You have the Porsche How About the Condo for It

If my readers will indulge me as this posting is NOT related to Denver real estate; once in a while I desire to go off topic geographically.

A few months ago when I was clearing out my house of 27+ years as it had sold, I ran across a pair of Porsche Design Sunglasses. During the early 1980’s when introduced; they were the pinnacle of design and at the time luxury priced, low $100’s (prior I was a fan of Vaurent, the sunglasses of choice for skiing). Living in NYC the Porsche sunglasses were a must have; a black metal frame and most impressive interchangeable lenses with a carrying case reminiscant of Porsche automobile designs.

Well fast-forward a generation. Porsche Design continues to design products (their retail stores are akin to a candy store for design aficionados like myself). Thus I was thrilled and desired to discuss a listing from our Engel & Volkers Miami , Florida shop. a never lived in condo at the beachfront  The Porsche Design Tower in Sunny Isles (Miami) Florida. I will save the suspense, the piece d’ resistance; the car elevator allowing you to park and keep an eye on your car within your condo. The following video via YouTube gives new meaning to having an attached garage: The Dezervator.

The following is from the sales brochure. If any interest please reach out to me and I will do an introduction with the listing broker:

A truly unique living experience awaits in the Porsche Design Tower, the first building of its kind with a breathtaking car elevator that delivers you directly to your private garage at the door of your never lived in apartment… All with the added distinction that comes with the Porsche name and reputation. 

With a total of 4,750 sq. ft. of living space, the residence features three bedrooms, three full and two half baths, large rooms, timeless white marble floors, state-of-the-art kitchen and a fireplace surrounded by views of the ocean and city. Outside, there is a large terrace with private pool and summer kitchen.

Located at 18555 Collins Avenue on beautiful Sunny Isles Beach, the Porsche Design Tower offers an inspired luxury living experience. With just 132 units on 57 floors, each unit has the finest finishes and touches that you would expect with the name Porsche. Building amenities include private restaurant serving the beach and pool, personalized wine storage, lounge bar with fireplace, two oversized spas, community room with pool table, auto racing simulator, golf simulator and movie theater complete with “new release” capabilities. The gym features state-of-the-art Milon equipment and there are yoga rooms, massage rooms, steam, sauna and ice therapy rooms as well as space for personalized, private services. 

For those who wish to purchase the asking price is $6,500,000 US and of course if you wish to lease (think of this as a test drive) available for $25,000/month.

The following is the link to the Virtual Tour by the listing broker:

Porsche Design Tower # 2803

For even more information the following is the original promotional video: Porsche Design Tower

 

 

 

Beige Book, Case-Shiller and Local Price Reductions. What’s Going On?

Nationally we still seem to be in a Goldilocks economy. The Beige Book evidenced positive economic indicators; The Federal Reserve indicated due to the continued momentum of the economy an increase in the Fed Funds rate is imminent. Interest rates on mortgages continue to bounce around yet continue to hover at historic lows.

So what is happening in Denver?

Well, a lot. The Case-Shiller Index advised the Denver area has fallen to #4 concerning price appreciation behind Seattle (12.3%), Portland (9.2%) and Dallas (8.6%). Of note Denver’s Year over Year appreciation was 8.4%. This is a positive as gains are still above national averages yet the cooling off concerning appreciation may indicate movement towards a market more oriented towards equilibrium.

For homeowners price appreciation may be a positive, yet when we have a continuing disparity between average income/wage growth coupled with higher prices; this is not sustainable and leads to potential corrections down the road including housing prices and employment attraction as many businesses will reconsider relocation if the cost of living is excessive.

And yes I have been told by some to look at New York (4.1% Year over Year) and San Francisco (5.1% Year over Year) as markets, which historically continue to increase in value. However both those cities have geographic constraints and higher demand leading to exorbitant pricing by Denver standards and strict rent-control programs, which impact the market, issues we do not have in locally.

While statistics can be interpreted any which way one desires; readers of my blog know I focus on the upscale neighborhoods of Denver. Specifically I believe the upscale neighborhoods are a leading indicator of the future of the overall market. Granted not scientific concerning methodology yet anecdotal evidence coupled with 20+ years as a broker makes me a bit concerned.

I have been keeping my eye on the Country Club Neighborhood of Denver, specifically are area bounded by Downing on the West, University on the East, 8^th Avenue on the North and 1^st Avenue on the South. While historically expensive the neighborhood has been the pinnacle concerning prestige and address within Central Denver for generations.

Suddenly there seems to be an increase in available inventory. Couple this with a section of listings that have endured price adjustments between 10%-25% to the downside, what is going on?

Granted some of the listings may have been overpriced to begin with. As brokers we advise our clients pricing options based on past sales, demand and other factors. Yet at the end of the day it is the seller who dictates the asking price. Thus some listing may have sellers believing their residence is valued higher than the market would dictate and thus the price reductions.

Yet there is another factor, which I call irrational exuberance of investment gains. A few listings I have watched include a selection that are asking 50%-100% return over their purchase price within the last 3-5 years. Granted some have been renovated/updated yet others are in similar condition when last sold and are asking for returns which are just not rational. Granted if the seller gets the asking price, all of a sudden it is rational.

However let me use the example of a home within the western section of Country Club south of 4^th Avenue, a prime neighborhood that sold within the last 12 months and is NOT presently on the market.

The house sold in late 2001 for between $310,000 – $330,000

In early 2002 the home resold for $530,000 – $550,000*

Thus in real #’s gross #’s not taking into account commissions and closing cost the house appreciated $200,000+* or over 60%

*During that short period some improvements were made to the house yet far from a full gut renovation, mostly cosmetics and some mechanicals.

The next resale of the home was in early 2006 for between $640,000 – $660,000

Between 2002 and 2006 (4 years) the house appreciated $100,000 or approximately 19% still quite respectable for housing, on an annualized basis 5%, which was below gains in the stock market during the same period.

The new owners who purchased the home in 2006 bought at the pinnacle of the housing market during that period of expansion. Within 1.5 years we would witness the bubble burst with the shut down of Lehman Brothers and the subsequent Great Recession and Housing Crisis, which were soon to follow.

In late 2016 the house sold between $745,000 – $765,000, an approx. 16% gain yet took 10 years for this gain to happen.

Overall the home in the above example has done well yet also provides insights concerning timing and overall market conditions. In pure #’s between 2002 and 2016 the home went from between $530,000 – $550,000 to $745,000 to $765,000 or approx. $225K or 40%, quite respectable and beating inflation yet also took 14 years to achieve the 40% gain or under 3% annualized which matches inflation which housing (beyond select coastal markets) usually mirrors. 

Are we to assume Denver is now suddenly an outlier like New York, San Francisco and Los Angeles OR are we in a period of concern as our housing appreciation historically matched those of other inland regional cities.

To be honest I do not know but as many clients are sitting on the sidelines waiting to see what the market does. My view is business cycles have not ended and while not in a bubble, if I were looking to buy and resell within 12-36 months, I would be a bit hesitant to sign the mortgage.