The Effect of Litigation on the Value of Condos

Click to see enlarged data

 

Attached is a summary comparing The Sierra, a condo building in Jack London Square, with other comparable buildings in the area that do not have pending litigation.  The comparison is for 2007 (arguably the height of the market) with 2010 (through 11/4/2010).  The data shows that values at The Sierra declined 54-55%, while the other buildings declined 17-25%.  The impact of the litigation which was filed in 2009 more than doubled the negative impact of the declining market.  This represents a negative impact of ~$150,000/unit.  This figure likely outweighs the potential upside of the litigation by 5-10x.

Please feel free to contact me to discuss this data or the impacts of pending litigation. 

_______________________

Andy Read
Caldecott Properties
aread@caldecott.com

5251 Broadway
Oakland, CA 94618tel:   510.594.2400 x 222
fax:  510.594.2424
www.Caldecott.com

DRE License #01356611

Advertisements

Tags: , , , , , , , , , , , ,

One Response to “The Effect of Litigation on the Value of Condos”

  1. john glynn Says:

    The long term cost of real estate is a function of A) the cost of the asset and B) the cost of financing.

    Most lenders will not allow a buyer to borrow money to purchase a condo in a project with pending litigation. So I’d assume that the transfers that did take place did so with private loans or as cash transactions. And since private loans can be significantly more costly, in these cases, the likely price a buyer is willing to pay is going to be lower to compensate for higher financing costs.

    great case study.

    jg

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: