Apartments are hot hot hot all over--vacancies are low and rents are high, and so developers are pouring money into new rental projects--but meanwhile the poor condos are suffering! The Downtown News reports that Downtown rentals are at 98 percent occupancy, but things are even rougher in the for-sale market: "In a community with an estimated 50,000 residents, there are currently only 64 active listings on the MLS" (although it notes that some of the Ritz-Carlton Residences are kept off the market, plus there are sometimes non-publicly-listed units). Several projects that were built as condos went rental during the recession and said they'd switch back when the market turned around, but none have so far. Meanwhile, "demand hasn't yet pushed prices far enough above what it costs to build a for-sale structure." Let's examine the madness: -- "When listings hit the market, most receive multiple offers, and the majority of buyers miss out on their first choice," according to the owner of the Loft Exchange.
-- Since the fourth quarter of 2009, median price is up 14 percent, to $395,000.
-- Related Cos. had originally planned to build a whole bunch of condos for its Grand Avenue megadevelopment, but now the first building is going up and it'll be rental. They're planning a second tower "that is also likely to be high-end rentals," although it may come with some condos.
-- But, according to the head of Related, steel and concrete condo towers cost about $700k per unit to build right now.
-- Barry Shy, who owns gajillions of apartments in the neighborhood (SB Tower, SB Spring, etc.) "has always planned to convert his portfolio to condos," but is in no rush at all right now--"For Shy, that day will come only after the average sales price surpasses $500 per square foot, which he estimates will happen in two to five years."
-- And poor Downtown condo brokers "have had to take listings in other neighborhoods or veer into commercial real estate to stay afloat."
· Amid Apartment Boom, a Shortage of Condos [Downtown News]