Monday, December 15, 2008

Lake at Walnut

Standard Pacific Homes has been building a lurxury condominium complex called 'Lake at Walnut' in Pasadena for the past several years. I have had a love/hate relationship with Lake at Walnut. First, I hate them for causing severe traffic headaches on the way to my favorite restaurant, Mediterranean Cafe. However, I love them for providing me with loads of amusement over the last year or two. Early 2009 they will be having their second grand opening. The first Grand Opening was unfortunately cancelled by the city of Pasadena for safety reasons, they were behind schedule but they went ahead anyway with tours even though the building was still undergoing major construction. I know this because I have been on the interest list since the beginning. 

The model I have been "interested" in is a 1200 sf 1 Bedroom, 1.5 Bathroom Townhome that at the first grand opening started at 530k. That is 440$ per square foot! For the second grand opening they claim that prices will drop to the mid to high 400's. This still seems very high. I am curious as to how they are going to sell these, because the model I was interested in is the second smallest plan out of 11, the larger units are closer to a million. 

The salespeople now pitch the Lake at Walnut as a hip urban community for young people. However, they require a 20% downpayment, which makes a lot of sense given the recent fallout in the housing market, but 20% of the cheapest model is around 100k. What young hip people are going to be able to fork over that kind of downpayment? FHA loans which require a much smaller 3% downpayment are not available until a complex reaches 60% occupancy. They are stuck in a Catch 22. The only way out that I see is to lower prices, but 530k to say 475k is a drop in the bucket.

As extravagent as this place sounds, it was actually originally pitched as a conservative and affordable alternative to the Prado just down the block. The Prado had much smaller units for almost double the price. The HOA fees were around 1000$ a month because the amenities included a pool, a movie theater, an over the top communal kitchen for throwing parties, consierge services, etc... I later found some irony that the salesperson at the Late at Walnut that I was speaking with revealed that she had purchased a unit at the Prado.

However, the biggest irony is that Standard Pacific Homes, the builders of Lake at Walnut, began construction  about a year ago on another luxery condo complex about a mile away called the Dalton. This place is over the top with penthouses that have rooftop balconies and more. And don't get me started on the Cinema Lofts next store which are 500 sf lofts for 370k, that unbelievably people have actually purchased. 

It is a little sad to see Pasadena change over the years. For decades to come the housing bubble will leave a scar on Pasadena with all of these rediculous complexes. Hopefully they won't end up abandoned and leave some real scars.

2 comments:

Jeffrey Shaw said...

Hey,

I found this post via a google search on the Lake @Walnut condos and am interested in your point of view of this residence. I went to see these condos yesterday and am interested in that same model floorplan as you (1 bedroom townhome setup). The asking price was 400K for 1st floor homes to 460K for top floor. However I'm wondering if they are willing to sell for lower given the current economic conditions. Whats your current viewpoint on these new pasadena condos? do u think they are a potential money pit/bad investment, or do u think they can be a good deal to be had at the right time? Your input is needed! thanks

Peter said...

Hi Jeffrey,

To me they still feel overpriced. Last time I spoke with them (it has been a while) they were not open to negotiating the price.

If you take the 400k example, and assuming you have an 80k downpayment (which you will need until there are enough occupants to allow for FHA loans) then you are left with a 320k loan amount. Assuming a 30 year fixed at 5% interest, you would have about a 1700$ per month mortgate payment. Add in the HAO fees and it is around 2000$ per month. I am not sure if any utilities or insurance are included, but they may increase that amount even more.

So for owning a 1 bedroom condo you would be paying at least 2000$ a month, a quick check on craiglist shows that there are plenty of 1 bedroom apartments availble for much less. However, there are many 'luxury apartments' in Pasadena that are comparable in cost, but it seems like these have a lot of vacancies, so they may be overvalued as well. The Archstone Del Mar Apartments come to mind.

However, I am not a real estate professional. I am just another normal person waiting on the sidelines until home prices return to sanity. If it is your dream home and you plan on living there for decades maybe it would make sense to buy it.