by Solutioneur; Sep 27, 2013 at 11:39 PM. Reason: Comment moved
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  #62  
Old Posted Sep 27, 2013, 11:56 PM
Solutioneur Solutioneur is offline
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Comments regarding specific projects are relevant to that project's Forum.

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Originally Posted by KevinFromTexas View Post
I was thinking we should have a thread on Austin's residential market and or market news.
My comments were relevant and appropriate in their original place - regarding those specific projects. They were not vague comments on "Austin's residential market and or market news." Clearly, the cost of a project and proposed pricing is perhaps one of the more important economic issues inherent in ALL real estate developments.

I do not believe anyone in any of these Forums should have their comments censored because a Developer or a Broker doesn't like them. Everyone always has the opportunity to either disagree or provide any additional information.
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  #63  
Old Posted Sep 28, 2013, 1:38 AM
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I thought this was the kind of thread you wanted - one to discuss and critique each project. And of course everyone else could, too.
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  #64  
Old Posted Sep 28, 2013, 11:57 AM
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Quote:
Originally Posted by Solutioneur View Post
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Yes, $500 / sf is moderately priced for downtown, compared to the only other available units at the Austonian or Spring penthouses. Especially when you consider the prime location of Seaholm and the forever views. The market is, by definition, what people are willing to pay, and there is no doubt in my mind that there a tons of people willing to pay that amount at Seaholm. I wouldn't be surprised if they sell out before construction is completed, unless a bunch of other projects convert to condo now too.
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  #65  
Old Posted Sep 28, 2013, 1:19 PM
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These condos are not all the same

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Originally Posted by H2O View Post
Yes, $500 / sf is moderately priced for downtown, compared to the only other available units at the Austonian or Spring penthouses. Especially when you consider the prime location of Seaholm and the forever views. The market is, by definition, what people are willing to pay, and there is no doubt in my mind that there a tons of people willing to pay that amount at Seaholm. I wouldn't be surprised if they sell out before construction is completed, unless a bunch of other projects convert to condo now too.
Seaholm cannot be compared to Austonian or even Spring. Until we see new plans it's an apartment building just like the Gables next door.

It costs $2,000 a month to live next door for the SAME product. If Seaholm sells for $500 PSF it will cost $3,500 per month for the SAME product.
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  #66  
Old Posted Sep 28, 2013, 4:45 PM
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Quote:
Originally Posted by Solutioneur View Post
Seaholm cannot be compared to Austonian or even Spring. Until we see new plans it's an apartment building just like the Gables next door.

It costs $2,000 a month to live next door for the SAME product. If Seaholm sells for $500 PSF it will cost $3,500 per month for the SAME product.

The Gables and Seaholm developments are the products of two completely different developers. So, I don't know how one could try and compare them apples-to-apples.

And let's not forget, Seaholm was originally designed as condos...then changed to apartments when financing dried up for condos...and now has changed back to the original condo design (when the capital environment shifted back in favor of more condo development).

The Gables development was designed as apartments from the beginning.

So, please explain how these two, completely separate/different developments are the "SAME."

Furthermore, rental rates and purchase prices have no direct correlation. Also, the rates at Gables start at just under $2000/mo and go up to $4300+/mo. So, if you are in the ballpark on your Seaholm "rate," it seems to be pretty comparable.
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  #67  
Old Posted Sep 28, 2013, 6:35 PM
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Rent Vs. Own is determined primarily by Monthly costs.

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Originally Posted by GoldenBoot View Post
The Gables and Seaholm developments are the products of two completely different developers. So, I don't know how one could try and compare them apples-to-apples.

And let's not forget, Seaholm was originally designed as condos...then changed to apartments when financing dried up for condos...and now has changed back to the original condo design (when the capital environment shifted back in favor of more condo development).

The Gables development was designed as apartments from the beginning.

So, please explain how these two, completely separate/different developments are the "SAME."

Furthermore, rental rates and purchase prices have no direct correlation. Also, the rates at Gables start at just under $2000/mo and go up to $4300+/mo. So, if you are in the ballpark on your Seaholm "rate," it seems to be pretty comparable.
Seaholm (as of now) has been designed and financed as an apartment project very similar to its neighbor the Gables. Both projects sought to develop a product that could capture $3.00/SF-Month in rent. That rental rate determines the cost of development in order to get financed and make a profit. In that regard they are the "same." If their development costs exceed $300 PSF they cannot/would not do the project.

