Living in The Crossroads
There is a condo complex on Dempsey Road in Milpitas that has attracted the attention of many first time home buyers looking to get a better deal owning than renting. Â Here's some history to help. Â
This is a condo conversion that was done back in 2005-2007. Â A bunch of old 1970s vintage apartments worth about $70-120K each were given a lipstick makeover with new kitchens and bathrooms, the minimum required for a flip. Â The developer aptly renamed the complex "The Crossroads" and started dumping them onto the market at ridiculous prices of between $290K for a 1-bedroom and $440K for a 3 bedroom. Â At the time, these were the most affordable "new" units available on the market, even though you still felt like you were walking into a dingy old apartment complex. Â
Unfortunately, with easy financing during the heights of the housing market in 2006-2007 and many greedy/clueless agents, lots of first time buyers got sucked into those units. Â Amazingly, even with the ridiculous sale prices and the relatively high HOA fees, the exteriors of the units have not been updated. Â A fresh coat of the original paint is about all you can see and not all of the units even have it. Â You can imagine what I think of the developer.
Today, those units have turned over as the whole complex is in deep distress. Â Prices have rationalized to about $120-220K, reflecting the original actual value of the units with a bit of valued added for the new granite slab and cabinetry. Â Dozens of first time buyers have lost out on their hard earned down payments and have seen their credit torpedoed. Â
With so many units in distress, I'm anticipating that the units will eventually bottom out near where they started, around $100-150K. Â If you get in at those price points, you'll be getting a good value, but prices aren't likely to appreciate for a very long time. Â The location overlooking 680 is simply not good and there's still a huge overhang of distressed inventory. Â All the inventory may take until 2015 to finally clear. Â Otherwise, for a cash flow investor, those would make for solid investment properties at the right price. Â Â