Tuesday, May 27, 2008

My Day at the FHA: part 2

downpayment assistanceFinding out that the Knickerbocker lofts are the only lofts in downtown St. Louis that have undergone the full FHA approval process was disconcerting. It makes perfect sense though.

A visit to the FHA office in the Robert A. Young Federal Building would clear up all my questions about getting more loft buildings FHA approved.

Getting an FHA loan on a condo doesn't require it to be previously "FHA Approved". The "spot approval" process works to get an individual unit approved. This usually means less work for the lender and a speedy resolution; both important when obtaining financing.

The only problem is that the next time a lender tries to get an FHA loan in that building, the 'spot approval' process must be done again, and again.......

Discussing the situation with lenders, its been said that if one unit in a building is approved, in a perfect world, all other units would also be FHA approved. Unfortunately, this isn't always the case.

So that's the problem in a nutshell.

My first thought is, if the buildings and the residents benefit from easier, smoother or more available financing through FHA, can they participate in getting thier buildings on the FHA approved list?

That was a question that seemed to confuse our friends at the FHA office. "The lender gets the buildings approved, " is what I was told. My reply, "why are lenders choosing to do "spot approvals then?"

The truth is, lenders don't have the time, money, access to condo association records, and really, any motivation to get buildings approved unless it adds to their bottom line. That's just how the system works.

My second thought involes adding to the workload of the condo board members and board presidents out there. The last thing I would want to suggest. Being on a condo board is often a thankless job that must be done for the good of the building. Adding the task of assisting an FHA approved lender at getting the qualified buildings on the FHA Approved Condo List may mean more "up front" work but may reduce the overall workload down the road.

With an increase in market share projected in the neighborhood of 45%, it makes sense for condo associations to start working with lenders and encouraging them to approve the building.

It also is worth a call to your local Congressman to find out why FHA financing is limited to condo projects with less than 30% commercial use. That provision is biased against urban "mixed use" projects and is not something the fine folks at the FHA are even able to explain.

FHA loans are a program that got left in the dust of the mortgage boom of the past decade. Its terms weren't as easy to deal with and there were better options available in the conventional marketplace. With FHA streamlining its programs and making them more "user friendly" combined with the current lending crisis on our hands, it just makes sense to hop on the bandwagon or else suffer the fate of buyer's being steered away from downtown.

Monday, May 26, 2008

My Day at the FHA; part 1

Federal Loft Buying Assistance
Rapid changes in the financing markets have me thinking quite a bit lately. Last week a lender advised a client that if she wanted a loft downtown, she should check a list of FHA Approved Condominium projects in St. Louis FHA%20approved%20St.%20Louis%20Condos.pdf

"FHA loans" are really bank loans that are insured by the federal government. They were created in the great depression as a way to encourage home ownership by those unable to make the substantial downpayment required to own a home (providing 97% loan to value (LTV) instead of 80% loans to value). For about the past 8 years, FHA loans were nearly obsolete with the availability of "piggyback" loans that allowed for two loans equaling 100% of the purchase price. Due to the corrections going on each day in the lending markets, the Federal Housing Administration estimates that the percentage share in the market of FHA loans will jump from 2% in 2007 to 48% in 2008.

With conventional lenders pulling most loan products off the shelf and the federal government anticipating the increase in FHA loans, one interested in downtown real estate may wonder why only 1 Loft building is FHA approved and what can be done about it.

That information to follow.

Sunday, May 18, 2008

Coming Soon To MacroSun

Downtown St. Louis merchants
Gil Williams, owner of Macrosun, stopped in the Washinton Ave Post on Friday. He spoke of his long trip to the far east. Buying jewelry apparel and home furnishings from places like Indonesia and Tibet has a tremendous amount of logistics involved. He expects his large cargo shipments to be arriving with some great new material starting in late May or early June. Check it out!

Friday, May 16, 2008

What's up with Tony's?

St. Louis real estate
The last month, news about the floundering Busch's Grove in Ladue has suggested that Vince Bommarito saving the historic restaurant with hints of uncertainty for downtowns Tony's.

