Of all of the real estate options in the Country, condominiums may have been hit the hardest over the last few years. As the Charlottesville real estate market heated up in 2004 and 2005, developers and investors swarmed to purchase apartment buildings to convert them to Condominiums in hopes of cashing in on the real estate boom. The first Charlottesville condo conversion, Hessian Hills, sold like hotcakes and was completely sold out faster than any of us could blink. However, as others followed, the market began to cool and sales didn’t go nearly as well (see Barracks West condominiums).
Obviously, Charlottesville condominium conversions have come to a grinding halt – the cost and risk associated just isn’t worth it for developers. While new condominium inventory isn’t increasing, sales are still decreasing. The lower cost of Charlottesville town homes and single family homes has caused would-be condo buyers to choose town homes or detached homes instead. And with demand falling off, prices have gone back to 2004 levels.
Charlottesville condominium sales peaked in 2006 (The Year of the Condo) at 275 sales in Charlottesville City and 306 in Albemarle County. Since then, the numbers have dropped pretty significantly. 2009 area condominium sales were 83 in Albemarle County and 66 in Charlottesville.
Unfortunately for area condos, all signs are still pointing in the wrong direction. Sales prices are down. Median prices are down. Price per square foot is down. Total sales volume is down. And Days on Market are up. The lone bright spot on the local condo scene lies in some recent Charlottesville City condo stats: sales in the 4th Quarter 2009 were up from 12 to 14 as compared to 4th Quarter 2008.
What lies ahead for condos? Some predict that condominiums may be the last section of the local housing market to recover – they believe that only after single family homes and town homes stabilize will condominium values stabilize and improve. I’m not so sure it’s such a broad answer, though. While I do believe that, as a whole, condos may be behind single family and attached in terms of recovery timeframe, I think that some condominiums that are well located may see quicker recovery. In the end, it’s ‘Location. Location. Location.’
Thankfully, the rental market throughout Central Virginia is extremely strong right now. So many condominium owners are able to rent their properties without much of a problem. And while being an ‘accidental landlord’ may not be their first choice, there are plenty of worse places in the Country to own rental property.
But here’s a little more positive news for Charlottesville condominiums: some of the newer condo communities have received or are about to receive FHA Financing approval. Hence, financing will be easier to obtain…and, thus, easier to sell. Expect the FHA Approved communities to be part of the condominium recovery.