Downtown Boston Foreclosures along Rose Kennedy Greenway Increasing
A second-floor condominium in a luxury building just off the Rose Fitzgerald Kennedy Greenway boasts a gourmet kitchen, golden-colored polished concrete floors, and spectacular views of Boston Harbor. This spring, it gained an undesirable distinction: The 2,600-square-foot condo went into foreclosure.
In fact, half of the units at Greenway Place, a newly renovated 12-unit, eight-story historic building, have gone into foreclosure, at least briefly, over the past two years. Such troubles are unusual in Boston’s downtown market, which has largely been cushioned from the rash of foreclosures that have plagued Massachusetts since home prices starting falling in 2005.
This year, however, foreclosure activity for downtown condos has started to edge upward. Petitions, the first step in the process of a lender taking back a property, have swelled to 46 for during the first five months of the year, compared with 30 during the same period last year, according to Warren Group, a Boston company that tracks real estate data. Petitions have been attached to some of the city’s most deluxe addresses over the past year, including the Residences at the Ritz-Carlton Towers and the Residences at the Intercontinental, according to the Suffolk County Registry of Deeds.
Completed foreclosures occur less frequently but also have increased slightly. Downtown condo owners lost eight properties to foreclosure during the first five months of 2010, compared with six during the same period last year, according to Warren Group. In May, a buyer purchased a foreclosed unit in Folio Boston, a luxury condo complex, for $650,000 — about $275,000 less than it sold for in 2006. Another unit in the Greenway Place was taken back by a lender this month and quickly resold for $699,000.
Whether these foreclosures represent a blip in time or a sign of what’s to come is up to debate, local real estate professionals say.
Kevin Ahearn, president of the Boston marketing and brokerage company Otis & Ahearn, said a bump up in the number of foreclosure petitions on high-end condos is the result of financial troubles among wealthy homeowners that likely will soon ebb because investment portfolios have stabilized. He said sales and prices in the high-end market are on the increase this year.
“It is a delayed reaction,’’ Ahearn said. “You are on an upswing now.’’
Debra Taylor Blair, president of Listing Information Network, a Boston company that tracks downtown real estate, said troubles at Greenway Place are unique to the building — it’s a boutique building on the fringe of the financial district that offers no parking or concierge services. “Fundamentally, I feel the downtown condo market is on rock solid footing,’’ Taylor Blair said.
Other market watchers are not so sure. Jon Gollinger, East Coast chief executive of Accelerated Marketing Partners, a Boston company that runs auctions for high-end buildings nationwide, said Boston’s downtown likely will see more foreclosures as wealthy people struggle with job loss and declining home values.
“It’s inevitable,’’ he said.
Greenway Place, located at 199 State St., across from the Marriott Long Wharf, appears to have had more than its share of troubles. The building was touted by developers in 2005 as a “hidden jewel’’ once overshadowed by the Central Artery. When the thoroughfare was dismantled as part of the Big Dig, the building was converted from office space into deluxe residential units with lofty price tags ranging from $1.3 million to $2.9 million.
But the building’s launch in 2005 coincided with the start of the state’s housing market downfall. Developer Richard Tambone was unable to sell five of the 12 units, and they eventually fell into foreclosure. Several owners stopped paying their condo fees, and lawsuits mounted.
Under financial pressure, Tambone sold three units at auction in 2008 and another in June for $640,000 in a short sale, a process in which the lender agrees to a price less than the mortgage balance. Tambone’s last remaining unit, with an original price tag of $1.8 million, was foreclosed upon by Bank of America Corp. this month and sold days later to a new owner for $699,000, public records show.
Tambone, president of Tambone Investment Group in Burlington, said he was a victim of bad timing as condo values in the area fell precipitously. Despite the problems, he said, he is still “very proud’’ of the building and continues to tout the project on his company’s website. He maintains that unlike some developers who abandoned struggling projects in recent years, he has worked with lenders to sell the remaining units. He said the lawsuits, including one from a lender and another from disgruntled investors, have been settled.
“So many other developers walked away,’’ Tambone said. “You can’t control the economy.’’
Christos Christoudias, a Greenway Place condo trustee, is optimistic about the future of the building, which is surrounded by good restaurants and is within walking distance to the harbor. Christoudias said he bought his unit in 2007 for 25 percent less than the initial asking price. When he moved in, fees were too high and many owners were delinquent in making payments, Christoudias said. The association eliminated the concierge, reduced monthly dues, and started collection procedures against owners who weren’t paying.
“It’s finally all figured out,’’ he said. “Now we have a surplus of condo fees.’’
But another owner, investor Ryan Connelly, is probably not so upbeat about the building. Connelly bought the second-floor unit at a foreclosure auction in 2008 for $901,000, according to the unit deed. Even after making major improvements, including the golden flooring, he has yet to find a buyer, according to listing broker Herion Karbunara. In May, the unit fell back into foreclosure and is now listed for $1.4 million — $1.2 million less than it was marketed for in 2008.
Connelly did not respond to requests for an interview, but Karbunara said the lowered price “breaks his heart.’’
“Once a building gets a bad rap, it’s very hard to clean it up, especially if it’s small,’’ he said. “I feel good about the building. I feel like it turned around.’’
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