Talk to Phoenix high rise developers trying to hawk their goods and they'll tell you their prices make all the sense in the world. If so, how come no one's buying? Sure the market is slow and its harder to get loans today but some people are buying but not at the brand new condominiums in midtown and downtown Phoenix. Sounds like a price issue doesn't it?
Because high rise living is so relatively new to Phoenix one way to get a perspective on values is to look at what's going on in other markets.
The San Diego high rise boom began several years before our boom in Phoenix AND the number of condos built there dwarfs what's happening here. Because of this San Diego MAY be a great indicator of where our market is heading.
The Legend is an A-Class building in downtown San Diego overlooking the Padres Ball Park. Prices are advertised at about $550 per foot plus discounted interest rates and 3 years of HOA fees. How much you want to bet that the $550 per foot is soft at that?
Now, I love Phoenix, but I don't think that the average buyer would consider downtown or midtown Phoenix to be "comparable" to San Diego. So, is it reasonable that someone pay as much to live in Phoenix as San Diego? Probably not. Century Plaza recently advertised prices in the $480 to 500 per foot range. And even though Century Plaza is a really good looking building it is not comparable to The Legend and even though Century Plaza is on the Phoenix Light Rail that is not comparable to The Legend location. Gang, IF The Legend sells at $550 per foot (again IF) then there is no way that Century Plaza is worth anywhere close to that number.
But now here's where things get really subjective. Compared to downtown San Diego what are high rise condos in midtown or downtown Phoenix worth? Ten percent less? Twenty percent less? Fifty percent less? What do you think? Should prices for a high rise condo in downtown Scottsdale be about the same as downtown San Diego? MAYBE. But wouldn't most of you take a condo in downtown San Diego over a comparable condo in Scottsdale. I would. I believe that San Diego prices should be about double what a comparable place in midtown or downtown Phoenix and maybe as much as 50% more than the same unit in downtown Scottsdale. Thoughts?
I can't imagine that anyone will think that Century Plaza prices make sense in this light. Fortunately prices at Century Plaza are about to come down; way down.
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