UPDATE: As of 3/24/10 there are five units remaining at the Sabine. Send me a message for availability.
[youtube = http://www.youtube.com/watch?v=qWCrXuNJJRk]
In a packed house, over 200 registered bidders showed up for the auction of 31 units at the Sabine on Fifth condos. 31 29 buyers walked away very happy, as this was believed to be the last great buying opportunity for attainably priced downtown Austin new construction. Where 27 units were originally intended to be auctioned, earlier in the week CWS (developer) decided to include three more, then in the final minutes of the auction they included another 1bd.
The building has 80 units total. Once the 31 auction units close, there will be 13 new construction units remaining. These will be sold through traditional channels. 36 units closed before the now settled lawsuit was filed in February of 2009. During 2009, the 44 remaining units were taken off of the market due to litigation. This auction marked the “re-debut” of the Sabine.
# of units offered = 31 (29 bids accepted as of 4pm Sunday)
Avg winning bid (inc. 4% prem.) = $228psf
Avg original asking price = $326psf
Avg discount from asking price = 30%
You’ll recall that the Brazos Place auction fetched an average of $281psf, and that was an avg 29% discount from original asking price.
-Jude
Just read about Waller Creek project, looks really interesting. I think this will help the properties in that area. Is Sabine expected to sell on par with the condos on west side(360, Spring etc at $400-$450/sq.ft)after this project is completed?
Does Sabine have any other units available for sale?
Sabine will never compete with those buildings, at least on an amenity level. However, as Waller Creek District begins to take shape over the next 5-10 years, we will absolutely see an increased demand for the units at Sabine.
As of last count, there were five units remaining.
Any other upcoming auctions in Austin? Rhett Winchell (Kennedy Williams President) said his company is in talks with other builders, does that mean something?
http://www.myfoxaustin.com/dpp/news/local/Downtown-Real-Estate-on-the-Decline%3F
I don’t think so. Rhett is working to draw attention to his company. Kennedy Wilson is one of many auction companies that try to buddy up, and are “in talks” with developers. As I commented on March 1st (above):
“Removing 30 units from the downtown market is a big deal, especially in the attainably priced category (<$350psf). As I've been saying, there are no downtown Austin condos left in this category of new construction. The only remaining new construction is the surplus of Sabine units and a couple at the Shore. For the first time in years, we are not anticipating another building, which in the past has blocked out resales in existing buildings.”
Jude, what are the dues ($/sf) at The Sabine? That’s something people don’t always factor in. You might get a unit at auction for under market value, but then you still have $300-$500 a month to pay in HOA dues.
~$0.41-0.45 psf. I disagree that people don’t factor this in. Even the most ignorant bidder would consider it. It’s impossible not to when talking with a lender.
Jude, has the HOA in the sabine gone up? .45 psf is high considering the spring and 360 are both in the .35-.40 psf range.
I mean wow. I was thinking sabine would be in the low 30’s. For example the Four Seasons is charing .61 or .16 more than the Sabine.
Any word on why its so high?
A few factors come into play. In fact, there was an assessment last week. The building will see a reduction when completion of the Waller Creek tunnel removes it from the FEMA 100 yr flood plain. Also, the residents’ parking is leased (99 year) from the HGI, and this payment comes from our HOAs. The last reason is we are a small building compared to 360 or the Shore, as examples, which have greater economies of scale for certain items (i.e. concierge, pool, fitness, etc)
The other buildings downtown may also have increases with the new FNMA rules in place. HOAs must now have a line item in the budget for reserves and it must equal 10% of the operating budget. Not sure what some of these other condos are currently collecting in reserves but I would think that this may affect other DT condos as well.
Good point, Clint.
I’m with you – I mean of course they consider it. I don’t think they are ignorant to the idea. I just think it’s possible when people think, “Man i can get a condo sooo cheap. My mortgage payments will only be $XX,” some of them don’t really take into consideration the painful act of writing a non-tax deductible check every month for a few hundred bucks to cover HOA dues. I think this is especially true when you factor in the discussion you’re having about dues being raised. You buy in when they are what you consider “reasonable,” and then they go up and you can do little about it. My dues have risen by over 30% in two years. Just sayin’.
These auction undermine the pre-construction sales process of remaining and future projects.
