New Construction Condos Adjust Pricing

Posted on 10/24/08 10:09 AM

Low occupancy rates among Portland’s new condo developments increase pressure for developers

New construction condo developments continue their struggle to turn over units. Overall occupancy rates have not changed much in the last three months. Most listing agents for new construction projects in Portland that I deal with admit “we’re stuck”.

Here’s what occupancy levels look like for some of the new (and not so new, but still vacant) entrants:

Most new construction condos now discounted by 10-15%

Many developers that have been adamant about avoiding price cuts are finally starting to understand that lowering prices is the only solution left to pay off construction/interim loans and avoid foreclosure. Developers W&K, having brought 937 to completion last week told the Business Journal that:

“Sales were helped when [W&K] lowered prices a week ago and rebated its early buyers the difference between what they originally agreed to pay and the new prices.”

A 968 sq. ft, 1-bdrm unit that had been listed for 444k as recent as 8/2008 is now available for 378k, representing a 14% drop. Prices for several other new construction condos had already started to erode in the last couple of months, leaving W&K and others such as The Encore with little choice. Consider this sampling of price adjustments:

Pacifica , 828 SF, 1-bdrm was 439k (5/2008) – now 365k (-16%)
Block 90, 810 SF, 1-bdrm was 430k (8/2008) -  now 399k (-7%)
John Ross, 1205 SF, 1-bdrm was 509k (6/2008) – now 449k (-11%)
Atwater, 1366 SF, 2-bdrm was 569k (8/2008), now 479k (-16%)
Encore, 697 SF, 1-bdrm was 348k (7/2008), now 306k (-12%)
Clinton 1424 SF, 2bdrm was 524k, (9/2008) now 495k (-5%)

Developers more likely to entertain aggressive offers

Not all developers have lowered their prices. Buyers are still looking at the original price points at the Waterfront Pearl, the Casey and the Westerly. However, as the pressure mounts – in particular for the Waterfront Pearl -  listing agents are increasingly encouraging buyers to write up an offer. The phrases “Any reasonable offer will be considered” and “the seller will certainly entertain a 5% discount” are a common response…and a good starting point.

Talk to me about some of the new construction deals that have gone through recently!

***Related Post***

City Condos Re-Sale Inventory Update