Thursday, May 29, 2008

Condo fallout continuing

Tribute Lofts is holding an auction for 40 units, with bids starting as much as 50% off. Tribute was 70% sold last summer, but saw about 35 contracts walk away when the credit crisis hit. Now, I heard about these broken contracts probably in the fall. It sounds like they haven't written ANY contracts since last summer. The developers' explanation for the auction:
"This is not a distress or foreclosure sale — it's simply a new way to market our homes," said Greg Wohl, who with his brother, Brian, developed Tribute Lofts. "The market is in a sort of paralysis. Our goal is to get the buyers off the fence."
Riiiiight.... the article notes that the auction proceeds will go to pay off the construction loan. I'm sure that the bank isn't putting any pressure on the Wohls... Nope. Nothing to see here.

This is a disappointing situation all around. I think Tribute was a good development. Awesome views, mixed-use, close to a lot of fun neighborhoods, and I like the tunnel-form concrete construction aesthetic. It was built as part of the Eastside TAD program, which means it had some affordable components. The market price point wasn't terribly high, either, and the fact that they hit 70% sales while still under construction indicates that buyers thought it was a good deal. Personally, I thought there were better values around, but I liked the project.

Those folks are who already bought at Tribute are screwed. They are going to eat it on the chin the most. The TAD can't be terribly happy, either - these home prices aren't going to meet the projections used to underwrite the TAD bonds, so it should hurt the ADA's finances.

Overall, its the kind of development that Atlanta needs to see succeed. If this project had started just a year earlier, I think it'd be sold out. As things stand, I just don't think there are enough buyers for even this auction to help much. The AJC article mentions that Atlanta has about a four year supply of condos, so expect more situations like this.

UPDATE: If you are looking for the Tribute Lofts auction site, try their web page.
h/t: jeherv

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