Is the recent construction and development of high end luxury condominiums and townhomes in Pasadena a vote of confidence in the real estate market and the City of Pasadena? Or was it a wild gamble and miscalculation predicated upon a never ending increase in home prices and demand?
Time will tell.
As the housing market finally begins to show some signs of emergence from the depths of despair one thing seems antithetic. The inventory for mid to high price condo and townhome units appears to be growing much faster than what the market has or is willing to absorb.
The Market for High End Condo’s
Pasadena Townhomes & Condos $750,000 +
However the market for high end condominium or townhomes in excess of $750,000 still seems very sluggish. As you can see from the enclosed graphic, sales of these units have been on a precipitous decline for the last 2 years as the demand has just not materialized. The flip side of declining sales is increasing inventory. Not only are we seeing inventory increases as we normally would this time of year, we are witnessing the completion of new construction projects which are all targeted towards a higher end buyer. Some people think these high housing prices in Pasadena are unsustainable. If so, that does not speak well to the very limited market these units are targeted, all of which are well over the median condo / townhome in June of $430,500.
To compound the “slowness” in this particular price category, many of these new projects are bundled with commercial office space. Combined under the current market conditions this does not exactly equal “black jack”.
Inventory is Growing on Higher Priced Units
Several years ago “mixed use” was the term for urban living. And while the concept caught on with many of the developers, albeit voluntary or mandatory the timing could not have come at a worse time. Many of the articles and blogs I read talk about the impending turnaround in the residential housing market but most market prognosticators don’t share the same view in regards to commercial real estate. The overwhelming opinion is that the bottom has yet to be reached. It will be interesting to see what impact vacant commercial space may have on a residential structure. Consider the scenario, first of all new construction commands a premium to previously constructed buildings. If the first floor commercial units are all vacant, would this influence your decision to purchase?
Urban living along with the premium that accompanies it has many benefits as long as the surrounding environment can maintain it. My question is …Is there enough infrastructure to support this type of community? Namely employment, shopping, entertainment, recreation and transportation.
Time will tell.
About Doug Willis
Of course they’re not selling anymore–nobody is writing the crazy mortgages that allowed people to buy them in the first place. Prices will fall hard in this segment, which will cascade on down the food chain.