Atlanta
Residential construction and home sales in Atlanta have fallen sharply in recent months due to the economic downturn. Two years ago, the Atlanta Journal-Constitution reported, 2,109 condominiums were under construction in Atlanta. But last year only half that number of condos was under construction, and unsold inventory has hit record numbers. Construction of standalone single-family homes dropped 60 percent between September 2007 and September 2008, and sale closings fell 40 percent. Residential building permits in the Atlanta metropolitan area decreased by 55 percent. Projects like the planned 21-story, 220-unit condo tower near Lindbergh Plaza have stopped mid-construction as funding has evaporated.
Boston
Work on a $700 million multi-use condo, hotel, office and retail project in Boston’s Downtown Crossing area stopped abruptly in November when the project failed to attract lenders. Developers John B. Hynes III and Vornado Realty Trust said they would resume construction in 90 days after redesigning the project to appeal to lenders, the Boston Globe reported. The project was originally slated to include 250 hotel rooms, 166 condo units, 475,000 square feet of office space and four floors of retail space. The halted project has left a hole in the ground that takes up nearly a block on Washington and Franklin streets.
Boston Properties, developer of the Russia Wharf project in downtown Boston, wants to eliminate 150 condominium units from the project because the market for luxury housing has declined. The developer wants to replace those condo units with 200,000 square feet of office and community space, leaving 65 residential units, the Boston Globe reported. The project also includes a 31-story office tower. The Boston Redevelopment Authority, which must approve the change, has expressed support for it. Residents of the nearby Fort Point neighborhood, meanwhile, have advocated for more housing in the area to help create a 24-hour neighborhood.
Chicago
Some Chicago restaurant owners are taking advantage of the recession to shop for real estate bargains. Jerry Kleiner, whose restaurants include Carnivale, Marche and Opera, will open at least three new restaurants in 2009, the Chicago Tribune reported. Chicago rents have gone down 10 to 20 percent since the beginning of 2008, restaurant properties are selling at 20 to 30 percent discounts, and many landlords are willing to make more improvements to their properties to attract tenants. But the companies making these deals are exceptions to real estate trends, experts said, and most of them use a combination of internal financing, private investors, investments by landlords and conservative lines of credit to fund their purchases.
Las Vegas
Las Vegas homes are undervalued, though further price declines are expected, according to a report on American home prices released by IHS Global Insight and National City Corp. In the third quarter, Las Vegas home prices were 18.8 percent lower than market fundamentals would justify, the report said. Las Vegas ranked 287 on the list of 330 markets with undervalued homes, the Las Vegas Review-Journal reported. Homes are undervalued if prices in the market are at least 14 percent below what market fundamentals would indicate. The home market in Las Vegas peaked in 2006, when prices were 30.8 percent above market fundamentals.
Los Angeles
Developers in downtown Los Angeles, and to a lesser extent in Hollywood and the San Fernando Valley, are giving up on selling units in their condominium buildings and renting them out instead. These units rent for $1,500 to $4,500 per month, the Los Angeles Times reported. Some local real estate experts say the shift from condo to rental could harm the area, because property owners who are in residence tend to be more invested in improving their neighborhoods than absentee landlords. But others say renters are more likely to participate in a neighborhood on a daily basis than owners who may be part-time residents.
Philadelphia
Sales agreements signed for existing Philadelphia homes fell in October by 19.9 percent from September and 32 percent from October 2007, the Philadelphia Inquirer reported. Poor economic forecasts and difficulty in obtaining credit hurt a market that has otherwise remained relatively stable throughout the housing bust. As of September, Philadelphia-area home prices had fallen only 2.45 percent year-over-year, compared to an 11.2 percent decline nationwide and declines of close to 30 percent in the hardest-hit areas.
The City Council has indicated approval of plans to build the 1,510-foot American Commerce Center, which would be Philadelphia’s tallest building. If a change to the current height limit for the property at 18th and Arch streets is approved, developer Hill International Real Estate plans to build a 63-floor office tower and 26-story hotel with a department store, a movie/dinner theater and a supermarket, the Philadelphia Inquirer reported. The project is slated to cost $1.1 billion, and if construction goes ahead, the building would be completed in early 2013. It does not yet have an anchor tenant.
Phoenix
Two parallel blocks in south Tolleson, in the Phoenix metropolitan area, are among the hardest hit by the housing crisis in a region with one of the highest foreclosure rates in the country. One-third of the 90 houses on the two streets are in foreclosure or facing a foreclosure notice, the Arizona Republic reported. Many of the homes on these streets were built in 2005 and 2006, during the housing boom, and first sold for up to $300,000. Several of the homeowners used subprime mortgages to purchase their homes.
San Francisco
Rents for waterfront property rented out by the Port of San Francisco appear to be far below market rates, and some local officials are criticizing the arrangements as “sweetheart deals.” The rents are arranged on a month-to-month basis, the San Francisco Chronicle reported. The port’s director of real estate said the leases are being reviewed and, in some cases, renegotiated. Thirty-six leases have been renegotiated so far, netting the port an extra $22,243 per month.
Seattle
As housing prices have declined and sales have slowed, developers are using auctions to quickly sell Seattle condominiums, townhouses and houses. At a recent auction, 62 out of 92 homes on offer sold for an average sales price of $248,387 and total sales of $15.4 million, the Seattle Times reported. The least expensive condominiums, one-bedroom units, sold for $110,000. At another auction, the developer accepted 17 of 28 bids, rejecting another 11 as too low and turning those units into rentals instead.
Washington, D.C.
The Montgomery, Md., City Council in early December approved legislation restricting the size of new homes in an effort to combat “mansionization.” The restrictions, which will apply to about 106,000 properties and to building permits filed after April 28, are a response to complaints that oversized new homes overshadow existing homes, limit sunshine and hurt property values. The legislation will not apply to single-story homes or to small additions and renovations. It will restrict home size by about 14 percent on small lots and 20 percent on half-acre lots, and height limits in some areas will drop from 50 feet to 45 or 35 feet.
Compiled by Sara Polsky