Interesting. McGowan must need some money. This could pose a tremendous value for a lot of potential residents.



http://westgatelofts.com/CloseOut.cfm

Man, this is really going to hurt some comps in that entire area. But it is an opportunity for some poeple to get entry into DT.

Yes hopefully most of these developers sell all their units so they do not have to resort to this. If a lot start doing this it may have a big impact on values.

Do you think they had to resort to this b/c of all the delays in getting the building finished. I remember back in 05/06 from their website it appeared to be almost sold out. I wonder if they had a bunch of people back out and go elsewhere. One other thought, I'm not sure if this will greatly impact the overall loft market b/c Westgate is on the western fringe of the loft district, which is just now starting to fill in between Jefferson and 20th.

Downtown2007 wrote:Yes hopefully most of these developers sell all their units so they do not have to resort to this. If a lot start doing this it may have a big impact on values.

I would not worry about this becoming common place. I think you are seeing this at Westgate mainly for one reason...location. I'd like to to see where the auction prices end up and how much real interest the auction generates.

I absolutely think this stemmed from developer delay. It is my understanding that the building was nearly completely reserved at one point in time and little by little, potential tenants saw the ensuing delay and jumped ship. Though location does play a factor, I do not think this was ultimately the reason.

Check out the pricing - the 2007 prices are inflated (perhaps fictitious), and the "auction" prices are at 130-150 sq ft which is what they were at the end of 2005. This really stinks for those who own in the building, and should have a negative impact on other projects by this developer as their credibility is shot. A travesty really if you think of all the growth and investment taking place in the area.

irocktheparty2000 wrote:

Downtown2007 wrote:Yes hopefully most of these developers sell all their units so they do not have to resort to this. If a lot start doing this it may have a big impact on values.

I would not worry about this becoming common place. I think you are seeing this at Westgate mainly for one reason...location. I'd like to to see where the auction prices end up and how much real interest the auction generates.

I agree: the location leaves a lot to be desired. Except for AG Edwards employees being able to walk to work, it's just too far west to be attractive right now.

Despite the fact these lofts are a little further west they are still Downtown. Lofts are being completed on Locust between 18th and Jefferson that may be affected.

I don't really get what all the fuss is about. It seems to me that the developer just wants to be out of this building. As far as values go, all these lofts are only really worth what people are willing to pay for them. Why would this destroy the developers credibility? To me this is no different than other kinds of incentives. What am I missing?

ksaett wrote:I don't really get what all the fuss is about. It seems to me that the developer just wants to be out of this building. As far as values go, all these lofts are only really worth what people are willing to pay for them. Why would this destroy the developers credibility? To me this is no different than other kinds of incentives. What am I missing?

What you don't get is that it sends a perceived negative message. The building has been selling units for a long long time now and they still have over 20 units that remain unsold. So let's drop prices and have a one day (fire sale) auction. Some will think "What's wrong with the development and why did it not sell well?" and they will stay away from the building.



And forget about the person that bought there in the last year and maybe has to move out for a job change or any other reason. Now they are almost forced to sell at a much lower price, at least until the building can re-establish itself and get the comps back up



You hope for a building that sells out and there is a demand to get in. This has not been the case at Westgate...at least not yet.

I understand that it sends a perceived negative message, but I don't see how that is such a big deal. If the sales prices were not supported by the market, then they should be lowered. I would agree that this is not the most ideal way to do this, but I think you may be making more of this than it really is.



The people who are forced to sell could be in a worse situation without the auction. Potential buyers could just purchase one of the unsold units rather than pay a premium to the current owner. If all the units sell out it may drive the future prices back up because supply has decreased.



Besides, all investments, including real estate, are a gamble. Real Estate has less risk involved than some other investments, but its still there. The buyer is taking a chance that when he/she wants to sell he can break even or make a profit.

ksaett wrote:I understand that it sends a perceived negative message, but I don't see how that is such a big deal. If the sales prices were not supported by the market, then they should be lowered. I would agree that this is not the most ideal way to do this, but I think you may be making more of this than it really is.



