At the downtown streets of Sonora Avenue and Technology Drive in San Jose stands The Sonora, a gated four-story condominium building situated just a short drive from San Jose Airport (SJC). Completed in 2005, these beautiful and spacious homes had been outfitted with granite counter tops, G.E. stainless steel appliances, maple cabinetry and expansive ceilings stretching up to 14 feet. 1 bedroom 1 bath and 2 bedroom 2 bath condo units in the Sonora were first listed at between $315k and $550k. Currently, however, over 20 of these homes are on the market for between $100k and $150k below their normal market value with some two bedroom units going for as little as $250k.
Why this substantial below market cost? Currently the HOA (Home Owners Association) is in the midst of a lawsuit with the developers of the Sonora Condos regarding approximately 46 flaws in the structure/construction and design according to the court documents. As a rule, banks continue to refuse loans for complexes in a construction litigation issue, making these properties available to only cash buyers. This along with the fact that owners are being forced to short sell their units makes for an excellent opportunity for buyers who are able to pay in full to purchase a stunning unit in a conveniently located, gated community in the downtown San Jose area.
Once the case is settled, prices for these units should likely shoot back up to market value, making the Sonora a wise investment for buyers who can afford to pay in cash. Investors looking to rent out their units should be aware, however. With about 35% of the homes already being occupied by renters, new investors should expect to wait in a long line including a requirement to own the unit for a full year before getting approval from the HOA to rent the unit. This will mean that all new buyers must be purchasing as an owner occupied unit only.
If you are one of these all cash buyers please give me a call.