Longwood Towers in Foreclosure

Lender to auction Brookline project - The Boston Globe

As the link above explains, the lender for the developers at Longwood Towers (20 Chapel St.) have begun foreclosure proceedings. What this normally means is an auction will be held for the remaining units. As far as I can tell the sell-out has not even approached 50% of the units originally listed in MLS.

Having worked on a large-scale sale of condos in one building before I can tell you that the process is very difficult. The biggest danger you have is people forgetting that you exist. With the prevalence of information out there buyers and their agents are bombarded daily with "what's new" in the real estate market. With that much volume in the market the condos which have been on the market for hundreds of days never get looked at.

I must take issue with the assumption that this project has fallen victim to the "market conditions." It is this segment of the marketplace that is actually one of the bright shining stars these days. So, what did happen?

1) From the start it was going to be very difficult to find almost 300 buyers who would be willing to spend close to $700 per square foot for small units.

2) If the developer wanted to ask those prices and establish that value they were going to need to be significantly closer to downtown.

3) Remember the location...there is NOTHING close to (and I mean simple walk a la the Mandarin Oriental or The Ritz Towers downtown) the intersection of Longwood Ave. and Chapel Street.

4) This location is perfect for medical professionals. The busy younger ones who have no time to eat or sleep, let alone find transportation into JP/Allston/Brighton/Washington Square at crazy hours of the day. How many of those people can qualify for a $600,000+ mortgage?

5) Poor marketing. If you look at the photos on MLS they tend to feature a dungeon-like lobby shot and a grainy exterior photo. This is a luxury property. There should be videos of the amenities, massive testimonials about the location, wonderful buy-in incentives, pictures and floorplans galore, etc...

6) Too many options. In just one listing I opened up I see "price includes selected upgrades" and "Valet Fee $135/mo" and "Complimentary Valet Parking." Ok, so I understand that each new owner would get to select some upgrades, but quite frankly the presentations tend to come off like a bait-and-switch routine in the minds of many consumers. Also, the "complimentary" parking is for visitors to the sales office, but just because I know that from experience does not mean it makes sense to the consumer at home on a Sunday morning.

7) CRAZY high condo fees. Honestly, I live in a 1300 sq. ft. 2 bed/2 bath in the middle of Coolidge Corner and my MORTGAGE is the same as some of these condo fees.

This is sad for the many people who paid what they were expecting to be "market price" for the early units. They will have to hold onto their condos for quite some time to see the return in investment. This building never fully made sense in my mind the way it was being presented to the public. The one thing the Brookline condo market has taught us is a building in that location should be fabulously successful. There is an incredible demand for housing at that location. The developers fancied some high-end luxury masterpiece, and I'm sorry but that location is not the proper spot for their dream.

Credit Crisis: The Sky is not Falling - Brookings Institution

Credit Crisis: The Sky is not Falling - Brookings Institution

This paper was published recently on the mortgage, credit and housing "crisis" we are all hearing about in the major U.S. media outlets. Coming from such a respected source, it is important that people who try to be informed about housing and financial issues read and have an understanding of what is being said here. In fact, I still need a few more reads through it before I can glean enough information to fully process what has been written.

Take a look and combine it with information that is starting to come out which indicates that 2008 could be a turn-around year in certain housing markets. At the end of the day, what matters is your comfort level in investing a minimum of a quarter of a million dollars (and that's the bare bare minimum here in Brookline). Like every "market" we can look at supply and demand figures. As far as I know there are very few if any "new" homes being built anywhere in Brookline. Therefore the available supply will always be capped. The demand (buyer pool) is pretty consistent as well. Medical Residents will always move in for short-term (2-5 year) stays and the academic community will always provide a constantly regenerating pool of consumers interested in living here. Therefore, while markets will ebb and flow, Brookline will be a more stable investment than almost any other community. These factors will not change which should be comforting to all who are currently invested here.

Turnaround? Rebound?

For today, and I think today alone, I'm going to give credit to Kimberly Blanton at The Boston Globe for her piece in the Globe Real Estate Blog. Add this new news to the stats yesterday from MAR and The Warren Group and you'll see more and more cautiously optimistic news. Yes, the housing market nationally is down. There are segments of the market which are way down. However, Boston is still growing in terms of prices and other key market waypoints.

Let's face it, the once thing Greater Boston always has going for it is life. How many thousands of students and young professionals come and go each year? How many new doctors arrive for their residencies and how many new biotech jobs are created each year? These people all need a place to live. Add that to the normal cycle of life (birth, death, new jobs, kids growing up, etc...) which causes people to move and you'll see all of the key elements of a perpetually strong real estate market.

People in the market today have heard all of the news, they've been scared by all of the bad reports and they're taking a look at their life priorities. Those who truly need to buy or sell are motivated by that need and make their decisions accordingly. This is why our market is so healthy today. A renter who shouldn't really buy yet is holding off until they actually have enough money to buy. A seller who is changing their quality of life lists their property to move, not to make gobs and gobs of money. This is all good and this will keep us all strong for a long time.

Remember, extreme growth feels really really good, but most times it's not sustainable, and this is what we saw happen recently. We're back to "normal" growth now, and we're in a good spot.

Thoughts from the media

Today I was forwarded an article that appeared on the 26th in the New York Times. The article was an editorial piece on Countrywide Home Loans and their aggressive telemarketing campaign which was designed to lead buyers into higher cost (and higher Countrywide profit) loan programs.

[Disclaimer: My home loan is through Countrywide and I have had nothing but the best experience with them]

Here's my initial reaction: How many of these buyers chose to engage in a Buyer's Agency Representation contract? I've had the pleasure of interacting with a disproportionately high number of you buyers out there, and I know your initial reaction is to avoid working with an agent until you find the house you fall in love with. Well, guess what? Now you've found your agent and you don't know if you actually like him/her, you just know you like the house they allowed you into. This is now the person who will "guide" you to your mortgage and legal representation. Are they qualified? Do they know your financial strengths and weaknesses? Can they make sure you're matched up with the mortgage company that will have the best programs available for you?

My guess is the answer to these questions is a resounding "no." Buyers, you spent hours, days, weeks, and months trying to find the perfect house. First, that's not your job, it's mine. Second, now you're stuck with someone you don't even know and have most likely barely even spoken to. How can you qualify the advice they're giving you? Yes, they're most likely qualified to give you advice, but do their experiences and knowledge base match up with your specific needs and interests? I hope for you they do...

Why did you not interview three or four agents (like you would if you were selling) to see what services they offer their buyers? Why did you not get a feel for how they'll react and respond to you during the negotiating process? Why have you not already struck up a relationship with and "shopped" their preferred list of lenders/attorneys/inspectors before settling on your next home? These are the reasons people ultimately walk away disappointed in the process and then think they can do as good of a job on their own.

Now all of a sudden people are in mortgage programs they were not full prepared for. Now they're finding out they didn't find out enough in the beginning, and now everyone is on edge.

STOP

Take a second to interview an agent. Find out which one (there are lots who are all good) fits your needs and personality the best. See which lenders/attorneys/inspectors they have a relationship with and make sure they they're able to help you negotiate the best rates and programs possible. This is still an amazing time to be in the market, it simply requires a little more planning and homework now.