condo market

The Magnolia, a $40M, 5-story, 139 unit condo project on South Lamar has been cancelled after a lender foreclosed on the property.

The story of the Magnolia sheds much light on what can go wrong with a condo project, especially in an unforgiving market.

When a restaurant or retail store closes, most people assume that it was ill-conceived or poorly run or a bad location or simply a bad product.

Rarely do people say “I told you, people don’t want to shop” or “the business of eating out is destined for an ugly demise.”

AustinTowers.net was featured tonight on Fox News 7 during a piece about the Austonian.

Our Editor, Paul D’Arcy, shared his opinion that it is a difficult time to sell expensive condos with the stock market in decline, the economy struggling, mortgage rates rising, and gas prices at a record high.

There is much speculation about the state of the Austin condo market. With lots of new projects, a national housing crisis, and no precedent for high-rise development in downtown Austin, the common wisdom is that all the new projects will fail.

Outside of Austin, the health of the U.S. condo market continues to deteriorate. It's well known that many formerly hot condo markets have come upon tough times.

In markets such as Fort Lauderdale and Miami where flippers would by and sell units many times before projects were completed, the meltdown has caused investors to flee, leaving the remaining owner-occupants with an oversupply of units and very few buyers.

The Statesman ran an interesting feature today on the downtown Austin condo market. It looked at many of the intangible benefits of downtown living.

It makes the obvious point that downtown living is not for everyone, but that a vibrant urban core enhances the life of everyone.

The article summarizes the importance of the current wave of downtown development:

It is a fact: there has not been much investment activity in the downtown Austin condo market. Most of the buyers plan to occupy their units.

As we reported last week, this is one of the reasons why Austin is less likely to see a Miami-style bubble explosion anytime soon.

Much has been written about the condo bubble in southern Florida, especially the dramatic rise and fall of the Miami condo market.

Between 2004 and 2006, condos were being snapped up by investors and quickly flipped for a profit long before buildings were completed.

As more and more investors joined the fun, condo units would often change hands like pork bellies -- and other dangerously volatile commodities -- many times before construction was complete.

For a couple of years, condo investments seemed to have no where to go but up.

In an embarrassing reversal, the Monarch Condominiums has decided to convert from a 100% condo project to a 100% rental project.

This follows the projects switch from rental to condo just 3 months ago.

The Austin residential rental market -- the whole thing, not just downtown -- has been very strong throughout 2007.

Throughout the first half of the year, both rents and occupancies increased significantly. For example the mid-year citywide occupancy rate was 96.8 percent, up 2 percentage points from December.

Fox News ran a story tonight on the Austonian ground-breaking and the state of the downtown Austin condo market.

AustinTowers.net editor Paul D'Arcy was asked to provide analysis on the current downtown condo market.