Friday, March 14, 2008

What is luxury in DC?

Investors took many risks a few years ago to get the ball rolling, to put their money on the line and build where nothing new had been for a century. But some of these investors had not a renaissance vision to contribute to the overall value of the old Grande Dame but simply get as much money out of her as possible, visions be damned. As they say, in the land of a blind people, the one-eyed ruler is king. So these pioneers “kings” raced for the gold---much like the old gold rush.. We let their marketers define what luxury was going to be in DC. ( And of course luxury should demand a higher price.) Since people were starved for the new and the rebirth excited us, we bought into it, literally. In fact the hype was so great we grew careless—overpaying for this so called luxury. And drunk with their own success, developers kept building until the market started to falter (and still they built—for it takes a couple of miles for a loaded freight train to come to a halt). And now we have many examples of the forgettable, regrettable, boom that while certainly they contributed to the excitement and momentum of our rebirth—now have become an embarrassing testimony to our own hubris. I have had the opportunity to visit two other cities in the midst of their own rebirths, Portland, Oregon and Omaha, Nebraska. Seeing the thoughtful projects emerging there has helped me to awaken from my slumber: shoddy workmanship, using cheap materials and “sprinkling” a condo with bits quality is not luxury. When they call it luxury (when it really isn’t) and try to sell it at luxury prices this is unfair. Let me list the examples of this philosophy in our midst.

□ Near U St there is a building that has a brick exterior but all wood construction underneath.

□ Downtown there are “luxury” condominiums going for up to $500/square foot and here is what you get: unmitered baseboards, light switches on the left when a bathroom door opens on the right, plastic soaking tubs, thin granite installed with large seams exposed, GE appliances, wood veneer flooring, simple and very limited placement of light fixtures, no recessed lighting, hollow core doors, apartment-grade carpeting, uncentered vanity mirrors, home depot grade cabinetry, crooked granite installation in bathroom,. (I can remember dorm rooms that started off better than these!)

□ There is an over-priced rental building in a bustling new area that, when you get done with all the hidden costs of rental (pet free, pet deposit, move in fee, move-in deposit) and the extravagant price for rental you are in a whole new category of rental (or you may just wanna go ahead and buy!) and you get bare concrete floors that are supposed to be a nod to “fashion.” Maybe the jazz down the street can give you some solace. Come on!

□ Another property tells naked emperors and their wives every day how beautiful their new clothing is with cramped windowless and dated kitchens, boring living rooms, low ceilings, and that 1/8th inch veneer wood flooring that cannot tolerate a decent sanding.. Ah yes, but they have a doorman. And you have the opportunity to pay for a club membership while paying $1000/mo condo fees. You want a two bedroom there? It will cost you about $1.2 million.

□ Another in the West End boasts a Viking kitchen—but insults the buyer with Home Depot -like foam core doors. Oh, and they provide the new trend of the veneer flooring—well it is better than Pergo. Please explain the insanity.

□ There is a new project in near Dupont that boasts and charges for the finest finishes in the city. What were they thinking when they installed a standard American Standard bathtub... charging $800+/sq ft?

Now there are some great projects that are great value in affordable quality with some luxury and full luxury that is TRULY luxury.

The Rhapsody
The Lincoln

True luxury throughout.
3303 Water St

2120 Wyoming

Finally, there is a whole delightful market of first-time buyers and very nice condo conversions in SE that I have been working with of late. I love to tell my prospective buyers or my clients that there are touches on these starter homes that you don’t see in million-dollar penthouses!

I would like to commend the builder for Maricor Gardens, 1817 24th Pl SE. You will find thick granite, stainless steel, REAL hardwood floors, solid core doors and Kohler products—even colored paint-- for $250/sq ft. Oh and the two bedroom has a view of the Washington monument. Take that NW DC! Thanks, Stu, for putting your heart into the building and offering Southeast real quality—something that makes a permanent contribution to the renaissance of Washington DC.

Thursday, March 13, 2008

Question of the Day - Can a Management Company Raise the Condo Fees Higher than What was First Contracted?

Thanks to reader DE for the question.

The simple and straight answer is - yes. While initial advertised condominium fees are just about always below $160 per month on condominium conversions, they just about always go to $230 - $250 per month within two years. Initial condominium fees cover the basics, such as trash removal and the master insurance policy but developers dont always take into account the cash reserves that the association will need to begin keeping for that 'rainy day' when something happens.

In response to the exact question, I would ask if there was originally a management company in place when the unit was purchased. If not, then the unit owners have to pay for the management company's fees in addition to their standard costs, after all, management company's dont manage for free. However, if, when purchased, there was a management company and the association has changed management companies and there is a strong increase in condominium fees due to the change, you may consider negotiating the management company's fees.

The third option is that by hiring a new management company or by changing companies, the new company has assessed that the original condominium fees being paid by the owners was not covering the expenses of the building and would have to increase the fee to pay for the building's updated expenses.

