Residential real estate is a tough business, but staying on top of the highly competitive, highly cyclical niche that is the condominium market is a special challenge for builders and Realtors.
All Utah real estate suffered during the flat market that characterized much of the 1980s, but none more than condominiums. The speed with which the condo market can become overbuilt when 50-100 units suddenly come on stream with completion of single development makes this niche particularly sensitive.The predilection of many Utahns and their larger-than-average families to prefer a traditional house in the suburbs with a big back yard over the conveniences of condo living is another factor.
Still, the dog days of the mid-'80s, when many condo owners simply walked away from their units after months or even years of fruitless attempts to sell them, seem to be over . . . for now.
According to the Salt Lake Board of Realtors, condo sales have been consistently increasing over the past four years. In 1986, 481 condos were sold on the board's Multiple Listing Service (MLS); in '87 the number increased to 491; in '88 to 604 and in '89 to 740. (Many foreclosed condos were not listed for sale through the MLS, which means the number of condos actually sold in the mid-1980s may be considerably higher than reflected in the board's figures.)
From January to August of this year, 513 condos were sold in the Salt Lake area, a 16 percent increase over the 444 sales in that eight-month period last year. The average selling price for the 1990 period was $61,984, a 12 percent increase over 1989's average of $55,257.
"The inventory of condos for sale on the market has decreased each year since 1985. This is a good sign," said Georgia Ball, president of the Salt Lake board. "It means the imbalance in the market - too many sellers and not enough buyers - is becoming less pronounced."
Ball said she believes the condo market is improving because people are tired of waiting for prices and interest rates to come down. "They've been cautious for so long. Now they've finally convinced themselves that real estate, in general, is still a sound investment, and that if they're going to make a move, the condominium option offers a lifestyle with tremendous benefits."
Ball believes that Utahns now have more faith in the local economy and that translates into increased faith in real estate as an investment as well as a place to live.
"For the past few years, many homeowners seemed, frankly, frightened when they heard about all their friends who were having an especially difficult time selling their condominiums. They were justified in having some concern because the facts showed that selling condominiums in Salt lake City was very difficult - possible, but difficult."
Ball said she doesn't want to imply that "we've suddenly burst into a market where condominiums are selling as soon as they're put on the market" but that the waiting period has dropped significantly. "Most of the foreclosed properties are now gone. The supply and demand is more in balance, and that's good news for everyone."
Nevertheless, she cautioned, resale of existing condos remains difficult. "There are so many appealing new options that buyers find it difficult to consider existing condominiums," she said.
"The people who are choosing the condominium lifestyle generally place a high priority on hassle-free living. Naturally, it follows that they would rather move into a new property, where they can choose the color schemes and other details, than move into an existing condominium and hassle with making modifications."
Ball advises potential condo buyers to consider the following: How aggressive is the homeowners' association? Is there adequate money in the association's budget to cover emergencies? (Ask to see a copy of the budget.) What's the track record for special assessments? How's the maintenance? (Check for peeling paint, shabby fences, etc.) What regulations and restrictions apply? (Ask for a copy.)