Buyers snapped up townhouses alongside the Inner Harbor for as much as $1 million off the asking price at a Monday night auction that experts say could help reset prices in Baltimore's languishing luxury real estate market.
The auction — held at a Baltimore Marriott Waterfront hotel ballroom where bidders were greeted with an ice sculpture and served dishes such as pork tenderloin — drew about 400 people, 135 of whom registered to bid. After the action started, the development partners put more units on the block than originally planned and sold 18, all for hundreds of thousands of dollars off.
The most expensive of the Pier Homes at HarborView auctioned off was a 3,732-square-foot unit. With an asking price of nearly $2 million before the auction, it sold for $956,000. The least pricey were a pair of 3,092-square-foot townhouses that had been on the market for $896,000 but sold for $516,000.
"I think we got an awesome deal," said Jenna Yalich, 24, whose father bought a unit for her as a graduation present, paying $543,000 for a unit that had last been on the market for $1.2 million. "Overlooking the harbor — what more can you ask for?"
The project, completed two years ago, had sold only 46 of the 88 units before the auction, with two more under contract. The developer, equity partner and financier decided to auction off a chunk of the unsold inventory as a way to kick-start sales in a tough market for high-end homes.
"We were very pleased with the outcome," said Jamie Riordan, a principal at Lubert-Adler Partners LP, the project's equity partner. He said the development team would huddle on prices for the remaining Pier Homes and put them back on the market today.
Real estate analysts predicted in advance that the auction's results — whatever they were — would ripple across the luxury market, recalibrating prices for other high-end homes and potentially putting recent buyers underwater on their mortgages.
But Bob Merbler, a partner with Yerman, Witman, Gaines and Conklin Realty in Federal Hill, said the market really needed such an event as a signpost for all sellers and buyers.
"We've had a real estate two-step dance going on, which is the sellers don't reduce the price to numbers that work, and the buyers all want to pay a lower price," he said. "You've got to get to the point where everybody says, 'OK, like it or not like it, this is the market.' "
HarborView's come-on to buyers was tempting. Minimum bids the partners would accept ranged from $329,000 — for a home on the market for $1.2 million — up to $665,000 for the home with the nearly $2 million asking price. Such potential reductions ranged from 55 percent to 75 percent.
Real estate agent Pat Hiban said that prompted him to tour the townhouses this month with his wife, even though they aren't ready yet to move from their Columbia home. He figures the minimum-bid figures were a huge motivator for people who want a new place.
"They're all massively discounted," he said.
As he saw it, the tricky part for buyers was figuring out what these luxury waterfront townhouses were actually worth. "Nobody knows," he said before the auction.
That was the question the event was designed to answer, said Jon Gollinger, co-founder of Accelerated Marketing Partners, which handled the event. He said he saw a clear "disconnect on price" between buyers and sellers that explains why so many homes are sitting on the market unsold.
"It's not that people don't want to live there, they don't want to buy — they do want to live there, they do want to buy," he said of the Baltimore market. "They just don't want to overpay."
The auction prices were too much for some buyers, who streamed out of the ballroom midway through the bidding after they got a gander at what the market would bear.
"More than I'm willing to pay," said Ronnie Miles, 41, a Washington resident who'd come ready to bid, if the prices had been near the minimum.
Besides the HarborView townhouses, the other luxury properties along the city's waterfront with a sizable number of unsold units are the Ritz-Carlton Residences and Silo Point, both condo projects.
Asked about the effect of HarborView's auction announcement its own sales, Ritz-Carlton developer RXR Realty said in a statement last week that the project "has seen a record increase in traffic in April, May and June." Twenty-three of the 190 units have closed since it was finished in 2008, with 10 more under contract.
Eric Turner, who is overseeing sales at Silo Point, said the auction seemed to help, not hurt — at least in the run-up to the event. The project, a converted grain elevator, has sold 95 of its 228 units since 2008, with 15 more under contract.
"We're seeing an increased amount of traffic and sales since the announcement of the auction," he said in an email, noting that demand has increased sale prices on some of the units. "It appears to me that the auction is putting people in the market that were not previously there or were not looking before."
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