Thursday, May 04, 2006

Alta Condos in DC: 6 Months of Paid Mortgages

These Alta condos are located in downtown Washington, DC.
[Thanks to a Citizen Reporter for the find]


  1. The fine print says this offer is valid up to $18k. What if a buyer went through the whole buying process, was just about to sign on the dotted line but then said to the Alta sales rep, "You know, I just changed my mind. Instead of paying my first 6 months why don't we whack $18k off the purchase price?" I wonder how that would go down?

  2. Gosh, that makes $1,500 in gift cards seem pretty cheesy.

  3. Knocking $18k off the price probably won't go down so well, since that assumes the buyer is going to have a full $3k/month mortgage payment. I suspect the average payment is around $2k (but I don't know, I'm not that familiar with their condos)...

    I suspect this is the equivalent of knocking $10k-$18k off the asking price (depending on the size/price), without actually having to lower prices.

    (Why not just lower the prices?)

  4. Anon 1:20
    It looks like creative financing to me. But I bet the bottom line is the buyer will have 29.5 year mortgage at the original price.

    For 6 months he will have no mortgage payment. Maybe he can use that money to buy a ton of lottery tickets..maybe win..and buy off that property and still have a chunk of money left over.

  5. Only 6 months?? Maybe if they offered 60 months free I'd consider it, but 6 months is a drop in the bucket compared to how much these condos are overpriced.

  6. That extra $18k on the purchase price adds $400/yr in taxes forever. Some deal.

  7. Two comments.

    The developer does not want to cut sales prices because it will anger the earlier purchasers, who if possible, will kick out of their contracts, or if not, will make the developer miserable through the statuatory warranty period.

    "That extra $18k on the purchase price adds $400/yr in taxes forever"

    Assuming the assessment is directly based on the sales price(not necessarily true) it would only be $165.00/yr

  8. David,

    Here's another goodie for you:

    Country Living in Ballston!

    I knew housing prices were being reduced but I didn't realize how rapidly. On page 23 of the Sun Gazette, a home at 616 Wakefield is listed for $625,000. ( Five pages later, it's listed again at $599,800. I figured I'd keep turning until I got to the end of this week's edition to see if I could pick it up for $365,000... :)

    Reminds me of a childhood book I had, something to the effect of Sesame Street's Grover's There's a Monster at The End Of The Book.

    My $0.02.

  9. In addition to the former buyers in the condo building getting upset that the prices are dropping, I'm sure the condo developers also want to portray that their condos sell at a certain price. It gives a feeling that there is nothing wrong with buying at the going rate in the building. If it showed a decline, future buyers would keep trying to knock the prices down further and further, which would look bad for the building's sales history.

  10. A lot of the above comments make a certain amount of sense. However, I just don't see what the difference is(tax implications aside, which may not be an insignificant factor)between an incentive and a price reduction. If I'm someone who bought six months ago at full price and now I see either price reductions or incentives I don't understand why one would piss me off more than the other.

    I'm still curious what would happen if a potential buyer demanded a price reduction instead of the incentive. Does anyone know-or care to speculate-on whether the builder would do it?

  11. This same developer last year at this time 1) would not accept buyers' agents and 2) required a SEVEN percent deposit. They also would not provide ANY dimensions for the unit plans.

    I cancelled my sales appointment, turned off, because even in the heyday of last years' market, other developers were not quite so arrogant.


    (I did not end up buying)

  12. mjrmajor: the differnce is that one shows up in the comps and one doesn't. If you want to sell your unit, what lenders are willing to lend your buyers should be based on what recent similar units have sold for.

  13. LOL.

    AOOGA, AOOGA, dive housing market, dive!!!!!!!

  14. How do the taxes work if they pay your mortgage for you?

    Do you need to pay taxes on an additional 18K of income?

    A Redskins fan

  15. mjrmajor: Or imagine you bought a $360,000 unit in the building with 20% down so you would not have to pay pmi, but got a 1yr ARM so you could get an extra low rate.

    If you wanted to refinance to a 30 year fixed, and your lender saw that comps were $18,000 less, all your lender cares is that you now want an 85% LTV loan and now you need to to pay pmi. In other words, that $18,000 discount comes right out of your down payment. Whereas an incentive that is not reflected in the sales price won't.

    The same thing will happen if flippers sell for a loss, but in that case, the developer is not the bad guy.

  16. Does anyone know if lenders retro-actively charge PMI? In otherwords, if the value of your property drops and you no longer meet the 80% threshhold, is it added back?

    I'm guessing that lenders probably don't pay attention once the loan is closed. Plus, they'd have to pay for an appraisal to prove the drop.

    My $0.02.

  17. I have never heard of lenders retroactively "reinforcing" a loan--the lender will not bother you as long as you make your payments.

    That kind of scrutiny costs them resources, and if the borrower is paying, they are wasted resources.

  18. The same developer is offering two years of condo fees on another of their overpriced projects. Clearly, lowering the selling price is the last thing they will opt to do.

  19. I don't think it will be long, though, there is nothing much left to do.

    These incentives do not even add up to 5% individually, even if they combined incentives, they don't amount to 10%. But listings of existing one-bdrms in the hot areas of DC are down 10%.

    The only way they are going to match it is to finally give in and do the price discounting.

    I am stepping out of the market--I will reevaluate in a few months.

  20. These incentives don't indicate much too me. And I don't think that they are proof of collapse in the market.

    Take a look at the Alta website, 90% of the units are already sold. The remaining 10%, for which the incentives are applicable, are the dregs, bad views, bad location within building, etc. The dregs are always hard to move, regardless of the housing market, and these incentives merely reflect this.

    Sorry to interupt your dreams of picking up one of these units at 50% discount in two years after the sky falls.

  21. Thanks, Mr/Mrs. PN Hoffman -- I mean, Anon 11:20.

  22. I wish I were Mr. PN, but its just Anon 11:20 here,

    You are welcome. Just trying to help everybody out.

    I thought the purpose of this blog was to keep readers informed of the real estate market by presentation of "all" the relevant facts. Maybe I was mistaken.

    I know its sometimes more entertaining to ignore the facts, but I think you'd do yourself a favor by knowing some of the facts?

  23. These incentives are the first I've seen in years. And for the first time in years, I see completed buildings half empty--there is one near Gallery Place that is only 50% occupied.

    Something is afoot, individual signs can be dismissed individually, but in the aggregate, these are telling indicators.