600 New Downtown Portland Condos Unsold
Nearly 600 of the roughly 1,800 condos developed in Portland’s downtown neighborhoods in recent times still remain unsold as of March 2010. Although a substantial amount of the unsold inventory is located in Portland’s South Waterfront, plenty of unsold condos are available in the Pearl District as well. Over the last six months South Waterfront condo developers have been particularly eager to reduce their inventory, dropping price points to record lows and employing a wide range of creative techniques to generate interest.
These unsold units alone represent about 12 months of inventory, based on the current monthly sales volume for Portland City Center condos (97209, 97210, 97201, 97239). Having been largely dormant for the first six months of last year, the city center condo market picked up noticeably in the last quarter of 2009, with a 40% increase in closings over the same quarter in 2008.
All but Encore Condos manage to clear 50% hurdle
Ever since FHA (and subsequent lender) guidelines for min. occupancy were tightened in Fall of ’09, clearing the 50% occupancy hurdle has become a key objective for most developers. (note: HUD requires that at least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Conventional lenders require 70%). Most developers have stepped up to the plate, offering steep discounts and innovative incentive programs. As a result, essentially all of Portland’s city center condos are now at or above 50% occupancy – with the exception of the Encore Condos in the Pearl District.
The Encore started selling in fall of ’08. So far only 16 out of 177 units have sold. As other developments started to reduce price points, pricing at The Encore remained surprisingly firm. The consortium initially hoped to entice buyers with creative incentive programs, and has only recently come to the realization that pricing is key. Prices were most recently adjusted downward in February and are now down 21% from the original price point. Closing prices have come down further still.
Atwater Place, John Ross and Pacifica Among The Most Aggressive
Arguably the most aggressive approach was taken by the developer consortium at Atwater Place, where more than 40 units were auctioned off on average at 36% discounts (vs. original price points). In an effort to remain competitive, The John Ross Condos, located across the street from Atwater Place in Portland’s South Waterfront subsequently lowered their prices and now offers the highest number of condos in the $200/SF range in the neighborhood. Rumors have been circulating that the John Ross Condos will be the next condo development in Portland’s city center to turn to an auction.
In Portland’s NW neighborhood, The Westerly and the Cambridge have been courting buyers on similarly aggressive terms, although through more subtle means. Both developments have been selling for more than three years and are now 75% sold. Advertising efforts have been more subdued, but in an effort to finally close out sales, both developers have become increasingly cooperative as evidenced by the most recent closings.
Select buyers at Pacifica Towers have also been successful at securing good deals. This waterfront property in Portland’s Pearl District is now 65% sold. It’s one of the few developments in town that is offering zero down, no mortgage insurance, 100% financing – courtesy of Homestreet Bank, the bank that provided the construction financing for the Pacifica. Units have been listed in the mid $400/SF, but have been trading around $350/SF, such as unit A201 which recently sold for 295k (828 SF).
Plenty of opportunities out there…
