“So have they released all the units now?”
“We have pricing on all of the homes. The least expensive units, on the second floor, overlooking the courtyard, one bedroom, one bath, are in the low $300s. And it goes up to $1.3 million for the penthouses with the large terraces.”
“Okay,” says Spick. Ian is sitting quietly in the stroller. Lutz has given the boy a peppermint candy to occupy him while she talks to his father. “Now, I guess,” Spick continues, “there are some financial questions I have. Let’s say I’m scheduled to move in in May. When am I expected to close escrow?”
“It’ll be within a few days of move-in,” Lutz says.
“Okay. So it’s not expected months before.”
“No. We will probably do the walk-through and have the sign-off sheet done for your home by March. And then we’ll get you all processed and do all that within a couple weeks of actually giving you the keys.”
“Okay.” Spick crosses his arms. “Are there any concerns, with the recent market in the state it’s in, that the units may not appraise for loan approvals?”
“You’re phase one, right?” Lutz leans against a corner of the table where the Vantage Pointe model sits. Spick says yes, he was one of the first to lock into a place. Lutz says, “Well, I really think phase-one buyers, especially on the upper floors like you are, will be fine. The lower floors may be a challenge.”
“Right,” says Spick. “Is the builder prepared to do anything about that? Because I’m certain he doesn’t want any vacancies.”
The builder of Vantage Pointe is the Calgary-based development firm Pointe of View.
“No,” says Lutz. “That’s right. He’s really focused on closing as many of the loans as he can that we have under contract right now.”
“Why I’m asking is, it looks like I’m going to have to get creative. I went into my bank the other day, Wells Fargo, and I was anticipating being able to rent out the townhome and to use the rent to be able to qualify for this. But I guess there’s a new federal policy now that you can’t use your rent to count toward equity unless you’ve had that rent for two years.”
“Wow,” Lutz commiserates. “Do you have equity in the property?”
Spick shakes his head. “I’m pretty much right at.…” He flattens a hand and moves it horizontally in front of his chest.
“Well, see,” Lutz says, “and this is the trouble. Wells Fargo is going to hold a seminar for our buyers to bring us all up to speed on stuff like that. Because the rules are changing daily. And they’re going to change a hundred times more between now and closing.”
“Right. Right,” says Spick. “That’s my concern. Because I still feel like it’s a wonderful investment, but I am concerned that if there’s a lot of people who are unable to qualify, what is that going to do to the value of the property if we have a lot of vacancy?”
“I don’t know what’s going to happen,” Lutz says. “Whether we do a buy-down program, to give a lower interest rate to the buyers, or…whatever we do, we’re well aware of it. Big-time talks are going on right now to figure out something.”
Spick nods. “Well, what’s the vacancy rate at now?”
“We have 43 percent under contract. We’ve been holding pretty steady. We’ve actually seen a lot more interested people lately.”
“Yeah. All of America’s on sale right now.”
Back in 2004, Vantage Pointe reserved 337 units — 49 percent of capacity — in the first weekend they were made available to the public. So having 43 percent under contract represents a decline from initial figures. Compounding the troubles at Vantage Pointe is the fact that there are already so many unsold condos on the market. The supply could last for several years.
According to Russ Valone, CEO of Market Pointe Realty Advisors, almost 22,000 housing units exist in downtown San Diego. About a third of that (32 percent) is subsidized, or single-room occupancy. The rest of the housing stock breaks down into 3600 apartments and 11,350 condominiums. Prior to 1999, there were only about 1300 condos downtown, so that’s 10,036 new units in the past nine years. Currently, 6441 condos are built, sold, closed, and have individuals living in them, either owner-occupied or rented out, and 3595 units are either still being built or are actively selling.
Of those 3595 available units, 1549 are new, or not yet built. Over a quarter of those, 389, are in Vantage Pointe.
One Who’s In and Wants Out
“I’m not at all unhappy with the decision to move to downtown,” states 25-year-old Jordon Harlan. Harlan lives with his older brother Landon in Union Square, on the corner of 14th and Broadway, in the northern part of East Village. “It’s what I wanted. I wanted to be able to walk everywhere, I wanted to be next to the cultural events. I wanted to be able to go to bars and street fairs. And that’s how it is. I live where people park to go to the ballgames. I’m 10 blocks from House of Blues. I’m 20 blocks from the bay. I can run through Balboa Park from my house if I want to. And I’m also about 2 blocks from the freeway, although I don’t have any freeway noise.”
Union Square is made up of three mid-rise buildings of steel-frame/wood construction and was completed by Western Pacific Housing in 2004. According to the downtown real-estate specialists at 92101 Urban Living, Union Square “sits in the path of development…the idea being that prices per square foot will increase as development around the area matures…Union Square is for the investor who is willing to be on the edge of development over the next few years.”
Harlan and his brother bought their condo late in 2005, and the two have lived there since. The price was $531,000, and they did a “credit back,” so that their loan totaled $550,000. They used the extra money to paint the condo, buy furniture, and make sure they had a little buffer left over in case of hard times.