Friday, March 7, 2008

Live Stream This Weekend of Property Auction at the Convention Center

This weekend is the property auction at the Washington Convention Center where they will be auctioning off 550 DC Metro area properties. We'll be on site, live, streaming video here. So, if you have been curious about how auctions work, or just curious, stop in and watch. The video bar will be RIGHT HERE.

FINALLY, FHA Limits Increased in DC & Area, Fannie/Freddie Soon to Follow

If you take a look at the video blog below from two days ago, you'll see that for about a year, its been my belief that relief will not come until FHA or Fannie/Freddie increase their lending limits to help homeowners in trouble. Well, that time has finally come. Yesterday FHA increased their limits in the DC Metro area to $729,750 for single family homes and up to $1,403,400 for four family homes. An impressive feat considering that their limits have been $360,000 for more years than I have been alive.

With this newfound freedom for refinances and purchases can we be approaching the bottom?

Wednesday, March 5, 2008

All Real Estate is LOCAL!

To all of you skeptics out there, I just happened to stumble upon an article this afternoon on that outlines every states state of the market. I found it interesting because its the first report to specifically give market data based on the individual state rather than the country as a whole.

As the article goes DC and Maryland are both in stages of Expansion while Virginia remains an at-risk state. DC's home values, on average, gained 1.9% last year while Maryland and Virginia gained 0.8%. Not bad for an economic recession. The information was based on three key factors: employment, industrial production, and adjusted retail sales.

What do the locals think about the local market?

Will the Expected Fed Rate Cut improve the market?

Modular Homes, the Way of the Future

Several months ago I wrote a post on how the only way for developers to make money anymore was by going Modular. That is, having the homes/multi-family buildings built off site at a factory and then shipped and installed on site. Well, the trend may be catching on. The Martha Condominiums is going up as we speak and in the least expected place...Northwest Washington, DC. Thats right, the address is 5414 1st Pl NW, and there are planned to be 20 luxury condominiums built with a starting price of $325,000 per unit, and at a cost of around $130 per square foot for the finished product, these units should profit the developer a pretty penny.

According to the listing, the units will have:
Hardwood floors
Exceptional kitchen with stylish cabinetry and granite countertops
Energy-efficient stainless steel appliances
Over 4500 sq. ft. of patio and terrace recreational space (with 2 handicap lifts)
Whirlpool tubs (Master bath)
Washer and dryer
Recessed lighting
Ceramic tile (all baths)
Crown moudling
Cable TV and high-speed Internet ready
8-foot ceilings and oversized windows; balconies*
Large walk-in closets; linen closet*
Elegant bathrooms with beautiful countertops. I thought I would take a drive over to The Martha and here is what I saw...

Do buyers out there have a stigma against modular/manufactured housing?

Anacostia BID (Business Improvement District) Proposed

Yesterday Former Mayor Barry proposed legislation that could soon create the Anacostia Business Improvement District. BIDs are created by local homeowners contributed extra to local cleaning and public safety programs, helping to improve a local neighborhood. Barry's proposal would include commercial and retail along Good Hope Rd SE and 18th St SE as well as Martin Luther King Ave SE and St Elizabeths Hospital.

One might consider that there are other courses of action that the city can take to help improve the area better than a bit, such as small business tax-credits.

Would Anacostia benefit from a BID or is there another course of action that could benefit the area more?

Inheritance and Vision

Much like the European Renaissance, Washington, DC is shaking off the fetters of its own Dark Age of corruption, entitlement, crime and the unspoken acquiescence to the given notion that life is better in the pseudo urban beltway suburbs. Locals and newcomers alike are seeing the Nation’s Capital with new eyes and have shown a willingness to dust off L’Enfant’s vision of Washington and build on it for the 21st century. The Grande Dame is preparing to be once again the proud hostess to the national government instead of the embarrassing contradiction to what it stands for.

The vagaries of time faded the forgettable and regrettable mistakes and carpet bagging charlatans of the artistic and cultural movement of the 16th century. Now we are left with just the enduring beauty of work from the likes of Da Vinci and Michelangelo. And, here too in Washington’s own rebirth the imperfect and the ideal, the misleading and the honest , the disposable and the timeless contributions must be allowed to coexist for a time so as not to stifle this renewed spirit.

There is no place better than the recent real estate development to illustrate this state of mix we are in—and the hubris that appears for all to see. Yes, real estate development and investment has been a vital part of the rebirth of DC. We can see examples of it all over: Columbia Heights, U St , 14th St and Logan Circle, Penn Quarter, Anacostia, H st. Combine this with the government’s plan to restore and improve the National Mall. We are in the midst of something great. But this is a renaissance of a living community. So those of us trying to survive—no THRIVE—at this time of change must know how to navigate through it until time itself reveals what are our DaVincis and Michelangelos.

next "Luxury in DC: The Emperor's New Clothes"