This week, Vince made an offer and hinted about the possible changing of the guard at Tony's in an article that included talk about suitors to Pyramid's projects.

Developing the Arcade under a different plan would be a great thing for the city for several reasons. For starters, the ultra-luxury plan envisioned by Pyramid wasn't marketable. Even the developer's have to remember that St. Louis is still a conservative midwestern city. Many "high end" buyer's start out looking for the penthouse and end up spending less.

The next phase of developers that take on downtown will hopefully stick to a more realistic business plan. As admirable as John Steffen and Pyramid are, it seemed that the past year or two that operations were more based on a fantasy than on a business plan. Many other developer's seemed to be caught up in the same notion. Of course, that's just an outsider's perspective. It was an issue that came up with each buyer and seller I worked with.

With the brakes slammed on so many projects downtown, it will give the market a chance to settle down. Despite all the hoopla, progress is being made and downtown is still in business!

Wednesday, May 14, 2008

The True Lofts

St. Louis lofts
The history of lofts is fascinating. Not a SOHO History expert, past reading talks of the starving artist--unable to afford residential apartments--rents out "space" in the largely abandonded structures zoned and equipped for commercial use. So began the attraction of the loft. A subversive element. A Soho Lofts website had this to say about the original lofts, "Most of these spaces were also used illegally as living space, being neither zoned nor equipped for residential use, but this was ignored for a long period because the occupants were using space that would probably have been dormant or abandoned..."

The beauty of these spaces involves personality.

In the mid 60's and into the 70's, getting a loft space in soho took on the personality of the occupant. The challenge was to make the space "yours" without having to add traditional building of walls and halls. Creativity and unconventional style was born and nurtured. The concept in various forms has spread and evolved.

Most of today's lofts from St. Louis loft builders don't have as much in common with the spaces in Soho. Here, the developer is the main source of creativity. Modern elements are produced in mass. Most loft dwellers today don't have the time for the creative lifestyle. The mostly open large spaces are being carved up into classy apartments with more conventional 2 and 3 bedroom units. The loft concept has evolved into the mainstream here and in many other towns.

Enter the King Bee Building. Located at 1709 Washington, the building resembles a converted commercial structure because that's what it is. Spaces rented out as office or artist studios were subdivided and sold as condos. The building and the lofts within are the closest thing to the Real Thing that downtown has to offer.

This weeks RFT highlighted a long brewing controversy within the building in its typical melodramatic and one sided approach. The article seemed to paint the "King Bee 9" as blameless victims. They may be. What seemed evident was the details conveniently left out of the story.

One thing that has been evident is that not everyone should live downtown. High density living favors people that can "play nice in the sandbox" with the patience and sincerity to work towards resolution. Various disputes in condo associations everywhere repeatedly confirm this fact.

Good luck to all at the King Bee for a amicable end to the story.

Friday, May 09, 2008

Urban Beauty

The Urban Roots planting days are today and tomorrow.

According to the Downtown St. Louis Residents website, meeting location for tomorrow is at the South sidewalk along Kiener Plaza. Show up at 8 and put in some time to make Downtown St. Louis a more attractive place to live, work and visit!

Another event set up to make downtown more beautiful is a fundraiser tonight at
Railway Lofts unit 901. For a long time, there have been various grass roots attempts at beautification of Lucas Park. One group was more or less dismantled after Pyramid (in its free time) was going to use MODESSA state tax credits to recreate the landscape of the park. The next group is fully active and organized to get things moving.

Lastly, yesterday the story broke that the National Park Service is beginning the process to re-evaluate the use of the Arch Grounds. The St. Louis Business Journal article discussed the process in the most detail. Most importantly, the public is being asked for its support and guidance throughout the process. Meetings will be held and input is being solicited. As has been said all along, good public support will go a long way into turning the riverfront into a world class destination.

If you love downtown, now is the time to remember we're in the "Show Me" state.

Monday, May 05, 2008

The Calmer Tour

St. Louis real estate
This year's loft tour was 'right sized.'

