Condo’s, No longer the Cheaper Alternative
Expert offer advice for real estate practitioners navigating the expanding condominium market.
The choices for today’s condo market are filled with more and more options. From the ultra luxury $2,000,000 plus penthouses that equal million dollar single family homes, to ultra-luxurious hotel condos, to 600 sq. ft. studios. This diversity of residences allow the growing condo market to offer many choices for every level of home buyer.
The word condominium actually describes individual ownership in a multiunit structure, not the architecture of a property. In the 1970s and ’80s, condominiums were thought to be a choice only for first-time home buyers and retirees.
For Dana Berke, director for the Ultra luxury Condominium Division of www.chicagosbesthomes.com, Chicago, Il., that ownership centers around a specialized buyer looking for a high-quality lifestyle, stunning views, top-notch locations, and world-class amenities and they are willing to pay for it.
From new money rich baby boomers to retirees, luxury condo living is in demand across the country. In addition to Chicago, luxury condos have strong growth in all the major markets, including Las Vegas, South Florida, Scottsdale, New York, and Pittsburgh.
According to La Jolla, Calif.-based DataQuick Information Systems, California recorded 1,677 condo sales in the $1 million category last year, up more than 90 percent from 879 in 2004.
These luxury dwellings often include a doorman, concierge service, 24-hour monitored security and security staff, maid service, luxury spas, pools, tennis and racquetball courts, state-of-the-art fitness centers, designer appliances, top-of-the-line fixtures and lighting, marble floors, walk-in closets, wireless Internet access in all common areas, owner’s lounges, business centers, wine rooms, movie theaters, and valet and underground parking.
But luxury costs. Price per square foot can start as high as $600, Some areas are starting at $800-$1000 per square foot. The Luxury Condo-Hotel market can start as high a $1250 per sq. ft. The other costs are the monthly assessments that can cost as much as $1,000 to $3,000/month.
9/11 seems to have had a hand in the booming luxury condo market. People have decided they no longer want to wait till retirement for that condo by the ocean, or that downtown high rise.
In addition to all the luxury amenities, people also want more room. The 2000 sq ft. 3 bedroom condo is no longer the norm, people want 4000+.
Of course, a condo doesn’t have to be new or luxurious to be desirable. Recognizing the need for affordable housing, and increased building costs and land restrictions in many markets over the past 15 years, developers and investors have been turning attached rental apartment into condominium communities and the movement to convert has never been stronger than in the past year.
Even at this end home buyers, looking for a small 1 bedroom or studio, people want choices. Granite, Stainless Steel appliances, hardwood floors. No longer are they willing to take whatever is available in their price range, they seek out new developments where they can make their own choices. Many developers are building condos in this price range, they can sell them out quickly and go onto the next protect.
According to New York-based research firm Real Capital Analytics Inc., nationwide sales to converters increased to more than $28 billion (representing 182,742 units) in 2005 from more than $11 billion (representing 77,193 units) in 2004.
Some of these conversions are truly stunning. What starts as an old apt. building is transformed into a showcase condo building. The homes are completely gutted and replaced with hardwood floors, granite counters, stainless steel Appls. The literally replace everything in the common areas, carpet, window treatments, ornate facades & beautiful landscaping and even sometimes adding pools & spas. They usually will offer existing renters a discount to stay in the building.
Condominiums are no longer a cheap alternative but a “Lifestyle”. Many condominium owners cannot imagine any other way to live.