There's Certainly Not Enough Local Money To Be A Potential Blazers' Owner...

597 Views 14 Replies 10 Participants Last post by Masbee, Mar 18, 2006

ABM

Discussion Starter · Mar 17, 2006

.....if there's not even enough to purchase a local historic mansion.

From: Bloomberg

March 17 (Bloomberg) -- A 1927 Tudor revival mansion built by one of the first American lumber barons is on the market for $2.35 million in Portland, Oregon, boasting leaded-glass windows and a closet for silverware.

What it lacks is a buyer.

The 10,000-square-foot (930-square-meter) home was built by Thomas J. Autzen, who made his fortune pioneering the manufacture and sale of plywood to the U.S. construction industry. He used his own invention for shelves in the house's map room.

A steal in almost any other West Coast market, the Autzen place hasn't sold even with its pedigree. The Portland-based Autzen Foundation supports education and the arts, and the stadium at the University of Oregon bears the Autzen name. The problem, says Jerry Johnson, a real estate economist, is a lack of local wealth.

``It's pretty rarified air for Portland,'' says Johnson, of Johnson Gardner LLC, a Portland-based consulting firm to property developers. ``There aren't that many buyers in that range.''.....

Notably...

The owners, Gregg Miller and his wife Christine Howell- Miller bought the house for $875,000 in 1999 from Steve Johnson, who played for the National Basketball Association's Portland Trail Blazers from 1986 to 1989.

The Millers have spent more than $500,000 restoring the place, which was in some disrepair when they bought it, says Gregg Miller. They rebuilt the chimneys, which were leaking, stripped the oak woodwork in the dining room, and repaired all the leaded-glass windows.

``It was pretty rough,'' says Miller, 57.....

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1 - 15 of 15 Posts

RedHot&Rolling

· #2 · Mar 17, 2006

OK - I'll take it! :angel:

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sa1177

· #3 · Mar 17, 2006

there is enough $$...ever visited Dunthorpe, West Linn, Lake Oswego, Portland Heights, Vista, Council Crest, Forest Heights, Alameda. Lots of huge Mansions in all those neighborhoods.

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ABM

Discussion Starter · #4 · Mar 17, 2006

sa1177 said:
there is enough $$...ever visited Dunthorpe, West Linn, Lake Oswego, Portland Heights, Vista, Council Crest, Forest Heights, Alameda. Lots of huge Mansions in all those neighborhoods.

I won't soon forget my visit to the Pittock. :greatjob:

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They buy it for $875k, claim to invest $500k restoring the place and, total $1.37million now it is worth $2.35million???

Maybe the reson they can't sell it, isn't because there aren't rich folks in Portland, maybe it is because the are vastly overvaluing this home.

Ya think? Maybe? Huh? Duh?

Establishing value for a home is not a matter of what you paid, plus what you put into it, plus you sweat equity, plus a little something something for your trouble, plus tack on the enormous Realtor commission - voila - the price.

It is what a buyer will pay. The buyer doesn't care if you got it for a bargain, or are selling at a loss. They compare it to other properties. Problem with this house is the neighborhood - which sports average house prices well below the metro average. This house is the most expensive, and doesn't fit the area. There are other big, historic homes in that area, that have sold in the for around $1 million. This one is real big, so maybe $1.5 to $2.0 if you find the right buyer who wants the biggest house around (few do anymore).

http://www.movingtoportland.net/living_northeast.htm#Alameda
http://search.movingtoportland.net/index.cfm?fuseaction=page&page=9307

I think the owners overimproved for their neighborhood, and possibly overpaid to begin with. If it was as bad a shape as they say, $875k was probably too much. You could get a LOT of house in 99 for that kind of money.

And it is a news story when homeowners list a house with a pie in the sky price - and gasp! - can't find any suckers, er, takers?

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sabas4mvp

· #6 · Mar 17, 2006

Rasheed is finally (or has sold, I'm not sure) listing his house in Dunthorpe for sale. He bought it initially from a classmate of mine for a little ove 3 million. I think he wants over 4 millions for it. I figure it will sell quickly.

