Wow, it was unreal. I picked up my Wall Street Journal Friday morning and tossed away the political news — yeah, Mitt did real well Wednesday night — tearing right into the brand new mega steroidal section designed for everyone who loves House Porn and craves real estate news: MANSION. There I had it kind of like a dream, everything from house hoarders like Larry Ellison– he now has 27 homes in Malibu — to the House Story on poet Maya Angelou. She owns three homes, each filled with art.
I am not the only one out there who collects homes!
Then we go abroad to see the (literal) craziness of real estate in London, where dirt is about the priciest anywhere. Now everyone’s living at Princess Park Manor, a former insane asylum re-born as upscale apartments. Think your apartment complex is loaded with nuts?
Then there’s page M4, where our beautiful Tower Residences at the Ritz-Carlton in Dallas makes our city proud. And finally, real estate class: no snarkiness snap at Museum Tower. We are given a chart in the print version comparing staying at a luxury hotel versus living there: stay at the W Hollywood, for example, at $8000 a night. (Really?) Buy a three-bedroom, 2614 square foot unit at $2.9 million for $1,135 a night. This must be a 30 year amortization based on (they say) an owner who keeps the unit for 7 years. I will ask WSJ writer and fellow NAREE member Kris Hudson if he figured in any appreciation or HOAs. So you see, the condo is much cheaper. But what about compared to a home with it’s unending upkeep? I have long wanted to compare what we spend on home maintenance to high rise HOAs. This article hit a total nerve: a friend saw it, called me and said “I am so tired of dealing with my home, this looks absolutely wonderful!”
Marty Collins, chief executive of Gatehouse Capital here in Dallas (and married to beautiful Josie Collins of the best home furnishings store anywhere, Scoot & Cooner, as you can see above) talked about how developers have slashed pricing to meet the market: the W Hollywood in LA came down to $625 a square foot from $800, and units started selling. The Tower Residences here offered a 10% reduction earlier this year and sold out all 12 reduced units. In fact, the price slashing has brought buyers in from out of the woodwork. I hear there have been some recent sales even at The Palomar.
So is it all about branding? Every property mentioned in this story was holding a luxury brand. As Kris reports, you couldn’t get enough of this stuff during the real estate boom. And what a deal for developers: they used the cash from condo sales to finance the luxury hotels — one reason why hotels have all kicked it up a notch or two these last few years. Ritz, Four Seasons, St. Regis and Fairmont (not mentioned, but same tier) indulged us with what Kris says are million dollar rooms. As my son now says, “my mother won’t stay at a hotel that doesn’t provide plush bathrobes.”
Buyers loved the brand, loved being attached to the luxury hotel services which the condos also helped pay for, by the way. So buyers, says Kris, did not mind paying 35% over market rates to get a piece of the panache. Money was coming from the banks a whole lot more freely, too. In fact, banks are now looking harder at condo purchases, and requiring 20 to 30% OR MORE down payments, Kris says. I’ve heard a lot of cash buyers (like from Mexico) come in to the Ritz and plunk it down on units. Many of those, however, want an additional deal on top of the reduced pricing. But if I have heard it once, I’ve heard it a thousand times in Dallas from buyers and appraisers: the Ritz is the only Dallas high rise with no foreclosures because its connected to a brand.
Well, so is the W, but we have had beacoup foreclosures there. That was not addressed in the article. The other day I was talking to an expert who worked on the W development. What happened? Not enough of the three P’s: Parking, Price and Programs. Victory storefronts are all bland and the same, no variety. And the American Airlines Center crowd that came down did not want to fork over $500 for a meal, sorry.
The House by Phillipe Starck? Now there’s a brand, just not one that may resonate as loudly with Dallasites. (How many times have I mis spelled his name?) Last February it was foreclosed on by lenders who gave up patience after only 26 of the 112 units sold, and pricing there was so aggressive when I last talked to Bobby Dhillon he was about to let me charge a one-bedroom unit! Steve Brown has my favorite line about The House: it opened, he said, just in time for the recession. Last May, the lenders popped the units into the city’s frenzied lease market, then offered to kick back some of the rents (ranging from $2500 a month to $6500 a month for the biggest) to a down payment.
And Dallas rents are predicted to rise by 19% in the next three years.
They will find buyers. Museum Tower will be best friends with Nasher pretty soon, they will even have overnights, jump-start sales. Yes, I’m an optimist, but Dallas is also one of the few cities in the U.S. with a growing population. Everyone’s moving here. We are becoming a business hub — did you see that Energy Transfer Partners bought Sunoco? With the exception of the way we finance pediatric orthodontics, our state is fiscally sound and our real estate market rocks. As long as the earthquakes stay below 3.4 on the Richter Scale…