Crazy for condos

CONDOMINIUMS, historically considered a purchase of last resort, increasingly are the most popular option on the block, resulting in sharply higher prices and attracting high-income move-up buyers seeking a simpler lifestyle.

Young, first-time buyers on limited budgets still make up a sizable portion of the condo market, but wealthier buyers seeking upscale units in coastal and urban settings, where many of the new units are being built, are nudging them aside in some areas.

The strong demand for attached units in all price ranges is due to factors ranging from a dearth of resale single-family homes on the market to a mini-boom in condo and townhome construction. Low interest rates have turned many longtime renters into condo owners, and downsizing empty-nesters and young professionals are choosing low-maintenance lifestyles near transit lines, theaters and restaurants.

“I wanted to live in the city, where people walk and there’s some atmosphere,” said Dr. Matilda Jude, 32, a radiologist who recently bought a two-bedroom Brentwood condo for $470,000. “I’m very happy where I am; I’d do it all over again.”

Condos currently account for nearly a quarter of all home resales in Southern California, up from 17% a decade ago. Part of that increase is attributable to major revitalizations underway in the downtown areas of San Diego and Los Angeles, which are attracting a new group of buyers interested in high-density housing.

“Young couples, professionals, middle-aged people without kids, anyone from 18 to 80 is looking for condos,” said Sherman Harmer, president of the California Building Industry Assn. and a San Diego builder. “People want to lock and leave; they don’t want the maintenance.”

The strong demand for condos and townhomes has pushed prices to new highs. The median price for a condo in Los Angeles County in February was $285,000, up 26.7% from a year ago, and up 90% from the same period five years ago, according to DataQuick Information Systems, a research firm in La Jolla. In Orange County, the median condo price was $355,000, up 32% from a year ago, and up 158% from five years ago.

Most dramatically, the median price for homes and condos in the 1,250- to 1,750-square-foot range in Southern California overall is virtually the same: about $330,000. In some Southland areas, the cost of a condo in that size range has surpassed that of a detached house of equal square footage.

In the 93035 ZIP Code of Oxnard, for example, the median condo price in February was $448,000, while a single-family residence of equal square footage there cost $408,000, according to DataQuick. In Alhambra’s 90042 ZIP Code, the median condo price was $367,500; the equivalent detached home sold for $325,000.

“Everyone’s buying condos everywhere,” said Walt Tamulinas, president of ERA North Orange County Real Estate in Yorba Linda. For good reason, he added. His daughter, Kristy Tamulinas, 30, bought a three-bedroom townhouse in Yorba Linda for $301,000 in July, and today it’s worth $425,000.

“This is the year the bar will be raised,” Tamulinas said. “The norm for newer townhomes with amenities here will be $400,000. They were $300,000 one year ago.”

High prices are not deterring most condo buyers, however, whether first-timers on a shoestring budget or young professionals seeking a slice of sand in the South Bay.

Alle Tithof, 29, a tanning salon owner, and her husband, Matt Hill, 30, who runs a venture capital firm in Santa Monica, began looking for a house on the Westside in the $500,000 range a year ago but quickly realized they didn’t want the small fixers that were available for that price.

The couple, first-time buyers, looked at about 50 condos and bid on four, before landing the 1,800-square-foot, two-bedroom West Los Angeles unit they bought in December for $505,000.

“I see what my friends in Michigan get, and what you get for the same price here, and I can’t believe it,” Tithof said. “But I love the weather here, so I’ll stay in a condo forever if I have to.”

Jeff Ris, 44, and his wife, Noel, 43, wouldn’t mind that scenario. They recently moved up to a $900,000 three-bedroom, 2,300-square-foot townhouse a block from the ocean in Manhattan Beach, from a single-family home nearby. The $375,000 investment in their house, purchased in 1994, doubled over a decade, enabling the couple to roll the equity into their dream townhome.

“We don’t have kids, we entertain a lot, so this is ideal,” said Jeff Ris, who works in the insurance industry. “Lots of people our age are doing this.”

About two-thirds of the attached units under construction in urban areas today are high-end, the CBIA’s Harmer said. The remaining third is entry-level, targeting the lower-income labor force.

One reason for the spike in luxury townhome construction is the increasing demand for second homes. Seeking “hard assets,” buyers are cashing in their stocks and putting the money into vacation and weekend beach units that sell for between $1.2 million and $2 million, said Dennis Moloney, a Shorewood Realtors agent in Manhattan Beach. He added that on his turf, about 30% of his condo clients are first-time buyers, while 20% purchase second homes and 50% are move-up buyers.

Most of the higher-end condo/townhome buyers are couples or singles; few have children, said Jimmy Wood, a zipRealty agent. His clients, Nelly Farnoody-Zahiri, a 32-year-old psychologist, and her surgeon husband, Dr. Chris Zahiri, 35, will close escrow soon on a 1981 four-bedroom, 3,300-square-foot townhome with a canyon view and pool in Bel-Air, which they purchased in the $1-million range.

“There’s a lot involved in maintaining an older property, but here it’s all taken care of,” Farnoody-Zahiri said. “There’s a sense of belonging to a community that I like.”

Severe land shortages in Los Angeles and Orange counties have prompted builders to come up with innovative attached-housing projects, often reusing buildings in industrial and underutilized corridors.

The Lee Group, a Marina del Rey company, has built units on old state highways and commercial corridors, and is concentrating on mixed-use retail-and-residential projects and downtown lofts. Redondo Beach builder Anastasi Development Co. recently razed the old Bay Harbor Hospital in Harbor City and has begun construction of a 120-unit condo/townhome development on the five-acre site.

The Olson Co., based in Seal Beach, is creating “live/work” projects, which feature offices for residents at street level and lofts above.

“We’re looking at boomers who have big homes, maintenance, and they want to downsize,” builder Steve Olson said. “Empty-nesters are looking to get out of the suburbs and into the city, where everything is at their disposal.”

Many first-time buyers, priced out of some urban areas, are seeking condos in the farther-out regions of Los Angeles County and the Inland Empire. Even there it’s getting harder to find condos under $300,000, said Michelle Wolkoys of the Meyers Group, a Costa Mesa firm that does consulting work for new-home builders.

Responding to first-time buyers’ needs, some builders are embracing condo conversions -- turning existing apartment complexes into condominiums.

With units starting at $250,000, Wolkoys said, a number of complexes are undergoing conversion in Santa Ana, Huntington Beach, Santa Clarita and the San Gabriel and Simi valleys.

While many builders still prefer single-family-home production, they are turning to condo and townhome construction out of necessity.

“We all hesitated to get into multifamily housing,” Anastasi Development Co. spokesman Mark Chodzko said. “We’re all heading for high-density housing now. That’s the future.”