Rental rates and purchase prices have a DIRECT correlation. The variation in the rents you quoted are simply because they are different sized units - they're all around $3.00/SF-Month. That is the current rate downtown, as set by demand and vacancy rates. Higher floors are slightly above $3.00 and lower floors are less, but the building averages $3.00/SF-Month.

When someone has an interest in homeownership they first focus on their monthly costs and as I mentioned above, Seaholm would cost almost double (on a monthly basis) than their similarly designed and constructed neighbor the Gables. If they return to an earlier design for a condo project that will show up when they release floor plans. Buyers should compare monthly costs for whatever the new Seaholm design includes with the Gables next door. Nobody would pay $500 PSF for a unit at the Gables. I'm afraid it will be very difficult to tell them apart because they are both (as of now) designed as apartments. Maybe the Seaholm group has already agreed to put more money into the project to achieve condo quality - we'll see.

I also heard from a broker yesterday that if they don't change their current apartment style design plans the prices will be $300-$350 PSF. That makes sense - for the developer AND the buyers. At $300 PSF the monthly cost of ownership would be similar to the Gables next door.

If you believe a buyer should pay a premium to own the same product, please explain why.
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  #68  
Old Posted Sep 28, 2013, 7:05 PM
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But I thought you were arguing that the developers could not deliver a product for $300-$350 sq. ft. Now I am confused.
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  #69  
Old Posted Sep 28, 2013, 8:19 PM
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Quote:
Originally Posted by austlar1 View Post
But I thought you were arguing that the developers could not deliver a product for $300-$350 sq. ft. Now I am confused.
They cannot deliver a "condo" product for $300-$350.

Seaholm at $300-$350 PSF (based on the latest designs) makes sense because it's equivalent to the Gables next door, an apartment. If they change their designs and invest more in the building quality, finishes and amenities, they would be able to raise prices. That's something for the Developer and RE Broker to decide.
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  #70  
Old Posted Sep 29, 2013, 3:28 PM
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Quote:
Originally Posted by Solutioneur View Post
They cannot deliver a "condo" product for $300-$350.

Seaholm at $300-$350 PSF (based on the latest designs) makes sense because it's equivalent to the Gables next door, an apartment. If they change their designs and invest more in the building quality, finishes and amenities, they would be able to raise prices. That's something for the Developer and RE Broker to decide.
Have you been in any of the recently constructed downtown rental buildings? Most are comparable in quality to condos.

Condo (and all home owners) are willing to pay more per month than renters, because they are building equity with their investment rather than building somebody else's equity.
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  #71  
Old Posted Sep 29, 2013, 5:30 PM
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Quote:
Originally Posted by H2O View Post
Have you been in any of the recently constructed downtown rental buildings? Most are comparable in quality to condos.

Condo (and all home owners) are willing to pay more per month than renters, because they are building equity with their investment rather than building somebody else's equity.
Plus, ownership brings tax exemptions in the the form of deductions on interest paid on the mortgage and property tax.

Last edited by the Genral; Sep 29, 2013 at 6:14 PM.
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  #72  
Old Posted Sep 29, 2013, 9:34 PM
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Seaholm at $500 PSF doesn't make sense for purchasing. $350 PSF does.

Quote:
Originally Posted by H2O View Post
Have you been in any of the recently constructed downtown rental buildings? Most are comparable in quality to condos.

Condo (and all home owners) are willing to pay more per month than renters, because they are building equity with their investment rather than building somebody else's equity.
Downtown rental buildings are not comparable to luxury condos. Have a look at Skyhouse, it's like student housing. If Austonian is the current standard for luxury ($600 PSF) there is no comparison to rental properties. Suggesting the Seaholm apartments are comparable at $500 PSF is silly. If you make specific comparisons you'll find very little is comparable - from finishes, building quality and developer provided amenities. That's why it cost $280 PSF (blended) to construct Austonian and the construction budget for Seaholm is only $180 PSF (blended). That's a big difference. If we wanted to demonstrate that difference we'd simply double the construction cost PSF and Austonian would price at $560 PSF and Seaholm would be $360 PSF, but we don't know yet what additional investments the Seaholm Developer will make based on the switch to condos.

Based on the $500 PSF quoted price for Seaholm condos and rents at the similarly designed Gables (next door), it would take 18 years before buying was better than renting. If you purchased the condo and stayed for 6 years and then sold it, renting is much better. It would cost $38,612 less than buying, an average savings of $6,435 each year. This includes everything related to purchasing or renting and is based on a $2,100 rent (increasing 3% a year) and a $350,000 purchase price with 10% down.

