Developer Drops Prices by 30% After Its Phoenix Property Fails to Sell
- Mar 22, 2010
By Anuradha Kher, Online News Editor
Phoenix–After about a year of being on the market, JAG Development’s new infill project in Phoenix, Evergreen 9, was not able to find a single buyer. As the economy weakened and real estate prices kept dipping, only 50 percent of the units had been sold. So JAG Development had no choice but to reduce the prices. Converting the building to a rental was the only other option, but because the company was able to recapitalize, it chose to bring down the prices as the company had done with one of their infill projects in downtown Phoenix-Portland 38. At Portland 38 about eights month after a price reduction of nearly 30 percent, 50 percent of the 38-unit project had been sold and the strategy proved to be successful.
“We lowered the price at Evergreen 9 because we were able to work with the lender on the cost structure of the building and make it work for us regardless of the drastic reduction,” Allan Gutkin, founder and CEO of Jag Development, tells MHN.
The loft-style town homes are now priced starting at $169,000, depending on the floor plan and layout. The new pricing reflects a decrease of nearly 30 percent of the original pricing and is only half of what it was during the peak of the market. “Many of our buyers are coming from other cities and from the suburbs in search of an urban community, walkability, and a cool, European feel. This proves to me that the market is really hungry for downtown options. With the improved affordability of lower prices combined with recent availability of FHA financing, this project is simply irresistible to a lot of people. The activity has been unbelievable.”
Gutkin is satisfied with the way sales are progressing and is predicting that the community will be sold out by the end of this year. “This is a very good product at a very good price,” says Gutkin. The units are now $130 per square foot versus the original $260 a square foot.
According to Gutkin, there is also a higher level of activity in the under $200,000 range, which helps this community which is in the range of $170,000 and $199,000.
Evergreen 9 is situated close to the new light rail line, the downtown ASU campus and the arts and dining district. The one- and two-bedroom unit homes have been designed by well-known architect and ASU professor Michael Underhill and feature high energy efficient insulation and design details leading to energy reduction that well exceeds requirements of the current energy building codes.