The people who are forced to sell could be in a worse situation without the auction. Potential buyers could just purchase one of the unsold units rather than pay a premium to the current owner. If all the units sell out it may drive the future prices back up because supply has decreased.



Besides, all investments, including real estate, are a gamble. Real Estate has less risk involved than some other investments, but its still there. The buyer is taking a chance that when he/she wants to sell he can break even or make a profit.

Not a big deal unless you personally are affected or if you have the best interests of Downtown's revitalization at heart. Put yourself in the shoes of someone who just purchased a unit in this building or one close by. You assessed value according to what others have paid and came to a decision as such. Now, all of a sudden, the whole building is on sale and this obviously impacts your value equation and your investment. Word gets around that Westgate held this auction and every other development in the vicinity is now under a microscope because of the fire sale.



This can't be good for the Downtown real estate market no matter you slice it.

I entered the numbers into a spreadsheet just to get some idea of what type of savings is being given at auction time (2/10/07). The 1/1/07 Pricing column is probably inflated (as loftlover stated). The price per square foot of the individual lofts at Westgate Lofts (at auction time of 2/10/07) varies so much--and I don't recognize a pricing formula right off. You would have to examine the furnishings and fixtures in an individual loft to determine the real value.

GEW, Motor, Adler, Packard? Though at the Western fringe, it may prove to be the area of the city that bridges downtown to midtown/CWE.

STLTapper9 wrote:GEW, Motor, Adler, Packard? Though at the Western fringe, it may prove to be the area of the city that bridges downtown to midtown/CWE.

I doubt that "bridging a gap" is much of a selling point.



This map on westgatelofts.com almost makes it look like Union Station and Scottrade Center are just a couple blocks away.

Thats one of the most important areas if Downtown is going to be successful. Your only as good as your surroundings.

Resurrectus wrote:

STLTapper9 wrote:GEW, Motor, Adler, Packard? Though at the Western fringe, it may prove to be the area of the city that bridges downtown to midtown/CWE.

I doubt that "bridging a gap" is much of a selling point.



This map on westgatelofts.com almost makes it look like Union Station and Scottrade Center are just a couple blocks away.

they are!

loftlover wrote:


Not a big deal unless you personally are affected or if you have the best interests of Downtown's revitalization at heart. Put yourself in the shoes of someone who just purchased a unit in this building or one close by. You assessed value according to what others have paid and came to a decision as such. Now, all of a sudden, the whole building is on sale and this obviously impacts your value equation and your investment. Word gets around that Westgate held this auction and every other development in the vicinity is now under a microscope because of the fire sale.



This can't be good for the Downtown real estate market no matter you slice it.

But if the market does not support the price that you bought in at you overvalued the unit, and that is why the value equation is impacted. You're right, its not going to help the real estate market, but I really don't think that this is going to have the catastrophic results that some do. Do you really think that all of the Downtown revitalization is going to slow down, or stop, because one building is trying to liquidate some units. I just don't see it. I'm not sure why this project didn't sell as well as some people had hoped. Maybe it is the location. Bottom line is that the developer owns those units, and he can sell them for what he wants to.

Does everyone think that the starting auction prices are set that low? Is this really different than any other open house? Maybe they're just using the word auction because they think that it'll attract a larger crowd of potential buyers.

How about the impact of these prices on folks who have contracted to buy units downtown but haven't closed yet? Don't you think this will impact the appraised value of their contracted units and, because of that, impact the ability of some of those folks to qualify for financing? Also, a lower appraised value could increase the interest rate they will have on their mortgage.... All of a sudden, the amount they are able/willing to provide as a 10% downpayment effectively becomes an 8% downpayment.

Why do you think that the auction will lead to lower appraised values???

It seems to me that if you have a contract on a place you would already have had an appraisal done. Wouldn't you have to do this in order to get a loan commitment? Appraisalman, don't you, as an appraiser, have the ability to pick what you use as comps, and also to make adjustments based on the individual property? Yes, it could impact the interest rate due to a higher Loan to Value ratio, but I don't get how it decreases the % of your down payment. Appraised or perceived value doesn't have anything to do with what percentage of the purchase price your down payment is, right?