If, as Ive suggested, the real value (and price) of the Seaholm Apartments-Condos is $350 PSF, then buying would be better. If you purchased the condo and stayed for 6 years and then sold it, buying is a little better. It would cost $7,165 less than renting, an average savings of $1,194 each year. Buying is actually better than renting after 5 years. That's reasonable, 18 years is not.

You can enter the data here and see the results:

http://www.nytimes.com/interactive/b...ator.html?_r=0

By using this calculator and entering all the relevant data it becomes clear when buying is better than renting - the primary factor is the price. $350 PSF makes sense, $500 PSF does not.
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  #73  
Old Posted Sep 29, 2013, 9:39 PM
Solutioneur Solutioneur is offline
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Interest deductions and property tax.

Quote:
Originally Posted by the Genral View Post
Plus, ownership brings tax exemptions in the the form of deductions on interest paid on the mortgage and property tax.
Both are included in the example above.

Contrary to popular belief, buyers do not get back the mortgage interest they paid throughout the year at tax time. Mortgage interest can only be deducted from taxable income. This essentially means that buyers pay a dollar just to save 30 cents.

Furthermore, deducting interest has no tax advantage unless a buyer pays so much in interest that the amount exceeds the standard deduction that everyone--including renters--is allowed to take.

Try the Calculator, it's a very objective and helpful tool:

http://www.nytimes.com/interactive/b...ator.html?_r=0
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  #74  
Old Posted Sep 30, 2013, 5:00 AM
AusTxDevelopment AusTxDevelopment is offline
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Quote:
Originally Posted by Solutioneur View Post
Seaholm cannot be compared to Austonian or even Spring. Until we see new plans it's an apartment building just like the Gables next door.

It costs $2,000 a month to live next door for the SAME product. If Seaholm sells for $500 PSF it will cost $3,500 per month for the SAME product.
You guys are arguing a moot point. It makes absolutely no difference if the product is identical. I'll quote myself from the other thread you started Solutioneur, "Austin Downtown: Highrise Apartments vs Condos": "The true value of a condo is what someone will pay for it, not what it cost to build or what a comparable apartment is valued at. Is that fair? No. Is it a fact? Yes."

I went into more detail on the other thread but that's the gist of it. H20 made a similar point above, and is correct. They will likely sell 80% of the Seaholm condos before delivery. That's just the way the market works.
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  #75  
Old Posted Sep 30, 2013, 5:03 AM
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Just curious, but how do you know anything about the amenities, quality of materials, etc. that will be used to construct the Seaholm residential tower?

I keep hearing it will be no different than the Gables next door, but how do you know this information?
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  #76  
Old Posted Sep 30, 2013, 11:56 PM
Solutioneur Solutioneur is offline
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Quote:
Originally Posted by AusTxDevelopment View Post
You guys are arguing a moot point. It makes absolutely no difference if the product is identical. I'll quote myself from the other thread you started Solutioneur, "Austin Downtown: Highrise Apartments vs Condos": "The true value of a condo is what someone will pay for it, not what it cost to build or what a comparable apartment is valued at. Is that fair? No. Is it a fact? Yes."

I went into more detail on the other thread but that's the gist of it. H20 made a similar point above, and is correct. They will likely sell 80% of the Seaholm condos before delivery. That's just the way the market works.
I appreciate your comment. We are all mixing value and price. You are correct that ultimately the market will determine the price (and settled value) after they're sold. At this point potential buyers can use tools, including comparing living costs from similar projects. In fact, Realtors should probably encourage their clients to use one of the many calculators to compare renting to owning. Doing so will determine the real value of owning versus renting.

I'm just suggesting there is no basis - objective or subjective, for the suggestion that Seaholm is worth $500 PSF just because it's less than Austonian or W.

As far as likely "selling 80% of the Seaholm units before delivery" that will be determined by the additional information regarding these units and demand. If buyers think these units are valuable at $500 PSF the bank-financing will need to see that before the apartment design is changed and the project becomes more expensive.

This cycle for condos will not be like anything we've seen in the past because of the difficulty of obtaining financing. Seaholm announced financing for apartments, but not for more expensive condos.
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  #77  
Old Posted Dec 15, 2013, 10:39 AM
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Quote:
Originally Posted by Hill Country View Post
The Solutioneur is definitely LookingUp reincarnated. Market forces are at work. Stop whining.
Ah, yes, now we understand your comment on the Highrise v. Condos thread! It would certainly not be out of character for Mr. West to cause trouble, lay low for awhile, and then pop up somewhere anew to cause more trouble with another failed Big Idea. UR Hartford? Sojourn? New Century Living? The Solutioneur Foundation? We most certainly perceive a pattern....
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