Each year it seems the loft tour is more and more hyped, with more and more new projects to see. Gimmicks, promotions, and lots of hooplah surrounded the fact that a neighborhood is being built. This year was calmer, except for the street level tension of having so many misguided cubs fans walking our streets.

According to Matt Schindler at the Downtown St. Louis Partnership,St. Louis real estate 900 people officially registered for the tour. My guess, based on the number of wrist-bands and blue bags full of information, was that about half the people "touring" had registered for the tour. Many people were just down, walking around, and trying to hit all the open houses. The overall experience is that as each year passes and downtown surges forward, more of the attendees are seriously considering a move downtown. I guess now that there's a Schnucks, its not such a novelty.

Also shared was that the fall tour will most likely be a 1 day event. Welcome news.

This year, my take on the tour changed slightly after being more actively involved with the Downtown St. Louis Partnership. The tour represents a big welcome mat, even for Cubs fans, to see what our downtown living in St. Louis has to offer. I take for granted that people know how great it is to be downtown and what urban living is like. In reality, people judge "what downtown is like" based on experiences they might have had decades ago. Just like being born a Cubs fan, that's just not fair.

Thursday, May 01, 2008

St. Louis Loft Sales in April

St. Louis real estate
Lately it seems like things have really been picking up. Downtown is buzzing, sidewalk cafe's are going, foot traffic is increasing, the Cardinals are playing. All the things I love about Spring in Downtown St. Louis.

Loft sales may have been a drop off from last month. More will be revealed as the next few days go by.

Speaking of the next few days.....The Annual Spring Downtown Living Tour is being held this Saturday and Sunday. It should be a great tour this time. Weather will be ideal for long walks and downtown will put its best foot forward.

We hope to see lots of friendly faces this weekend!

Here are the current sales for April. (Updated 5/5)

210 N 17th St #308------------427-----79,900
210 N 17th St #1408------------------82,400
210 N 17th St #1106------------------139,140
1123 Washington #710-----------------144,000
2020 Washington Ave #307---1198----155,000
2020 Washington Ave #413---1300----157,000
721 N 17th St. #405------------1285----182,500
2201 Washington Ave #302---1358----192,635
314 N Broadway #1108-------968-----239,900
901 Washington Ave #411-----1711----242,500
1619 Washington #201-------2268----267,000
1611 Locust #703-----------2062-----312,000
1015 Washington #702-------2532----558,535

"Did You Hear....."

St. Louis real estate
The month of April 2008 will henceforth be known as the "Did you hear about Pyramid?" month. I must have been asked that question 500 times in 3 days, followed of course by "What do you think?".

There are a whole lot of bad things about Pyramid closing. I can go on forever. Seeing so many really good people with such dedication and vision finding themselves out of work in these times is terribly depressing. I hope and pray that they all land on thier feet.

Aside from the personal side, I can't help but say that the whole thing happening wasn't a big suprise. How it happened yes. Anyone following downtown development was skeptical about their ability to pull off so much work. My thought all along was that they had a good "poker face" and that they would eventually shelve or change plans. The way things were going was just too wierd. It didn't make sense.

When John Steffen was quoted in the St. Louis Business Journal, saying that he was just doing deals because banks wanted to work with him, I was confused. Banks are always wanting to do deals with me. I get 20 credit card offers per week it seems. When I bought my first multi-family apartment building, I was approved to buy 6 of them. That would have been a recipe for disaster for sure.

As far as downtown real estate goes, despite the way things happened, its a good thing for these projects to slow down or go away for a time. Getting more focus on improving the quality of life downtown and attracting more businesses is best for downtown and the region. Getting more residences is needed, but not yesterday. Having hundreds of vacant condos sitting around won't help anyone.

Yesterday I was working with a buyer wanting to live downtown. We spoke of the advantages to living downtown as we walked into the Printer's Lofts building. As we walked in I saw a medical transport van from Mt. Vernon Missouri parked out in front. "Steve must be coming back home!" I thought. Today I read his blog post. Hearing his simple endorsement of downtown living is a wonderful focal point to consider regarding downtown development. That's what is important to me.