Sunday, February 25, 2007

SOLD OUT! Well... sort of. Not really. OK, none actually sold...

In a Bulletin article last April,
Buyers compete for Bend condos
Deadline for bids on Franklin Crossing condos today


We got the practically effusive predictions of never ending price appreciation for Bend in general, and downtown Bend condos in particular. Franklin Crossings condo units were embroiled in a bidding war:

Six of the seven drew offers at the asking price before the reservation period ended last Friday, Coldwell Banker Morris Real Estate broker Norma DuBois said. Five drew multiple bids, which prompted a follow-up bidding period. The competition may bump the prices up even further.

The reservation period was offered only to a "priority list" of potential clients who had expressed interest in the project, DuBois said.

The Franklin Crossing building, in particular, with its ground- and second-floor retail, third- and fourth-floor offices and upstairs condos "has a penthouse feel," DuBois said. "There is a real feeling of uniqueness to it."

Joe Bankofier, a partner in Franklin Crossing's development group, Keystone Partners LLC, said he didn't expect condominium sales to run as strong as they have in his building when he started planning the project three years ago. In fact, the ownership group raised the target prices on its condos around $200 a square foot since they started considering their pricing last year.


Then, from an August article: High-end retail eyes Franklin site - Restaurants, athletic club are among pending leases:

The eight condominiums sold from $481 per square foot to $636 per square foot, Oliver said.


So, we get the impression that Franklin Crossing practically had to fend off buyers with a stick, and resort to their "priority list" to keep the rabble at bay from sullying the waters with their almost sub-human bids. So these units are not just reported as "Sold", they are Sold Squared. There's virtually no chance in Hades mere humans will ever get their mits on a Franklin Crossing condo. OK, those units are SOLD, GONE, GOODBYE.

Fast forward to today:

Condo market key to penciling out projects
Developments line up, but sales strength a factor


In Franklin Crossing at the corner of Franklin and Bond — the downtown’s first new five-story mixed-use building — buyers lined up to snap up reservations on the buildings eight top-floor condominium units last spring, despite prices that ranged over $1 million, DuBois said.

But the market changed over the summer, and so did Franklin Crossing’s fate.

Reserved buyers melted away from five of the building’s eight units by the end of 2006, DuBois said, leaving only three sold so far. The remaining five units, priced between $450,000 and $1.1 million, account for about $3.25 million in inventory at current listing prices.


So Franklin Crossing units are available again, right? So the whole SOLD OUT thing was a load? Apparently so. And what's more, developers have pinned their hopes on the condo market to get downtown deals done:

All of the downtown projects include some mix of retail or office space on their lowest floors.

But, given the high prices for downtown land and the high price of construction, their economic viability may depend on a single factor — the health of the residential condominium market.

The reason: Selling parts of a building to condo dwellers is the only way, in most cases, to offset initial building costs to the point where ground-floor retail and midfloor office leases can generate a profitable income stream.

In other words, as Bend Realtor Norma DuBois puts it, “It’s the only way you can make it pencil.”


Seems downtown buildings don't make sense unless you can jam way overpriced condo units down the gullets of several buyers on Day 0. Day 0 is the day you're at the bank begging for money to start building, by the way.

This latest article goes on to detail the vomiting forth of a litany of condo projects all over Bend that promise to flood the market with hundreds of units. Then it details the terrible vagaries of the condo market, a beast much more volatile than single family home sales. And these projects are almost all mixed-use residential/commercial beasts that need the pre-selling of condos to even get out of the blocks. And... condo sales are dead.

But this entry isn't about that... it's about what "SOLD" and other representations from Realtors, and by extention, our local media really means. We were told last April, and on innumerable occasions since, that Franklin Crossing was SOLD OUT. That means to me, SOLD OUT, operative word being SOLD. We find out that more than half the buyers in Franklin Crossing have bailed out. They weren't SOLD, they were just PENDING. Or kind of PENDING. Maybe the buyers made verbal promises about going PENDING. MAYBE. SOMEDAY. If certain contingencies are met.

A promise to go pending someday, if certain contingencies are met, maybe.


Call me a pessimist who just doesn't get it, but THAT AIN'T SOLD.

Which brings me to THE REAL POINT: OUR LOCAL MEDIA HAS ZERO CREDIBILITY WHEN THEY REPORT CRAP LIKE THIS, AND THEY KNOW FULL WELL THEY ARE COMPLICIT WITH THE RE INDUSTRY IN LYING ABOUT THE MARKET WHEN THEY DO REPORTS LIKE THIS. FRANKLIN CROSSING WAS NEVER SOLD OUT. BUT THE BULLETIN REPORTED THEY WERE SOLD OUT LIKE THE TRAINED DOG THEY ARE. HEY BEND MEDIA, HERE'S AN IDEA: GROW AN EDITORIAL BACKBONE!

17 comments:

Anonymous said...

Anyone know how well that monstrosity overlooking the old mill is selling.It is owned by a certain high profile real estate agent and her husband. Last I heard, they were all spoken for. In light of the above article ,I wonder where the truth lies. It looks more like another Ameritel than a condo project. Supposedly many were sold before construction even started.

