The condo market in metro Atlanta, beaten nearly to a standstill by the housing bust and recession, is beginning to follow the path of single-family homes into recovery.
Sales volume and prices are up, while the glut of unsold units built during the boom is being whittled down.
Now the words ‘condo’ and ‘construction’ are even being used in the same sentence, with a developer team recently announcing plans for a new 23-unit building in Midtown. While small and aimed at higher-end buyers, it would be the first major condo project in Atlanta since 2007.
“It means values are on the rise,” said Scott Leventhal, president of Tivoli Properties, which is not the developer of the Midtown project but has built Atlanta condos in the past. “That’s the thing that should be most comforting to existing condo owners.”
When housing tanked in 2007, condo developers auctioned off units and slashed prices as demand evaporated. Some finished developments were turned into rental units.
The new project at Peachtree and 7th streets in Midtown, ironically, was planned as apartments, but would be built as for-sale units to take advantage of the low inventory and rising demand.
“We had an oversupply of condo units, but like everything else, it’s been eaten up. It’s gone,” said Eugene James, Atlanta regional director of Metrostudy. “It’ll be two years out before they even start delivering units. It’s going to be a great time. It makes sense.”
James said he does not expect an influx of new condo projects. But he and others said they would not be surprised to learn of sporadic new condominiums, and that the small project — called Seventh — is viable.
“I think it’s time for another condo project to get off the ground,” said Joshua Herndon, an associate at the real estate consulting firm Haddow & Co. “I like the idea of smaller projects coming on to test the market.”
Seventh would be a nine-story midrise building, with retail at the ground level and three units on most floors. Prices would start in the mid-$600,000s, with two penthouse units priced just under $1 million.
The developers, former Aaron’s CEO Robin Loudermilk and Dwight Bell, are still working on financing the project. Construction would not begin until some units are sold, a spokesman said.
The average sale price for an Intown Atlanta condo was $167,234 in 2012, up 19 percent year-over-year, as the number of sales rose 21 percent, according to year-end data from Haddow & Co.
The number of new, unsold units was down 84 percent from the 2007 peak, to 1,171 units at the end of 2012. Herndon said he expects the number to be well below 1,000 when his firm compiles new numbers this summer.
Any interest in new construction shows that the trend toward a sellers’ market in signle-family homes - at least in desirable areas - is becoming the case for condos, too, Leventhal said.
John Stremming, a Midtown resident, recently sold his condo at 905 Juniper — at a profit — to buy one at Midtown’s Midcity Lofts. He’s not sure new construction in the area would boost his home’s value, but he doesn’t think it will hurt.
And Stremming sees the movement in the market, too. Some units spark bidding wars and sell within a week of hitting the market, he said.
“It’s a great time to sell,” Stremming said.
James Robbins, a Realtor with The Marketing Directors, recently sold his Viewpoint condo in Midtown. He said new construction will be necessary in a year, when the supply of new condos has diminished more.
The location and price of the proposed Midtown complex are right, said Steve Baile, the senior vice president of condo developer Daniel Corp. Robbins said there is more demand in Midtown than in many other areas.
Still, lending remains tight, and it can be more difficult for buyers to qualify for mortgages on a condo than on a single-family home, said David Tufts, president of The Marketing Directors. Construction financing might also be hard to come by, James said.
“I wouldn’t be surprised if we start hearing some discussions, but I think it’s going to be very slow going,” James said. “Don’t look for additional announcements any time soon.”
Rising prices and higher sales volume mean condo demand is on the rise, Herndon said. Even those who were stuck in condos longer than they intended following the crash may start to get comfortable with the idea of buying one again, he said.
But nothing is certain.
“The market is still timid,” Herndon said. “The severity of the downturn in the condo market certainly lingers in people’s minds.”
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