Auction set for unsold Boston units

The Boston Globe reports:

The developer of a new luxury condominium project in Boston's financial district is resorting to a tactic last seen in the real estate bust of the 1990s: It's holding an auction for the 34 remaining, unsold condominiums.

The units on Broad Street — 11 of them penthouses — will be sold in a live auction at the Seaport Hotel in South Boston on Oct. 7. The developer of the 14-story Folio Boston project hoped to capitalize on completion of the Big Dig tunnel and construction of the Rose Kennedy Greenway, which has been delayed but would clear the way to the waterfront for pedestrians.

A minimum bid will be required for each unit. A one-bedroom currently offered for sale at $480,000 (all figures U.S.) will be sold at or above its $325,000 minimum price. The most expensive unit to be auctioned, a $1.76 million, two-bedroom with a wraparound terrace on the 14th floor with a waterfront view, has a $1.025 million minimum price.

"There's been a stalemate between the buyers and sellers," said Jon Gollinger, whose firm, Collaborative Cos., was the sales agent for Folio's condos, and who will handle the auction through his other firm, Velocity Marketing.

"We want the market to determine the value," he said. "We're starting at a price that's laughably low."

Auctions often heighten interest among potential buyers who think they can get bargains. Homeowners and developers often resort to such one-day sales in a declining market to quickly dispose of properties, cut their losses, or repay lenders.

While more individual properties, such as single-family, vacation and retirement houses have been auctioned recently, this is the first auction of multiple units in a single project in Boston. And it is one of the first highrise condo auctions in the U.S.

The Folio auction is sure to rattle competing downtown developers forced to deal with what could be low prices that would bring down sales prices for comparable condos in their projects.

Downtown condo sales, which had remained strong even after the suburban market began to slow, slumped 7.9 per cent between January and the end of July, according to real estate research firm Listing Information Network. The median condo price in downtown Boston, $572,761, is 5.9 per cent lower than a year earlier.

The last time auctions were popular around Boston, the real estate market was in crisis. "I was around in the late '80s and early '90s when all that went on, and I kind of cringe. Are we doing this all over again?" said Diane Maloney, president of Marketing Group of New England who markets the 44-unit loft building on Broad St., near Folio.

Down about 6% in a year.I guess not every year is going to be an up year in Boston real estate.