Posted: Thu, 12 Nov 2009 12:24 AM - 8,150 Readers
By: Shonda Novak
photo by J.P. KING AUCTION COMPANY INC.In a sign of Central Texas' slower real estate market, another parcel of condominiums is going on the auction block — this time 25 units in the $36 million Waterstone Condominiums on Lake Travis' northern shore.
J.P. King Auction Co., which has conducted several other local condo auctions this year, will manage the sale. Ten of the 25 units will be sold to the highest bidder. The developer, Dallas-based Winston Capital, can accept or reject bids on the other 15 units.
Winston Capital had marketed the project's 71 units in the $400,000 to $700,000 range.
Chris Ray, Winston Capital's assistant vice president and the project manager for Waterstone, said it's possible that a bidder could purchase a $500,000 unit for $250,000 to $300,000.
"This is kind of a one-time opportunity for buyers who couldn't normally buy in this price range" to purchase a unit in a resort-style community that they otherwise might not be able to afford, he said.
Ray said Waterstone is the first, and so far only, luxury condo project on the lake's growing north side. Waterstone is part of Winston's 350-acre Waterford community, which eventually could have about 300 high-end single-family homes.
The first units at Waterstone were completed in May, Ray said, and about 10 have been sold, at an average price of about $520,000.
At one point, Waterstone had potential buyers for about 20 percent of its units, but it lost a lot of those reservations and contracts when the economy nosedived last year, he said.
Ray said he has no investor buyers: All of the units that are sold or that are under contract are second homes, mainly for buyers from Texas.
Auctions are an attractive method of selling units in a slower market, said Craig King, president and CEO of J.P. King, based in Gadsden, Ala.
In the past year, J.P. King has sold about 65 condominium units around the Austin area, including 18 in the Sage project on South Lamar Boulevard this summer, which brought $3.7 million.
"With the condominium market pulling back as the real estate market has softened, it leaves some overhang in many developers' inventory," King said.
Auctions, he said, are "a way to move inventory quickly and close within 30 days."
By selling the units quickly, developers eliminate the costs associated with holding those units, thereby clearing "a large portion of their inventory in a well-organized, professional and quick process," King said.
Ray said the auction already has generated more than 100 phone calls and nearly that many tours by potential buyers.
Prices for the units may gradually return to the original asking prices by the end of next year, Ray said.
At the Sage auction in August, winning bids ranged from $176,000 to $253,000, with an average price of $205,000, according to J.P. King. The units previously were priced from $299,900 to $469,000.
Also in August, developers of the Bel Air on South Congress Avenue sold the project's last 20 units at auction. One-bedroom units sold for between $170,000 and $180,000, according to Kennedy Wilson Auction Group, which conducted the sale.
The least expensive units previously had been priced in the upper $200,000s. Bidding started at $90,000.
The two-bedroom units sold for $180,000 to $240,000, including the buyer's premium charged by the auctioneer.
In May, Kennedy-Wilson Inc. auctioned off the last 20 units in the Brazos Place condo project at Eighth and Brazos streets downtown. The least expensive unit sold for $168,480, including the buyer's premium, down from the listed price of $199,900. A penthouse originally listed for $1.6 million sold for $967,200.