IHateToBurstYourBubble said...

More from that August article:

Roughly 65 percent of the office space is taken, and 45 percent of the retail space is reserved, with more proposals pending, Oliver said.

"Taken"?

"Reserved"?

It's almost impossible to figure out what that means, given that SOLD means nothing of the sort.

Oliver could not name tenants that have outstanding leases with Franklin Crossing but provided an idea of what's to come:

* Cascade Capital Group, a merchant banking company, third floor.

* A new athletic club occupying 8,000 square feet on the third floor, including a full locker room, sauna, massage room, aerobics center and free-weight area.

* Morgan Stanley, an investment banker, fourth floor.


"OK, I can't name names, because nothing is final. But here are some names..."

Just what is a "finalized lease"? Is it the same as a SOLD condo? Can we really extract any meaning whatsoever from these Trained Dog Media RE Puff Pieces?

IHateToBurstYourBubble said...

I wonder where the truth lies

The TRUTH LIES all over the place at The Plaza (yes, that is the Inspired name of that monstrosity). The Realtor lies as well, using Bend media as a trained dog, because you see from todays Bulletin:

A few blocks away above the Old Mill’s retail district, The Plaza, a purely residential condominium project, has moved 12 of its 42 units so far, owner and Realtor Becky Breeze said, at prices ranging from around $600,000 to nearly $2 million, although the building won’t be move-in ready until June.

They've moved these 12 units. MOVED. Sounds like they're SOLD. Who knows. Kinda sorta pending? Maybe. Under contract? Could be. SOLD? Hey, flip a coin. With Bend media relentlessly digging for the real facts, we're sure to get... something. Not facts, though. Luckily we're all too stupid to demand stringent editorial standards.

IHateToBurstYourBubble said...

OK, I've whaled on the Bulletin, and they might be wondering (probably not), "What terms should we use?". Here you go:

"RESERVED": OK, this is a virtually meaningless term, as reserved means someone has signed a completely non-binding, legally unenforceable piece of paper saying that they are really really hoping to go under contract. I've signed one of these in the past 90 days, they are totally meaningless.

"UNDER CONTRACT": Slightly more meaningful, usually accompanied by some small payment that Realtors try like hell to increase at every instance to increase your "commitment". But this thing, penned correctly, can be bailed out on by both parties at almost any time. Not quite meaningless, but close.

"CLOSED": Title has transferred. The deal is done, and there ain't no undoing it.

OK? Reserved, Under Contract, and Sold are the terms that SHOULD BE used when describing where a deal is in the pipeline. The first 2 are almost meaningless, the last is a done deal. Bend media does not care about using the term "Sold" interchangeably with the other two, giving the distinct impression that projects are SOLD OUT, when they are nothing of the sort.

Bend Economy Man said...

I remember seeing that April article about Franklin Crossing and thinking, "well, maybe I'm wrong if Franklin Crossing is sold out already - there must be a huge demand out there."

I guess even I, cynic though I am, never imagined that the sold-out schtick was all bullshit. But it was, apparently. Nothing was sold out. A lie, reported as fact in the local newspaper.

Duncan McGeary said...

I have my doubts that even the units that have SOLD have sold for full price.

The real question is: How many units have sold for full price to real customers?

There are just too many ways they can fudge this to ever know the truth.

But I suspect -- I assume -- that at least some of the sold units were in 'trade' or were 'sweet heart' deals in order the prime the pump.

So it may even be worse....

Bend Economy Man said...

Rumor has it that one of the 3 units that was actually sold was immediately put back on the market. Sounds like pump-priming to me.

Anonymous said...

It was actually used as payment to one of the principal commercial brokers for Franklin Crossing rather than paying their fees, so wouldn't even call it a "sale".

The funny part, is that the supposed flurry of activity when these were released was used in the design decisions for the other projects downtown. Basically, they all screwed themselves on this one.

Anonymous said...

How'd you like to be one of the two people who actually went through with the buy, only to find out that the other 6 bailed? Probably means your neighbors will get theirs for cheaper.

Anonymous said...

RE, Ihatetoburstyourbubble:
OK, I've whaled on the Bulletin, and they might be wondering (probably not), "What terms should we use?". Here you go:

"RESERVED": OK, this is a virtually meaningless term, as reserved means someone has signed a completely non-binding, legally unenforceable piece of paper saying that they are really really hoping to go under contract. I've signed one of these in the past 90 days, they are totally meaningless ... ya-da-ya-da


I looked up the Bulletin's April story myself to check the accuracy of YOUR rants ... turns out, the article refers only to "reservations" and "bids" ... no "sale" or "sold" terminology in sight.

Do you people even read these stories before you tune up your Bill O'Reilly-esque rants on the local media? Or is it just more convenient to attack the strawmen you set up -- or the messanger -- in lieu of making a real point?

In Oregon, binding contracts can be written on condos only after the condo papers (agreements, terms, etc.) gain preliminary approval from the state. After that, they can go into escrow with earnest money, but can't close until the unit is certified for occupancy.

