I was showing a client condos on Capitol Hill yesterday and we stopped by the Marlborough House in the early afternoon to look at some units. There were several potential buyers standing around waiting for someone to show up. The signs on the door say they open at noon and it was close to 1pm. Finally someone got a return phone message from someone at the sales office. She told them that Live Historic was no longer selling units in the Marlborough House and that the building would be rented as apartments again. The prospective buyer was told that they could not get financing so they were forced to suspend sales.
I was kind of surprised to hear this because I know the preferred lender (Trevor Bennett) at Countrywide well. I gave him a call and he said that because pre-sales had been weak, it looked like the developer was going to be renting the units out, rather than selling them at this time.
The Marlborough House had only garnered about a dozen sales since their grand opening and about half of them had decided not to convert their reservations to purchase and sale agreements when the time came. It probably didn't make financial sense to continue marketing the property with only 6 out of 88 units sold. These days lenders usually require at least 20-25% down from buyers until 51% of the units in a new development have closed. That makes it very difficult for developers with projects that have a large percentage of studios and one bedroom units in their projects, like the Marlborough House. These types of buildings typically attract a lot of first-time buyers that don't have the resources for larger down payments.
A phone call this morning to Live Historic confirmed that they took the property off the market as of last Thursday, October 2nd, and they are in the process of figuring out what the rents will be and returning earnest money deposits to those who had exercised purchase and sales agreements.
I spoke with Ben Rankin today, co-principal of Pioneer Property Group and co-founder of the Live Historic . He made it clear that because of the market conditions and the possible foreclosure, The Marlborough House will not be converted to condos at this time. It will most likely stay apartments and be rented out sometime in 2009. It sounds like things are still uncertain, but Live Historic is definitely not pursuing sales of individual units there at this time.
New blog posted: Marlborough House in Foreclosure