Quote:
Originally Posted by Investing In Chicago
Disagree, rental markets are cyclical, if they sell out the rental portion then it wasn't overpriced. What happens in 2 years (or whenver) isn't relevant to todays prices...Also, you say we will only know if it's overpriced is after awhile, but you also just proclaimed these apartments as overpriced.
|
Right, except for if in 4 months after opening if they lower the prices a bit, you'll know it was overpriced. Who mentioned 2 years? It wasn't me.
Again, I'm talking about relative to the rest of the market. You're talking about something else. It's overpriced relative to the market regardless of whether it sells out or not. It's an outlier. Just because you have people to pay for these prices doesn't mean it fits into the standard deviation and is considered normal at all.
Quote:
|
You're overthinking this...my point is what is expensive to you or I, may not be perceived as expensive to someone else. So yes, someobdy with with a UHNW may not drop what they perceive as a lot of money on an apartment, but what is consider "a lot" to them may be vastly higher than what we think is. To me, $10K on housing (whether rental or own) isn't THAT expensive....$10K per month is like a $1.8M mortgage + taxes in Chicago, if someone put 20% down, that's like a $2.2M home, in Chicago, that exists in spades.
|
I still don't think you're understanding my point. Everything you're talking about is what people can afford. This is different from what people will pay for, and there's a few factors to think about when talking about what people
will pay for.
Let's think about this another way - computers. Let's say the average computer costs anywhere from $400 to $3000 Then I make and sell a new line of computers that costs $8000 - $10,000. Lots of people can afford it. Will they though? Just because it's out there and they can afford it, doesn't mean they are going to just run and buy it. That's a ridiculous notion. There's a lot of things to make someone consider that. Is it just that much better quality than the normal $2500-$3000 ones? Will it bring them status? Does it offer them something or allow them to do something nothing else really does that they want to do?
OBP still needs to check those boxes. Yes there are people with money who are dumb who flush it away, but there's still many people with money who are still logical and this applies to them too. Is OBP that much better than the most expensive buildings in town (which are $3000/mo for the same sized unit downtown) that they'll pay for it? Will it bring them status? Does it offer them something no other building really does or can?
Honestly, I don't think any of them are the case. Renting is not going to bring you status either. The rental portion isn't No. 9 Walton, Trump Tower, Vista, or many places in NYC. Buying in the building may give you status, but surely not renting. Status is going to make you probably buy something, not rent it out. Better quality, amenities, etc? I don't really think so based on other luxury apartments I've seen downtown. They will probably go after people moving to town who can afford it but will only do it for a few months up to a year while they find a place to actually buy. It reminds me of what the office at my building in Chicago told me when I was moving out. They told me they get tons of people relocating from NYC and San Francisco who definitely did not do their homework about Chicago markets. They told me they were shocked by this, and how many thought they had to spend X amount of money in Chicago - similar to NYC. When they find out the average prices for certain types of luxury units in Chicago, they're elated and don't go that high usually even though they can afford it.