Ritz reduces asking prices
The Ritz-Carlton Residences in the Inner Harbor has lowered the asking prices on 30 of its condos by about 30 percent.
The luxury development, conceived in good times and delivered after the housing market slammed on the brakes, has closed deals on just 24 of its 190 units. About a dozen more are under contract. That leaves a lot more to sell.
The discounted units represent about 20 percent of the condos that haven't either sold or gone under contract. (Hat tip to The Daily Record, which had it first -- though you'll need to sign in to see the story.)
New prices on the 30 units range from $499,000 to $2.1 million, says Greg Harris, a spokesman for the developer, RXR Realty. It's not the first reduction: When the development opened, asking prices ranged from the upper $800,000s to $5 million.
Back when a bunch of the Pier Homes at HarborView were being auctioned off, I asked the Ritz-Carlton developers what effect their next-door neighbor's big price drops were having on them. In a statement, they said the development "has seen a record increase in traffic in April, May and June."
Harris said Wednesday that the auction results had nothing to do with the Ritz-Carlton's decision to discount some of its units.
"It's not a true comparison of projects," he said. "The list of amenities and the finishes and the lifestyle that people are looking for at the Ritz-Carlton don't compare with any other project in Baltimore."
It's an interesting question for both appraisers and buyers: How different do luxury products need to be before they're not competing against each other for the same prospects?
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Comments
2 years and they've sold about 20% of their inventory. I'm sure Darwin Rules will have some colorful commentary on this one.
"The list of amenities and the finishes and the lifestyle that people are looking for at the Ritz-Carlton don't compare with any other project in Baltimore."
First rule of business school: get out of the commodities rat race and earn super normal profits by using Jedi mind tricks to position yourself as a premium brand.
Second rule of business school: even if you achieve significant market power, you're still subject to consumer's demand curve.
Posted by: Josh | August 19, 2010 7:21 AM
If you're blue and you don't know
where to go to why don't you go
where fashion sits
Puttin' on the Ritz
Different types who wear a day
coat pants with stripes and cutaway
coat perfect fits
Puttin' on the Ritz
Dressed up like a million-dollar trooper
Tryin' hard to look like Gary Cooper (super duper)
Come let's mix where Rockefellers
walk with sticks or um-ber-ellas
in their mitts
Puttin' on the Ritz
...and now you can have it all for just half-a-million bucks
Posted by: Darwin Rules | August 19, 2010 9:24 AM
These two projects ARE different- comparing condo apartments with 5-story townhouses is apples v. oranges. BUT there's a pretty thin market in any case for housing in this price range, especially when the Ritz has sky-high condo fees to pay for those amentities that few people want, regardless of how affluent they are. Factor in City taxes too, and you've got a pretty good explanation for the stagnant sales in this economic climate.
Posted by: Enzo | August 19, 2010 12:34 PM
Enzo hit the nail on the head. In theory, I'm the perfect target for these things: empty nester; downtown worker; successful professional. But between the fees and the taxes, I wouldn't take one of these things for free, much less drop half a mil on the crummiest one.
Posted by: Jim | August 19, 2010 4:53 PM
The scuttlebutt I heard about the Pier Homes is that their auction pricing was bank driven and prior to hiring Accelerated Marketing, the developer never dropped the prices on the units to adjust to the changing market.
The question is, how long can the Ritz Carleton hold out before its lenders make a similar decision to move the inventory?
Buyers want to have upside potential attached to their purchase, not fears of being under water right away. It takes real confidence to pull the trigger on a "luxury home," and its hard to have that when you can't even sell your own house, your stocks are down, and real estate prices have not floored yet.
Posted by: smithbaltimore | August 20, 2010 9:03 AM
smithbaltimore, housing analysts say it often is the lender behind decisions to go to auction on new-home projects -- even non-foreclosure auctions.
The Pier Homes team is a developer, an equity partner and a lender, and I asked the equity partner at the time about who wanted to pull the trigger. He said they came to the decision together in hopes of capitalizing on low mortgage rates.
Posted by: Jamie Smith Hopkins | August 20, 2010 9:10 AM