With Home Prices Rising Out of Sight, Condos Are an Affordable Option for Many Buyers
Not long ago, Lorena Tong and her husband, Mike Tamaki, who were renting an apartment in Santa Monica, faced a dilemma not unfamiliar to millions of Californians yearning for homes of their own. “We wanted to stay in Santa Monica, but we could not afford the houses,” said Tong, a television producer.
Tong and Tamaki, a public works coordinator, recently settled happily into a Santa Monica condominium, joining an increasing number of Californians satisfying their home-owning aspirations by purchasing condominiums. Many people have been completely priced out of the single-family home market, and others find that they can buy in the neighborhoods they like only if they choose condominiums.
Because of the increased demand, California condominium prices are currently increasing at a rate faster than that of detached single-family homes, according to the California Assn. of Realtors. The group Tuesday released its monthly survey of the state’s resale housing market.
The median price of a condominium sold during July rose 5.6% to $145,867 from $138,174 in June, the survey showed. July’s median price for condominiums was 19% higher than the $122,610 median reported in July, 1988. At the same time, the median price of houses rose only 1.1% from June to July and was 16% higher than the median in July, 1988, according to the survey.
While the rate of increase in the price of detached single-family homes has slowed, their prices long ago reached a point beyond the means of most Californians. That is the most important factor driving the current healthy condominium market, realtors said.
“Higher single-family home prices continue to force home buyers to consider this more affordable alternative,” said CAR President Leo Saunders, a Walnut Creek realtor.
Condominiums have always been less expensive, but increased public confidence in them as a good investment and as a good life style alternative is also a factor in today’s market, said Chuck Lamb, a San Fernando Valley realtor. Only about 11% of California families can afford the median $262,600 price of a single-family home in the Granada Hills-Northridge area where he operates, he said.
“Most of the action is at the low end of the market,” where first-time buyers are clamoring for a piece of property, he said. At today’s prices, if they get into the market at all, he said, most “will go condo.” A 1,200-square-foot house in the San Fernando Valley costs about $220,000, he said, while buyers can get the same space “and a pool” in a condominium for about $175,000.
About 20% of the market in the area is composed of condominium sales, Lamb said.
Santa Monica realtor Ellen Poll said “close to half” of her sales are condominium sales these days. An agent for the Jon Douglas real estate firm who also works in Brentwood and other West Side communities, Poll said the condominium market is very healthy all over the West Side, where first-time buyers are exerting “intense pressure.”
Poll said she is encouraging buyers who are considering a house in a neighborhood they have doubts about to buy a condominium instead in a neighborhood they like better. “If you have to make sacrifices on the neighborhood, you should think about a condominium in a better neighborhood.”
While they were renting, Tong and Tamaki always knew they wanted to stay in Santa Monica. Although they lived in a $520-a-month rent-controlled apartment and were able to save a lot more for a house than many others, Tong said even the “fixer-upper” houses in Santa Monica were too expensive for them.
But they were able to buy a two-bedroom, 2 1/2-bath condominium with a loft for $289,500. And she added, “The workmanship was good, and there was hardly any work to do” before they could move in to the 8-year-old unit, she said.
While sales seem particularly strong on the West Side of Los Angeles, realtors said condominiums are gaining acceptance in neighborhoods not traditionally receptive to them.
Nearly all of the units in the first and second phases of the new Crossroads condominium project near the Great Western Forum in Inglewood sold in record time, said saleswoman Sandy Irish. “Sales are fabulous,” she added. “I’ve been selling about 20 years and I’ve never seen sales move so fast. We can’t yet start selling for our third phase, but we have people lined up to buy them.”
Most of the buyers, she added, are professionals who work in the area but are first-time buyers and cannot afford a house, she said. Prices start at $104,000 for a one-bedroom unit, she said.
