Wednesday, July 28, 2010

Great Deal or "Get Real"?

Condos go for half-price in a unique Mindtown neighborhood.

Posted By on Wed, Jul 28, 2010 at 11:26 AM

Burned in stocks and bonds and bored by alternatives that pay 1 percent interest, I paid off my home mortgage last week, locking in a 5 percent return and assuring that the Deal of the Year would materialize the minute I wired my check.

Sure enough, the stock market rallied, shares of FedEx went up nearly 10 percent in two days, and 18 new condos in Cooper-Young, a one-of-a-kind neighborhood in Midtown, were auctioned off last weekend for as little as $50,000. When the 32 units were built in 2007, they were listed at $125,000 and up.

The two-story Pie Factory, named for the old Keathley Pie Company that opened in 1932, is two blocks west of the fairgrounds and four blocks east of the Cooper-Young business district. The units have big windows, secure parking, fancy floors and kitchens, and 11-foot ceilings. The neighborhood boasts an active residents' association, a festival, a farmer's market, a better-than-average public elementary school, a bank, Burke's Book Store, and restaurants such as Celtic Crossing, Java Cabana, Sweet Grass, Grace, the Beauty Shop, Young Avenue Deli, Tsunami, and Au Fond. Bike lanes are slated for Southern Avenue and Cooper.

The fairgrounds is about to get a Salvation Army Kroc Center for indoor fitness and youth sports, outdoor playing fields, and $16 million in publicly funded improvements to "Tiger Lane," the entrance to the football stadium off of East Parkway. Young Avenue is being extended into the former Libertyland site. If you're so inclined, you can walk from the Pie Factory to nine football games a year.

So how come the Pie Factory didn't take off? Was the auction a great deal or just getting real?

Emily Bishop, communications director for the Cooper-Young Community Association, has lived in the neighborhood since 1987. The Pie Factory, she said, was "an idea ahead of its time." She is disappointed that the commercial spaces on the ground floor are empty and wary of the units auctioned off to investors who may plan to rent them.

"One of our concerns when this project was proposed was that if they didn't sell well, it might become a bigger problem of rentals that were not maintained," she said.

Linda Sowell, a realtor whose office is in Midtown, said the auction prices "were lower than I would have thought." She thinks one problem with the condos is the lack of outdoor space. "People want a balcony or a courtyard or something." Meredith Smith, 25, an art teacher with Memphis City Schools who came here four years ago with Teach For America, said she loves living in Cooper-Young. She rents a small house near Cooper and likes the neighbors of different ages, the restaurants, and the funky ambience. She was not surprised, however, that the condos didn't sell out when they were listed for more than $100,000.

"Why would you buy a condo, when you can get a house here for the same price?" she said.

James Rasberry, co-developer of the Pie Factory, said that after 10 units initially sold for $125,000 to $150,000, sales "stopped cold" when the recession hit. The auction prices, he said, ranged from $50,000 to $82,000, with half the buyers being investors and half people who plan to live in their units.

Rasberry also represented the group that wanted to put a grocery store in Overton Square in Midtown but withdrew in the face of community opposition.

"The problem with Midtown is household income," he said. "A national company or developer looks at it as a fourth-tier or fifth-tier site compared to the Poplar and Perkins intersection in East Memphis or Germantown or Collierville."

My theory is that the Pie Factory looked good on paper. At half-price, it may pan out, especially if the fairgrounds achieves its potential. But it goes against the grain. Pedestrian-friendly neighborhoods or New Urbanism or whatever you call it is one of those things, like supporting public education and reducing your carbon footprint, that is more praised in theory than in action. Good for someone else but not you. Until gas goes to $5 a gallon, most of us aren't going green, and we'll keep our cars and houses.

And as Sowell says about the current real estate market, the glass is not half-empty or half-full; the glass is too big. Even when bargains abound, Memphis needs more people with the ability to make a down payment, whatever and wherever they buy.

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