Not surprised at all to hear about the problems with the Ritz - just drive or walk by it any night and see the 98% dark windows. I'd be pretty upset if I was one of the 21 people who bought there for twice what these things are eventually going to cost.

When are developers and sellers going to realize that Baltimore can't sustain a thousand $1,000,000 homes?

The Slums of Federal Hill? Sure hope the handful of residents there won't need to be consulting your recent post on dealing with derelict housing next door!

http://weblogs.baltimoresun.com/business/realestate/blog/2009/06/tips_for_dealing_with_a_mostly_abandoned_home.html

"Abandominiums" on the way?

I'm sure the Ritz Carlton "brand" is going to suffer for this. Maybe they can try and salvage the situation.

The Ritz-Carlton in Baltimore is truly one of the finest and most luxurious condominium projects of its kind - not only in this area, but anywhere in the world. An incredible complement to Baltimore's Inner Harbor area.

For anyone that has had the opportunity to visit the community, you walk away with a sense of grandeur and awe. For those that are lucky enough to afford the lifestyle of The Ritz - I am envious. As a downtown homeowner, I am truly sadden by the news that the project is not selling well. This is not only unfortunate for the developer, but for the city of Baltimore. Granted the project is for the wealthy "few," but those "few" people will bring millions to our city's property tax base - not that the city needs it! (especially with crime on the rise and our school system and streets in need of repair.)

I commend the developer for their courage in taking a risk on Baltimore and not using any city funds to do it. I hope the project is able to turn it around. Baltimore needs it!

Maybe they can ask Obama for a bailout too?

I work for a local banking firm that just returned its TARP funds. As soon as I get my salary more in line with what I do and when the housing market recovers back to 2007 levels in September or so - I plan on selling my 2 BR rowhouse in Federal Hill for about $750,000 and then putting a down payment on one of the Ritz condo's. Word at my country club is that the economy has really picked up - lots of my buddies are thinking of moving into bigger homes. I am relieved about the economy comeback because I bought my rowhome in Federal Hill in 2006 and thought I may have been ripped off (especially with all the money I spent on granite counters and the expensive fridge)

Lots of us rich people in Baltimore - Don't worry!!

Ashton, I am not sure what dream world you are living in. First of all, half of the Marylanders that earned over $1 million left the State when O'Malley raised taxes. Second, Baltimore City has plenty of foreclosures and short sales. You buying at the peak at '06 and making a huge profit is a little wishful thinking. You will be lucky to get your money back. And if you really do make as much money as you claim, Obama is going to lower or even take that mortgage interest deduction on your taxes. You might want to plan on staying in your home for awhile. Even if you were to put it on the market, you are not going to sell it unless the price is way below market value. The foreclosures are not stopping atleast for another year. Even then, housing values are not going up like they did, ever again. The housing market will never be the same. The days of making 20% to 30% a year is long gone. You will be lucky to get 5% to 10% with the way inflation will be in the future. The only way to stop inflation is to RAISE INTEREST RATES. Again, higher rates will drive prices down even more.

Frank, I think "Ashton Covington V" is winding us up.

Ashton, if you truly work at a high income position in a "banking firm" you are an example of how we as a country have gotten into this situation.
First, there is no position in a local banking firm, including CEO, that is worth an income that could touch one of these properties. Getting "your salary in line with what you do" is a big part of our financial mess. Your overvalued (for now) Federal Hill townhome is gonna make you feel pretty lucky a few years from now.
Housing valuations have a LONG way to fall yet. This is not my opinion, it is simple Economics 101. The trash mortgage products invented by your industry combined with the "real estate only appreciates" fallacy perpetrated by the RE professionals made the perfect storm. It not only put millions of starry eyed people into houses they couldn't begin to afford, but continued to artificially inflate the value of homes as they adjusted to the "demand" fed by these loans. The house of cards has only begun to crumble. As the expanded economy fueled by the HELOC money now contracts, more jobs are lost, more companys fold (airlines next, more retail, etc.) and those unemployed push more houses into the flooded market.
Only a banker would deceive us into believing the economy is about to turn around. This is impossible UNLESS the previous charlatan loan products were again available to sustain "growth" back to these fairy tale levels. And we know that will not be allowed.
Housing prices will fall until the AVERAGE family can afford the AVERAGE home. That pins the adjusted price of the middle house at between 150K and 200K. Just like in 1996 or so before all the smoke and mirrors. You can laugh at that all you like, but with the large number of homes built over the last decade the supply may even dictate lower prices.
I predict the last Ritz-Carlton homes will go at auction for less than 250K. You heard it here.

Frank, John et al. - Your sarcasm detector must be broken. More importantly (John) your post demonstrates that you are not a big fan of personal accountability. Sure, banks, executives and especially the government share some of the blame, but whose fault is it if a bunch of dumb asses take out huge loans they can't afford? Everyone but the dumb ass right?

This all seems unreal ... but if "the last Ritz-Carlton homes will go at auction for less than 250K" wonder what will happen to all those "2 BR rowhouse(s) in Federal Hill for about $750,000" bought in 2006? Weird times along with news that UMBI is spreading itself out over the state ... what does that say about the future growth of biotech in Baltimore? Can we just send positive vibes and hope that the universe corrects these mis-deeds and the market recovers in 2010? (Thank you, all you bankers, who made the dream of homeownership come true for a brief period of time, if only to end in nightmares for so many ... It was really worth the few months before the HELOC kicked in) Hmmmm, Could it be that the idea of "sending positive vibes" is now a bit dated along with our imagined home equity wealth? This news, of "21 sold, 171 left" should dash a bit of that notion out of all of our psyches .. Though I'm sure there are those waiting for the prices to tumble on the Ritz and pounce, provided they have anything left to work with by then ... sadness, truly : (

not really...if you guys work in banking as im in the uk , its the bankser/financiers whom are to blame,,,yes the poeple who decide to take out these loans are over expectant,but yet if they had calculated the cost of salary to the mortgage. they felt that they could repay it..

but to break the ice the bankers were to ones encouraged to meet market demands and were giving out loans that they knew people could not pay back due to the fact that they got greedy and also didnt see the global economical decline so fast.so therefore why were they providing public a flase sense of security>>???and luring clinets in to buy houses they could not afford..

your credit rating system is not faulty , it is the people whom give the faults that are in fault.

The bottomline is that you need to take a look at the real estate sales for existing homes, , new home sales, and then distressed sales (foreclosures, shortsales, REO's). The distressed sales are about 80%, if not higher, of all real estate sales in the country. You think California, Arizona, Nevada, and Florida are the only places affected? Get real!!!!! There are still plenty of those to go around here. Especially in Federal Hill where you have rowhomes that were bought for $50,000 when they were boarded up and then renovated and sold to someone for $500,000. Now that $500,000 house will be lucky to sell for $250,000.

You want to blame the person buying the house for not being able to afford the home? It is not their decision to decide what they can or can't afford. It is the lender who is making the loan to decide since they are the ones taking the risk of repayment!!!!! On top of that, you had all these 100% stated income interest only loans to help people afford more home than they really could. If you were a real estate agent and the lender would not do it, you would just take it to another bank. It was a complete joke of a system, and a real estate market that was waiting to burst.

If you are a serious about buying a house in this market, are you going to buy a home that is listed on the MLS for full price by a real estate agent? Or are you going to look at distress sales like shortsales, REO's, and foreclosures? Not only will the builder have a hard time completing the project now that they can't pay the people to finish the work, but NO LENDER WILL APPROVE A LOAN WHEN THE CONDO QUESTIONAIRE IS COMPLETED. I guarantee it.

U know, the Ritz Carlton is just one of many high end projects downtown that will go for auction.
Silo Point? haha
The Water Street project? haha
Fells Point condos.. lol
Chas Village.
harborEast.
etc etc
I lived through this in the early 80's on a much smaller scale. And, Baltimore, is just one of many many cities and towns that overbuilt.
Harborview was a disaster, as was Scarlett Place, and the condos across from Hopkins field.
No, there just are not that many rich folks in Baltimore who want to live downtown when they can get lots of land, big houses, and low crime in Hunt Valley, Owings Mills etc.
The Ritz and others are doing themselves a disservice by waiting to auction off the properties. The values will only decrease.
At least the 4 Seasons was smart enough to abandon their ill-conceived residential project.

Rich, I agree that it appears the history is just cycling when it comes to Baltimore real estate. I am very surprised that nobody seems to have learned anything...

