It would be an understatement to say that since I learned of the existence of the “Nouvelle at Natick”, a luxury condo project “fused” to the revamped Natick Mall in Natick Massachusetts, I have been a bit perplexed.In truth though, I have also been also captivated by the many details and news surrounding the project and I have followed along closely.
As you may already know from past posts concerning the project, to me the Nouvelle represents a sort of crescendo of optimism and exuberance of both the notion of American “consumer” and of the modern concepts of “homeowner” and "luxury".
How better could the euphoric sensibilities of the pre-collapse heyday be represented than through a luxury condo project, with units ranging from $439,900 to $1,599,900, that is actually attached to a newly refurbished mall some 20 miles from the nearest city center.
Add to that the fact that the town of Natick has never seen a median condo price higher than $242,000 or that over the last year only 18% of all condo sales for the town sold at or above the LOWEST priced Nouvelle unit with NO sales ever reaching the HIGHEST priced unit, or the many quietly reported details suggesting that the builder, General Growth Properties (NYSE:GGP) has been experiencing very poor, almost nonexistent, sales from the project and the picture becomes even clearer.
But before I get too downbeat and bearish let’s all remember that thankfully not everyone interprets information the same way and that there is certainly room differing opinions on both the fundamental value and personal value we place on the things we purchase.
Remember, these are “luxury” units implying that the buyers are, in a sense, both in the position to expect and desire a bit extra from their living space.
They can afford the extra expense, the space fits their need of location and lifestyle, and risk of re-pricing may simply not be a concern.
To that end, I recently contacted Michael DuGally, one of the current Nouvelle buyers quoted in the many articles (Boston Globe, NY Times, etc.) on the project and here is an excerpt from our exchange.
Keep in mind, Michael was generous enough to answer my questions even in light of the fact that this blog and blogger present some of the most pessimistic and bearish outlook on residential real estate to be found on the web and, as you can see from his responses, he is perfectly aware of the downturn in housing, its causes and its effects on the wider economy.
SoldAtTheTop: Can you describe what you perceive the total experience will be living at the Nouvelle at Natick?
Michael: Convenience. First class building, great amenities, underground parking, our primary view is the small wetlands so feels like being remote even on top of a mall. Access to both work and airport for travel is even time for us. We have our favorite Yoga studio 5 minutes away that we used to have to drive to from Everett.
SoldAtTheTop: Has the builder communicated any information to you regarding any difficulties with the project or the possibility of them leasing rather than selling units?
Michael: No, not yet.
SoldAtTheTop: If leasing the units rather than selling was to occur in the future, would that change things for you?
Michael: We would have to deal with that when the time comes. I don't think it really matters because we we're not snobs about who our neighbors are, and a college party crowd would not lease there anyway.
SoldAtTheTop: Has the builder reduced prices (or increased incentives) on any of the units and if so, are you entitled to any compensation?
Michael: Not yet from what I understand. Not sure if we would be entitled to anything.
SoldAtTheTop: Are you close with any of the other unit buyers and if so, have any others expressed any reservations about their purchases especially in light of the recent downturn to residential real estate?
Michael: Real Estate has been in a downturn for 18 months. All that is happening now is the reality of bigger impact is starting to set in. As you well know, the bubble bursting is GOOD for the economy.
Americans have become ridiculously obsessed with easy debt and deserve a reality check. You can't blame McDonald's for obesity. People make choices. It is a shame that state and federal governments are bailing out people who live beyond their means.
I don't blame the lenders. There are a miniscule handful of real victims. We have been getting easy credit card promotions in the mail for over 20 years now. Do we blame the banks because people use them and end up in bankruptcy? No.
The best thing that could happen to the larger economy is for home prices to adjust to somewhat resemble wages and for the condo "flippers" to be driven out of the market.
Nouvelle had an insane amount of people (hundreds) a couple years ago on a list who paid $1000 for the right to buy them when they went on the market.
Those were fast money flippers. Not people like us making a lifestyle living decision. I don't think you will see a single condo flipper buying at Natick. It is not an easy money investment.
SoldAtTheTop: You mentioned that this will be your primary residence... will you be selling your current property prior to moving to Nouvelle and if so, are you having or do you think that you will have any difficulty?
Michael: We have the nicest unit in our current property, and did so many unique things to it that we have actually a list of interested buyers and a couple offers already to consider.
We bought pre-construction and very early on that project, and won't lose money. We won't make the killing we thought, but that is the way real estate is.
SoldAtTheTop: What's your take on the current state and future outlook for housing and the economy?
Michael: I think we are heading for a deeper recession, but it should be a softer more gradual blow over the next 8-10 months and will be overall very good for the broader economy in 09 and 10.
The fed will continue to cut rates, but lenders will not be dropping rates as a result. Global economic growth and weakness of the dollar will help in many ways from things going totally south.
New construction and new permits will come to a standstill by this spring, which will help move the record inventory in the market.
Once that is gone, builders I think will be more prudent. This is very akin to the dot.com bubble.
We could argue we are in another bubble with Google at a multiple that would take 1000 years to justify, but largely there is rationale in valuations of tech companies versus blind faith during the bubble days. Same thing will happen with housing.
SoldAtTheTop: Is there any misinformation that has been reported about the project that you would like to correct?
Michael: The Globe (Boston Globe) did a great cover story on Natick, but it focused too much on "Living at the Mall." JC Penney, Cheesecake Factory are not what Nouvelle represents.
It’s simply a blend of city “high rise” style convenience with an urban hook. Sure, for the price we paid we could find a nice place in Boston.
We could not find a 2200 sq. ft penthouse with all the other amenities.
In comparable quality buildings with similar interior standards we would have paid 50-100% more. Not just in price, but in taxes, condo fees, etc. Nouvelle is practical for us both, cutting our reverse commute in half. That is 1 less hour a day of the mass pike. And, we will still be just 20-25 minutes from the city.