The fault lies partly with developers who got greedier as the market got hot who priced units higher than the existing inventory and started resorting to tricks (like 360’s call-ins to schedule appointments). Preconstruction should be cheaper and have little restriction on backing out during the first phase of reservations, otherwise the first wave of buyers has no confidence they’re getting a good deal.
speaking of pre-sales of remaining projects.
The only things left to come online are the 3 ultra-luxury condos on the market.
The Four Seasons opens in May, The Austonian opens in June and The W in December. How these units fare should determine the future of the downtown market in the next few years.
How many of the early buyers will be able to close? How will sales pick up once there is a finished product and no longer the wait or speculation that comes with earlier sales. These developers have deeper pockets, so they should be able to shoulder unsold inventory longer than the developers at Brazos or Sabine so auctions seem unlikely in the near term.
Also we will see our first re-sales in these buildings and will also see them come up on MLS for the first time. Thus our analysis of MLS will get better because there will be more inventory on there.
Overall 2010 looks to be the year of the luxury condo in Austin now that Sabine has resolved its issues.
All good points, JJC.
“There are the 36 original buyers who paid far more than this new group of 29 buyers. Will there be resentments?”
I bought a condo pre-construction in a complex located in South Austin about a mile from downtown, most of which was then auctioned off at 55% of original prices less than a year after completion. The developer removed ALL leasing restrictions before his fire sale, which effectively disqualified the complex from FHA-backed financing. Now there are 24 out of 32 owners who have substantially less invested in their units than the 8 “original” owners, and have so far mostly acted accordingly by ignoring CCRs and effectively turning it into a glorified apartment complex. I don’t necessarily blame the condo vultures for scoring their deals, but this negligent developer poisoned the community well so badly that the regime will be anything but harmonious for the forseeable future.
The stigma and unnaturally forced absorption rate of a no-minimum auction depresses market values in a condo complex for a prolonged period of time, QED. Anyone bidding at these condo auctions should take note: not only may you be entering a snake’s nest of disgruntled owners, but like those owners, you may end up with something far different than what you bargained for.
As an owner, I don’t begrudge the winners one bit. It will be nice to have some new life in the building. My discussions with neighbors generally corroborates that attitude is shared throughout the building. Removing 30 units from the downtown market is a big deal, especially in the attainably priced category (<$350psf). As I've been saying, there are no downtown Austin condos left in this category of new construction. The only remaining new construction is the surplus of Sabine units and a couple at the Shore. For the first time in years, we are not anticipating another building, which in the past has blocked out resales in existing buildings. Now that the market for attainably priced downtown residences is limited to resales where individual sellers cannot drop their pants as far as developers could, we might see more people just sit tight or lease out their property. This would further constrain inventory downtown. Where exactly the supply/demand curves intersect remains to be seen, but I’m generally expecting to see upward pressure on prices.
So what is the normal timeline that winning bidders have to obtain financing and start moving in? And we throught the last month was hectic… I would imagine 30-40 people moving in over the next few months will prove an extreme headache!
One other question… do you think the county will use this auction as a way to set the appraisal values for this year?
Contractually, they have 45 days. As you’re aware the HOA did a stellar job at fighting the onerous appraisals they gave us last year ($400psf+), but it will be interesting to see what happens with the auction clearing $228psf. To the best of my knowledge, if you filed a homestead they cannot increase your taxes more than 10% per year.
Someone had mentioned that 10% capped increase before but I have neven seen any proof of this when searching online? Where would proof of this be? Also, if this is the case,(I had my Homestead exemption inplace from teh beginning) then how come its was able to go up 300% the first year? Was this becasue it was a new construction?
I was able to find proof of this… and the catch is that you have to have had the Homestead Exemption in place under your name both the current year and the previous year.
But that great, because we will benefit from last years decrease for years to come.
Not a bad auction. I wonder why the developer rejected the last 2 bids, they fit in line with the other sales they accepted.
The politics in this building should be interesting. There are the 36 original buyers who paid far more than this new group of 29 buyers. Will there be resentments?
They should have a move in plan to make the transition of adding these new owners in a smooth fashion and try not to upset current residents or cause more drama that this building doesn’t need. Although I’m sure a decent percentage of these units is from investors.
Finally how does this 30% discount affect the rest of the market of unsold new condos in austin? How does removing 30 units from the market affect sales going forward?