So "bids" and "reserves" were the correct terms to use in April 06, and the competetive bidding was quite indicative of Bend real estate at the time ... as was the subsequent melting away of the reservations which, as you accurately note, are pretty meaningless as anything other than an indication of market interest at the time. That's why not all condo sellers opt to use them.

The dozen condos that have sold in Breeze's building in the Old Mill are under contract and in escrow, since their papers have gone through their initial vetting by the state. As I understand it, the sales agreements were signed in the last few months, after the overall bubble had pretty much burst.

Anyway, surely this site would be more useful if it wasn't so quick to turn on a firehose of bile . Particular when it's not even attached to a fact.

BEM didn't seem this quick to resort to the histrionics when he/she ran the site, at any rate.

Anonymous said...

You make a good point. I went and read the whole article.

It did say "sales" near the end of the article, but otherwise, you're right, it was pretty vague about the terms.

"The strength of sales, and the prices, will likely encourage more mixed-use developments to rise from downtown streets, Bankofier said, as long as demand remains strong and building costs don't price developers out of the market."

The article was pretty breathless up front, though the end of the article did mention that upper-end sales had slowed.

Bend Economy Man said...

Gotta look at that August article, rather than April:

"The eight condominiums sold from $481 per square foot to $636 per square foot, Oliver said. One-bedroom units facing east averaged $525 per square foot and two-bedroom units facing west and south averaged $625 per square foot. Condo sizes ranged from 1,100 square feet to 2,350 square feet. That means sale prices ranged from about $529,100 to $1.5 million."

It says they were sold, not reserved.

Bend Bear said...

"The dozen condos that have sold in Breeze's building in the Old Mill are under contract and in escrow, since their papers have gone through their initial vetting by the state."

Also gotta get your terminology straight now that you've corrected IHTBYB. These are still not SOLD. They are not even platted, completed or have a CO. There's still only a deposit in the way of these buyers walking(which is pretty easy to get back).

Anonymous said...

Interesting new shareholder presentation document posted on the CACB site. See the link here:

http://www.snl.com/irweblinkx/ShowFile.aspx?KeyFile=3471795

What it contains:
-old stuff about the great growth markets of Oregon and Idaho, and the wonderfully low median prices of homes in Bend
-contradictory future business strategies in the future for CACB: gain market share, but increase discipline in pricing (but don't you need to cut prices to gain market share?)
-self-serving comparisons to peer banks
-a chart showing declining net interest margins which claims that margins are stable
-AND a very interesting chart which shows that CACB has lost deposits in its core Deschutes County market in 3 of the last 4 quarters. That has not happened before. Quite a dramatic shift. This is on the chart entitled “real estate returning to a more sustainable level.” Read that chart carefully.

If I were a professional investor I would be unimpressed with the presentation, and I would focus on that dramatic shift to shrinking deposits. This is no growth stock anymore.

-CACB Shorter

IHateToBurstYourBubble said...

Anyway, surely this site would be more useful if it wasn't so quick to turn on a firehose of bile . Particular when it's not even attached to a fact.

BEM didn't seem this quick to resort to the histrionics when he/she ran the site, at any rate.


What's next?

"I served with Bend Economy Man. I knew Bend Economy Man. Bend Economy Man was a friend of mine. IHTBYB, you are no Bend Economy Man!"

Actually, if you READ a little, you see it's all facts. The word SALE is used. Again, if you don't like the blog, you're welcome to go elsewhere. But you won't. YOU'LL BE BACK! I appreciate your comments, but if you read the thing, you'll see I merely want honest reporting. Do you?

Do you people even read these stories before you tune up your Bill O'Reilly-esque rants on the local media?

Local media? Rants? Tune up? Bill O'Reilly? This is just a weird sentence. There's almost none of it that makes sense. The question should be, Do you read any of the post before you "tune up your Bill O'Reilly-esque rants"? "Local media"? Get a clue. This is a lowly blog, in which YOU are it's most loyal follower.

Believe me, nothing would make me happier than BEM firing up his old blog so I could shut this one down! Well... maybe a few things would make me happier. But not many! I prefer to vent my "histrionics" in comment form. But BEM is starting to whale on RE harder than I do!

CACB: When you going to cover?

IHateToBurstYourBubble said...

BEM didn't seem this quick to resort to the histrionics when he/she ran the site, at any rate.

BEM said
I guess even I, cynic though I am, never imagined that the sold-out schtick was all bullshit. But it was, apparently. Nothing was sold out. A lie, reported as fact in the local newspaper.

Oy! Sorry to respond to these personal vendetta comments, but if you'll READ something, you'll see BEM isn't exactly The Raging Bull you claim! And uh... he refers to the Bulletin piece as:

the sold-out schtick was all bullshit.

And in case you aren't able to figure it out, BEM ran another blog, not this one. This was started fresh when he shut his down.

Keep those barely coherent personal vendetta attacks coming! They're much of the reason I soldier on!

Anonymous said...

Yes. It shows.