Element Auction Shows There's Still Demand to Live Intown
Decatur Metro | March 1, 200940 Element condos at Atlantic Station went up for auction yesterday, and while the AJC seemed focused on the “bargain” prices, I was most interested to hear that all 40 condos were easily sold.
According to the article, 175 bidders showed up to bid on 40 Element condos with opening bids less than half their original asking price – though the two profiled in the article actually ended up going for more like 2/3rds the original asking price. To me this seems to indicate that the condo market is over-saturated not because of dying interest to live intown, but because property is simply over-priced.
Though it would be nice to have these condos going for insane amounts of money, its still good to see so much interest in Atlanta’s condos when the price is right.
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I think you make a good point. I was thinking they would not sell all of them, but as you say, they did.
I guess you have to wonder if they would have built them at all if that was all they’d get for them.
Agreed David. That’s the one point I was getting stuck on too. But, if people continue to fill the vacancies and life begins to permeate AS, perhaps it has a chance.
Does anyone have an example of real estate development where the developer knew in advance what turns the market would take? Of course not. It’s a speculative business. Uncertainty is the rule, whether you’re building something of the highest quality or the least.
George Willis began Avondale Estates in the 20s and it was a smash. By 1931, only partially complete, he was auctioning off lots out of a tent for as little as $50. Today, with the soft filter of time passed, do we look at him with the same disdain?
It’s a market. Both buyers and sellers are willing participants in search of agreeable terms. That’s the way it’s supposed to work.
This is a situation where the lenders are trying to staunch the bleeding. There are no profits, and the buildings would not have been built if these were the expected prices. The market is very close to the bottom and it is a good time to buy. Whether these untis and Atlantic Station is a good buy depends on the buyer.
AS won’t have that kind of time frame because it won’t exist by then.
To me it wasn’t necessarily interest as much as it was the pricing. Make anything cheap enough and there will be speculators. There were 174 registered bidders but I’d say far fewer than half were actually bidding. Bidding was pretty fast until prices started hitting 180-210k for 2bdr and 250k for the 3bdr. These prices were far below what many other buildings are having existing homes listed for (partly due to the build quality of Element itself). Neighboring Twelve will probably have similar pricing as the speculators continue to fall out of that building. The fact that they dropped an additional 4-5 3bdr models into the auction due to interest also made a few people overpay early on. Accelerated Marketing Partners auctioned Tribute Lofts last year but just over half the units sold there due to lack of interest and not hitting target prices. Of course since Tribute is located in the Old 4th Ward rather than the relatively popular(for now) Atlantic Station its not directly comparable.
I’m sure a lot of the people were running numbers to see what they could rent the places out for and still turn a profit. Prior to the auction I checked MLS prices in Element and the 3bdr was at 400k, and the cheapest 2bdr was 220k. Basically the 200 or so residents just got their valuations hammered by 20-30% on the spot. To walk away w/ a 3bdr in the 250k range definitely was a steal but its still a big commitment in a relatively unpopular building in Atlantic Station.
I had a enough reservations about Element that I didn’t bid despite units closing squarely in my target price range. The units were cheaply finished, HOA high for relatively low service levels (no doorman for $300/mon?), and proximity of so many units to 17th st. I felt it better to walk away after seeing the existing homeowners now had zero incentive to keep paying their mortgages now that they were 40-100k+ underwater. If I decide to stay in midtown, I’ll wait till the pricing is right on one of the half dozen or so high rises between 14th and 6th. My Novare rental landlord just offered a significant discount(still not cheap enough for me to stay). Viewpoint and 1010Midtown are still under half full. Then there’s the Atlantic that might just take Novare under completely since it looks like its still climbing.
These auctions may clear a single developers inventory now and there but given the wasteland of townhomes & condos I see biking from midtown to Stone Mountain, there’s no end in sight for falling values in areas that quite the place to be.
DM write: “Though it would be nice to have these condos going for insane amounts of money….”
Why? To make the developer rich? To see less affordable housing?
This comment seems oddly juxtaposed to your ordinarily pithy take on the world. I must have missed something, no?
B. Steal
Brad “man o steal”: It was more a comment about general demand for property intown, than the hope of rampant gentrification. And while I lose little sleep over the viability of rich developers, we do need their interest if we’re going to build up Atlanta’s central core.
Hopefully I have regained some of my pith!
I think I agree 100 percent with Justin.