Condos are not selling well in the Baltimore metro area, in general. I live in Mays Chapel, and a large, new-construction condo complex has a building sitting mostly empty nearby. Other condos in established complexes have been on the market for over one year now, and haven't moved. I used to live near the Meyerhoff downtown, and the new condos constructed at Preston and Charles sure don't seem to be filling up, either.

I don't think the Ritz Carlton enterprise was faulty for going into the condo business: the flaw in their logic was picking Baltimore. Also, having lived "in the city", Baltimore still doesn't offer the types and variety of amenities that those of us who moved from other metropolitan areas (Denver, Boston, Chicago) in the U.S. are used to. If I have to drive outside the city for amenities, it doesn't make city life worthwhile if I am in a position to choose where I reside.

Pretty interesting to see the comments here; most barely attempt to contain their seething jealousy. The fact is that the Ritz project has a market and even a market in Baltimore. The problem with high end properties right now is a) banks/lenders are requiring a lot more upfront cash b) fewer lenders are willing to lend on them right now, c) those who populate the high end market are dealing with their own liqiudity issues as their investments have taken a significant hit in the last year and their own employment prospects may be a little rocky right now, and d) there's a large supply of homes on the market which given the previously cited factors aren't moving for those reasons thereby making it hard to move to a new home if you can't sell the existing one. I'm a professional in the Baltimore area, my wife and I are both high earners, we live in Federal Hill with our child(btw, the Federal Hill market is doing just fine, homes over the $450k range are moving more slowly to be sure, but there's a lot of vibrancy in the sub-$400k range and values have probably held up better than in many other baltimore area markets), and I work with these issues as part of my job--no, neither of us are bankers, investors, or real estate agents/brokers. Trust me, there is demand out there for this type of product, but these projects are impacted by the economic times like every one else is. (I know the Silo Point project has had an uptick in sales, including a possible sale to a local celeb, Water Street has some issues with it beyond the economy which impact its sales) The Ritz will be just fine, it will just take longer than they had projected. The brand alone will probably assure that.

Geof the points missing from your conclusion are price point and saturation.

There IS an absolute limit to the number of potential buyers and there IS an absolute limit to what any one of this limited pool will pay. That the pool is even smaller than it (actually) was prior to the boom only compounds the pain.

The lesson being learned is that (in Baltimore at least) these realities don't change merely because of sales and marketing.

Maybe we're just too parochial and pedestrian for the gloss and sizzle... but we seem to prefer it that way.

"Pretty interesting to see the comments here; most barely attempt to contain their seething jealousy."

Oh really Geof ? Since when is stating the obvious (observing empty condos) considered jealousy??

"I know the Silo Point project has had an uptick in sales, including a possible sale to a local celeb,"

So what? I don't care who lives there, it's still a 2/3rds empty building.

The Ritz Carlton Residences started out with so much promise. Just visit their in-house spa "The Pearl" where the service and the amenities were first class and just what you would expect from a Ritz Carlton property. It is now a one star over-priced mess with a staff that is less then stellar and seem to have no training on customer service. They used to offer a great selection of beverages, exclusive teas, fresh fruit, champagne and brownies. They now offer pitchers of tap water with your choice of lemon or lime slices. No snacks or other beverages are served anymore. The sparkling white hand towels in the bathrooms are now replaced by a paper towel machine. The changing areas and showers are dirty and the sauna is never working. Any regulars that fell in love with the place have fled to nearby spas that value their loyalty and make them feel like pampered, appreciated patrons. The whole place feels like a ghost town and the Ritz concierge team are anything but welcoming. It's really sad and I'm sure the tenants who did finally manage to move in after months of waiting and delays are less than thrilled in their new digs that are failing to deliver the Ritz lifestyle they were promised.

The Residences at Ritz-Carlton are always beautiful no matter where they are located. They also are always luxurious and done in great taste. Another one of their communities I love is the Residences at Ritz-Carlton, Dove Mountain in Southern Arizona - http://www.theresidencesdovemountain.com/luxury-arizona-real-estate.php. I recently stayed at the resort there and found the residences while walking the grounds. The views of the desert were amazing, and there was a golf course too. These homes are perfect retirement dream homes; considering a lot of my friends retired in the Tucson area I'm hoping to be in one soon.