Condo Market Revives, but Price Increases Are Minimal
For Bruce Mosk, happiness is a commission on a condominium sale, and lately Mosk has been very happy indeed.
He is a San Fernando Valley real estate agent specializing in condominiums, and, in recent months, the moribund Valley condo market has started to show a pulse again.
The market, Mosk said, is “hotter than it has been in eight years.”
Sellers stuck with unwanted condos may disagree, but even allowing for realtor hyperbole, the condo market is clearly much improved.
The San Fernando Valley Board of Realtors reports that the ratio of condos coming on the market to sales is about 2 to 1, contrasted with about 4 to 1 four or five years ago.
“The condo was the dog on the marketplace,” said Robert Adamson, the board’s executive vice president. “Now we have a viable marketplace for them.”
“There’s plenty of activity,” agreed Mosk, whose business is 90% condos. “It’s just that prices aren’t going anywhere.”
Still a Dubious Investment
Condos remain a dubious investment, however. There has been little price appreciation in Valley condos in 10 years. Business executive John F. Venuti, for example, found a buyer within three weeks for his Northridge town house for $124,500, his asking price. But Venuti paid $90,000 for it more than eight years ago, hence, counting inflation, he didn’t make much on the deal.
But at least condos are selling, and experts cite several reasons for the change. First, prices of single-family homes have started to accelerate again, rising beyond the reach of many prospective buyers. The average resale price for Valley homes was $193,300 in April, up 9.3% from a year ago, the board said.
Second, relatively few single-family homes are on the market.
“Single-family homes have not only gone up in price, but the inventory is so low it’s ludicrous,” said Temmy Walker, president of James R. Gary East, a real estate firm in Studio City.
As a result, real estate agents said, buyers are once again looking at condos.
Another reason for the improved condo market is the fairly low interest rates that have persisted for months--the same factor that has helped heat up the single-family market.
Valley real estate agents sold 266 condos for an average price of $117,600 in April, contrasted with 1,239 houses. A year ago, Valley real estate agents sold 250 condos, for an average of $110,700. But, despite the price increase, many condos still sell for less than they did in 1979.
Although the condo glut has lasted so long that many buyers are wary of purchasing anything but a single-family home, condos still offer a big bang for the buyer’s buck. Lavish town houses with lots of room, fancy appliances, swimming pools and other amenities are still available for far less than a comparable home. Venuti’s place had three bedrooms, a den, 2 1/2 baths, a big patio, communal tennis, swimming and Jacuzzi.
Town house Style Is Popular
“A lot of people make a major distinction between town house and apartment-style architecture,” said Mosk, who handles condos for Buddy Bernard’s White House Properties in Encino. “Town house is much more popular.”
Some Valley condos offer ownership for roughly the same after-tax cost as renting. Anne Saliba, for example, wants to sell her Northridge condo for $99,500. It has three bedrooms, a den, and 2 1/2 baths.
Assuming a 10% down payment, a buyer could live in such a place for less than $1,000 a month. Tax benefits could easily reduce the actual cost to $700 or less. Indeed, Saliba thought she had sold her place within two days, but the buyer didn’t qualify for a mortgage, so it is back on the market.
Saliba said she is encouraged even though her condo was a bust as an investment. She bought it 10 years ago for $51,000, and, counting inflation and other costs, she will about break even.
Lee Easton, a commercial-real-estate agent by trade, said she sold her Tarzana condo in just two weeks for about $115,000. She bought it eight years ago for about $72,000, and acknowledged that there was little or no profit.
Condo-Sales Unit
Valley realtors are acting on their belief that the condo market is better. Mike Glickman, owner of the real estate firm that bears his name, said he is forming a special condo-sales unit at his agency. And Mosk said that, since there are at last some buyers on the scene, he has decided to step up his condo advertising.
Those moves contrast sharply with previous years. Said Glickman: “For a long time, a lot of agents did not want to handle condos and town houses.”
Condos also seem to suit contemporary circumstances. With more women working and many high-income people postponing marriage and childbearing, condos offer the tax advantage of homeownership without many of the time-consuming maintenance headaches.
The condo market has sagged throughout the Sun Belt in recent years, but, in the Northeast, the market has been much stronger.
Nevertheless, for all the signs of a comeback, there are still condo owners like Renee Elias out there. She said she has been trying to sell her Tarzana condo “for about 2 1/2 years,” adding, “I’m getting to believe this town house is jinxed.”
The place has three bedrooms, 2 1/2 baths, a pool, a Jacuzzi, and monthly common fees of just $115. Elias is asking $115,000, which is what she paid more than six years ago. She’ll take less, but the only offer was $100,000, which she rejected as too low.
Ex-New Yorker Linda Klein, in perhaps the ultimate expression of confidence in the Valley’s condo market, bought a foreclosed unit six months ago in Universal City, despite “holes in the ceiling and 6 million cockroaches.” She fixed the place up and now is trying to sell it for $132,000.
“The market has stabilized since 1980,” she said confidently. “Condos will go up.”
