Condo prices were the first to show weakness and will be the last to revive. Supply is simply too great and demand at “normal prices” is non-existent.
Please consider Fire-sale prices for luxury Center City condos.
Price break on luxury condos in striking glass tower in Center City. Best offers over $250,000 considered.
That’s the strategy for moving 40 of the 178 units still unsold at the Murano at 21st and Market Streets, to be sold at auction for sums 50 percent below their original list price later this month.
Take the 1,405-square-foot, 23d-floor unit originally listed at $995,000. It could go for $485,000, less than what it would cost to build today, said Jon Gollinger, president of Accelerated Marketing Partners, of Boston, which is handling the sale for Murano’s developer, Thomas Properties Group Inc.
“These are preposterous numbers,” Gollinger said of the prices, which are based on his analysis of the Philadelphia high-rise condo market. “But there is disequilibrium in the market, and the only way to get it moving is to try to provide an extreme-value opportunity – a once-in-a-lifetime event.”
The sale, set for 1 p.m. June 27 at the Westin Philadelphia, 99 S. 17th St., is not an auction with absolutes, said Gollinger, who markets high-rise condo buildings nationally.
“If the reserve published minimum bid is $250,000 and no one bids above it, the condo sells for $250,000,” he said.
“The market dictates prices, and I don’t see these being gobbled up like they think it will,” said Center City mortgage and real estate broker Fred Glick. “No matter the price, financing is extremely difficult for a building that is not 50 percent presold, so . . . investors with cash will be the only ones that will probably buy these.”
The developer seems to have the idea that if they can get 40 units sold at fire sale prices, the rest will go at better prices. Let’s look at the math: There are 302 units, only 124 sold, and only 112 of the sold units have closed. The likelihood that that the 12 sold, unclosed units actually close is slim.
If 40 units are sold for 50% off, and all of them close soon, the building will be 50.3% closed (clearly the reason for precisely 40 units). At that point perhaps bank financing becomes available with the key word being perhaps. What then?
Will buyers rush in with attractive offers? No Chance. Expect to see “Preposterous Prices” on condos for a long time to come.
Mike “Mish” Shedlock
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