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Ed O

· #7 · Mar 17, 2006

Masbee said:
They buy it for $875k, claim to invest $500k restoring the place and, total $1.37million now it is worth $2.35million???

I agree with you about it being only worth what someone will pay for it, but that goes to the assertion that there aren't many wealthy purchasers in the Portland area.

As for whether it's "pie in the sky": I have little notion of the Portland real estate market, but it doesn't seem to be a ridiculous price to me.

If they purchased the house for $875k in 1999 and invested $100k in restoring it each of the years 1999, 2000, 2001, 2002, 2003 and 2004, the average rate of return would have to be just over 9% to get to $2.35m... certainly better than inflation, but not ridiculous.

Just something to chew on.

Ed O.

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barfo

· #8 · Mar 17, 2006

Yeah, it's been on the market for a looong time. I've seen the listings several times. On the other hand, if you are going to make an extra million dollars, it may be worth waiting a few years for the perfect sucker to come along. Totally overpriced as Masbee says, but you only need one buyer...

barfo

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sabas4mvp

· #9 · Mar 17, 2006

After Shawn Kemp left portland his house was for sale for about 3 years until it finally sold. I have a feeling he just wouldn't budge on the price and since he really didn't need the money he just let it sit.

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mook

· #10 · Mar 17, 2006

Ed O said:
I agree with you about it being only worth what someone will pay for it, but that goes to the assertion that there aren't many wealthy purchasers in the Portland area.

As for whether it's "pie in the sky": I have little notion of the Portland real estate market, but it doesn't seem to be a ridiculous price to me.

If they purchased the house for $875k in 1999 and invested $100k in restoring it each of the years 1999, 2000, 2001, 2002, 2003 and 2004, the average rate of return would have to be just over 9% to get to $2.35m... certainly better than inflation, but not ridiculous.

Just something to chew on.

Ed O.

that's a pretty interesting way to look at it. even in this overheated real estate market it isn't always easy to make huge returns on your investment. that's why I can't wait to finally be out of real estate investing in a week (when my only rental property closes).

history has shown that stocks outperform real estate on a larger time scale, and they're a hell of a lot less work.

I'm one week from being rid of the Shawn Kemp of rental properties, and I just got a call from a tenant whining about a toilet that's leaking water on the floor.

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Masbee

· #11 · Mar 17, 2006

Ed O said:
I agree with you about it being only worth what someone will pay for it, but that goes to the assertion that there aren't many wealthy purchasers in the Portland area.

As for whether it's "pie in the sky": I have little notion of the Portland real estate market, but it doesn't seem to be a ridiculous price to me.

If they purchased the house for $875k in 1999 and invested $100k in restoring it each of the years 1999, 2000, 2001, 2002, 2003 and 2004, the average rate of return would have to be just over 9% to get to $2.35m... certainly better than inflation, but not ridiculous.

Just something to chew on.

Ed O.

There are lots of multi-million dollar house in Portland metro.

My proposition was 3 fold:

1) they overpaid initially - that affects the "correct" rate of return.
2) they over-invested in the rehab - that too affects the numbers.
3) they aren't in a "hot" neighborhood generally, and specifically that neighborhood isn't even on the radar of rich buyers. - in many markets there is a glass ceiling of price, past which it is extremely difficult to obtain a higher price, no matter how much money you sunk into "restoration". If you do the wrong thing to the wrong house in the wrong neighborhood, that puts a cap on you possible rate of return.

Like I said, current buyers don't give a hoot about their rate of return and weather it is good or bad.

Real Estate is Location, location, location.

That house is in an ok location. Not terrible, but not a primo spot in town. Now, change the parameter to location for multi-million dollar homes - and it goes for ok, to a bad location. Just a fact of life that most high-end home buyers want to cluster around other high-end homes. This is the current fashion in most of the U.S. Homes like that become hard sells. They have to find the rare buyer. In bad markets they are white elephants.

