One of the best locations for a residential building in downtown Charlotte has always been Fifth & Poplar. Originally announced as a condo development, the project initially got sidetracked by the terror attacks on 9/11. Interest in buying downtown immediately stopped, and the project was changed to a rental building. Around 2003/2004 the developer announced that they would convert the now successful rental complex back to its original plan, condos.
The market was hot again, the banks were hiring, and bonuses were flowing. It was a heady time. The downtown skyline was full of constrcution cranes, and announcements for new projects were popping up all over. In 2005/2006 there were 218 recorded sales in MLS for Fifth & Poplar with an average price per square foot of $345!
Mortgages were easy to come by, and a popular tool was the 85/15 mortgage, with the 85% being the first mortgage and the 15% being a ballooning second mortgage. Guess what, they have come due.
Not having anything else to go by, the county set the tax rates in line with the sale prices, so taxes were generally in the $400 - $600 per month range. All the amenities in the building also insured that the HOA dues would be high, $300 - $400 per month range.
Then came the crash! Jobs were lost, some people had to move, investors were having difficulties with finding renters, things had stopped working there. To further complicate the problem, problems with the building began to surface and fingers were pointed between the developer and everyone else. The HOA determined that an assessment needed to be levied and they took the form of a monthly assessment. This raised the HOA by another $100 or so per unit!
Last year there were 18 recorded financially distressed properties sold in Fifth & Poplar at an average price per square foot of $197, a drop of over 40% from the high water mark.
There is a light at the end of the tunnel however. The current market has only 6 active properties listed for sale, and only 2 of them are financially distressed. The recent tax re-evaluation has cut the taxes for most units by almost 50%, and there appears to be a settlement with the developer and the monthly assessment should be ending within 6 months. The repair work is nearing completion, and a more normal time seems to be looming. The general economy is showing signs of life as well.
The location and amenities remain as good as anything in the city. The values in this building have never been better, and the coming years should move the property values to approach their pre-recession levels.