Slow condo sales might pick up in urban areas
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Condominium units in East Lansing aren’t selling quickly, but experts say the market for urban housing is expected to grow.
The West Village project has sold 21 of its 46 units — the same number of units that had been sold in April. The units were placed on the market in early 2007, when construction began. Tim Dempsey, economic development administrator for East Lansing, said although the city is keeping an eye on the sales, it’s something he feels comfortable with.
“The overall slowdown in the housing market is impacting demand everywhere, so I don’t think it has anything to do with the condominium project or location,” he said. “It’s a symptom of a larger problem out there.”
There are several condominium projects developing in East Lansing, but City Center II, the main project moving forward right now, will not be part of the marketplace until 2011, which is a big benefit, Dempsey said.
“It will give time for projects that have been recently completed to be absorbed into the marketplace,” he said.
However, family community services senior Laquetta Walker said a college town might not be the best place to build condominiums right now.
“More permanent families are going to be raising kids most likely, and I’m pretty sure they’re not going to be wanting to raise their kids around a bunch of drunk college kids,” she said.
But the demographics pushing urban housing are primarily baby boomers who are now empty nesters, and people younger than 30 who expect a high level of social interaction, said Gene Townsend, a Lansing builder.
“I’d go so far as to say, our country over the last 30 years has spent trillions of dollars on the wrong thing,” he said. “It catered to baby boomers, (but) once that population bulge aged, the need for the vast investment in suburban housing … no longer makes sense.”
One of East Lansing’s condominium projects, Albert Place Condominiums, has sold six of its 36 units.
“I feel pretty good about it, since the building isn’t done, and we only have two finished units for sale right now,” said Dave Krause, a partner with Cron Management. “(New developments) typically take a couple years to fill up.”
Construction of single family homes has been down for the past three years because of the economy, said Doug Carr, CEO of the Greater Lansing Home Builders Association. But this slump shouldn’t translate to urban housing, he said.
“If gasoline prices continue to remain high and the new single family housing market continues to be depressed … we’re probably going to see an increase in demand for urban housing,” he said.
More people will want to move back into urban areas closer to their jobs, he said.
The delay in selling condominium units might be related to the single family housing slump, as people have to wait for their houses to sell before moving into a condominium, Krause said.
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Ronald
(10/01/08 8:05am)Report
After reading this article all I can think is how delusional are these developers? Can’t they come to terms with their horrible decision to build a condo development in East Lansing (of all places) at the peak of the housing bubble? Face it, these projects are doomed to loose money.
“I feel pretty good about it” after selling 6 out of 36 units?? Seriously?? These developers will say anything. Also, anyone who believes the CEO of the Lansing Home Builders Association is out of there minds. He really expects the single family housing market to stay depressed but all of a sudden see a pick up in condos? Again, how delusional?? Condos are the first area of the housing market to go bust, especially if single family homes are under pressure.
Finally, it makes no sense whatsoever to own one of these downtown condos. By factoring in property taxes, maintenance, insurance, and interest on the loan, owning is astronomically more expensive than renting. Especially if you are only thinking of living in the place for under 10 years. I am absolutley for home ownership, but in a severely depressed market in a severely depressed state, its not economically feasible.
For anyone interested in learning more about renting vs. owning in a depressed housing market, google “NY times rent vs. own calculator”.
Scott Cooley
(10/01/08 8:09am)Report
Follow-up story suggestion: Lenders Have New Rules, Require More Paperwork For Condos vs. Houses. They have recently revised rules that create more “red tape” for those wanting to purchase condos, for example, they now require the condo associations to include in their legal documents language that if monthly association dues are in arrears, the mortgage company or bank is notified so they can make the payments. This language is not in most, and is a new requirement. It may differ for those backed by Fannie Mae vs. Freddie Mac. Property management companies hired by condo associations to maintain such agreements are likely unaware of the changed requirements, and need meetings and majority votes of condo owners to ratify the association membership documents – a process that can take months. Meantime, those wanting to purchase condos, through no fault of their own, are forced to wait and are in some cases prevented from buying. The first “guinea pigs” with purchase agreements are going through this now, and change is unusually slow, hence a contributing factor to slow condo sales in general, whether in urban areas or otherwise. It would be great if you did a story on this.
stupid...
(10/01/08 10:13am)Report
Condos are terrible investments. There is nothing you can do to improve the value on them and they are hard to rent (or prohibited). You are totally at the mercy of the market which, right now, is dismal. These guys are kidding themselves if they think they are selling them as an investment instead of to some rich Grosse Pointe daddy who doesn’t want his daughter to have to walk a long way to Rick’s.
elmer
(10/01/08 10:29am)Report
Never seen a condo in a place like “otherwise.” I can’t imagine a condo out in the sticks with cows walking around pooping on the lawn and the like. Goats would help keep the grass down though I suppose.
Maybe could name a rural condo something catchy like Brown Acres or the Villages of Cowflop.
Dave
(10/01/08 10:44am)Report
We’re at the beginning of a nationwide trend- cities are about to become the center of public life. High transportation costs and fewer jobs will force suburbanites to move closer to urban areas. To this end, downtown/urban condos are not only practical, but ideal.
Unfortunately, Lansing has not done much in the way of promoting their development. Or maybe there just aren’t enough jobs to warrant private investment.
EL is Wrong
(10/01/08 4:13pm)Report
No only are developers wrong in their statements regarding demand for condos in East Lansing, but so is the city. The city likes to continually cite a study that is 10 years old saying the city needs more condos downtown, even though the study has not been updated since all of the condos were built following City Center 1. Just think how prosperous the city would be if they continued to keep the students downtown instead of pushing then north of Chandler road.
Jeff
(10/02/08 6:21pm)Report
Actually a decent sized condo is quite competitive in terms of value compared to renting. A fixed rate 30-year mortgage on a typical downtown condo with 20% down is in the range of $1000 per month. Association fees are about $400 when you include parking for three cars. Property taxes are about $450 per month. Interest and property taxes are deductible, so that reduces costs by about $250 per month.
So it’s about $1600 per month including parking. Co-owner or Co-owner’s child and two friends at $533 per month with a downtown location compares pretty well to the Northern Tier.
Hans Larsen
(10/06/08 1:21pm)Report
City Center II is being funded with Taxpayer Money—Public Debt—in the form of General Obligation Bonds! (LSJ 9-18-08) $30 Million dollars. The City assured us that taxpayers would not fund the project—that TIF Bonds and Parking Revenue Bonds would fund it. But they lied, and now they are going to raise our property taxes to repay the bonds for an project that only worsens the oversupply of housing and the decline in home values in our city.
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