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sa1177

· #12 · Mar 17, 2006

Masbee said:
They buy it for $875k, claim to invest $500k restoring the place and, total $1.37million now it is worth $2.35million???

Maybe the reson they can't sell it, isn't because there aren't rich folks in Portland, maybe it is because the are vastly overvaluing this home.

Ya think? Maybe? Huh? Duh?

Establishing value for a home is not a matter of what you paid, plus what you put into it, plus you sweat equity, plus a little something something for your trouble, plus tack on the enormous Realtor commission - voila - the price.

It is what a buyer will pay. The buyer doesn't care if you got it for a bargain, or are selling at a loss. They compare it to other properties. Problem with this house is the neighborhood - which sports average house prices well below the metro average. This house is the most expensive, and doesn't fit the area. There are other big, historic homes in that area, that have sold in the for around $1 million. This one is real big, so maybe $1.5 to $2.0 if you find the right buyer who wants the biggest house around (few do anymore).

http://www.movingtoportland.net/living_northeast.htm#Alameda
http://search.movingtoportland.net/index.cfm?fuseaction=page&page=9307

I think the owners overimproved for their neighborhood, and possibly overpaid to begin with. If it was as bad a shape as they say, $875k was probably too much. You could get a LOT of house in 99 for that kind of money.

And it is a news story when homeowners list a house with a pie in the sky price - and gasp! - can't find any suckers, er, takers?

I disagree...this house is both big and historic. The Portland housing market is booming, it's currently a great market for sellers. I bet they have to come down in price a little bit but I don't think it's drastically overpriced.

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Backboard Cam

· #13 · Mar 18, 2006

Masbee said:
http://search.movingtoportland.net/index.cfm?fuseaction=page&page=9307

I've driven by that house many times. Nice place, great neighborhood.

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MARIS61

· #14 · Mar 18, 2006

Something you have all overlooked, except The Wanker due to personal experience, is the prohibitive cost of continual maintenance and upkeep an ancient relic such as this will require.

Want to take a guess at what it costs just to heat this sucker for a year? Has all the plumbing and wiring been completely replaced and brought up to code? Was the house lifted and the foundation replaced?

The property taxes listed suggest it's true value is actually a little over $1 million.

Then there's the fact that the neighborhood is made up primarily of people of a less wealthy class than prospective owners would be used to hanging with:

http://search.movingtoportland.net/index.cfm?fuseaction=neighborhood&ln=5016492&startrow=1

For $2 mil+ a grand-sized, brand new, well designed home with a breathtaking view in a safer, quieter neighborhood seems a more attractive choice and can certainly be had in many areas of Multnomah county.

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Masbee

· #15 · Mar 18, 2006

MARIS61 said:
Something you have all overlooked, except The Wanker due to personal experience, is the prohibitive cost of continual maintenance and upkeep an ancient relic such as this will require.

Want to take a guess at what it costs just to heat this sucker for a year? Has all the plumbing and wiring been completely replaced and brought up to code? Was the house lifted and the foundation replaced?

The property taxes listed suggest it's true value is actually a little over $1 million.

Then there's the fact that the neighborhood is made up primarily of people of a less wealthy class than prospective owners would be used to hanging with:

http://search.movingtoportland.net/index.cfm?fuseaction=neighborhood&ln=5016492&startrow=1

For $2 mil+ a grand-sized, brand new, well designed home with a breathtaking view in a safer, quieter neighborhood seems a more attractive choice and can certainly be had in many areas of Multnomah county.

Good point. And something else, there is a slow burning insurance crisis in the homeowners insurance business. Claims exceeded premiums for several years running and the insurance companies have been redoing their policies for a while now.

As you point out, if the foundation wasn't redone, the purchaser likely cannot obtain any earthquake coverage.

As you point out, if the wiring wasn't completely redone, the fire insurance premium may very high, and not available from your company of choice.

Most insurance companies no longer cover mold and mildew. If that house was in disrepair, it is at risk for harboring what will be an uncoverable, and the new owner will have to be extra dilligent about repairs.

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