Outlook bright for condo ownership in older neighborhoods

By Lorrie DeFrank
Resident  Community News

High demand for and low inventory of condominiums in Jacksonville’s Historic Districts and older neighborhoods seem to be strong indicators of an economic upturn.
The current bright status of the condo market contrasts the gloom of just a few years ago when prices plummeted, homeowners associations struggled with deficits, sellers battled desperation and buyers wallowed in remorse.

Now, the allure of a relatively maintenance-free lifestyle in the walkable, exciting neighborhoods of San Marco, St. Nicholas and San Jose plays a major role in boosting sales, prices and optimism.

A Northeast Florida Association of Realtors’ (NEFAR) condominium market analysis that compares the first eight months of last year to this year shows the following average improvements in the combined areas of San Marco, San Jose, St. Nicholas, Riverside, Avondale, Ortega/Venetia and Murray Hill:
• Total units sold: 45.5 percent more
• Median sale price: 4.5 percent higher
• Percentage of list price:
0.5 percent more than asked
• Days on the market:
14.7 percent fewer days

“Our resale market has been on fire, for single family homes and condos,” said Anita Vining, Realtor, Prudential Network Realty’s San Marco office. “Prices are slowly and gradually coming back, not as fast as they went up in 2006 but as inventory gets lower, it’s causing prices to rise gradually.” She attributes the condo turnaround to “great interest rates, great prices and limited inventory.”

“Decent value, low prices and good area” make it a smart time to buy condos in the Historic Districts, concurred Umesh Patel, mortgage originator for Jax Federal Credit Union on Park Street. He said interest rates for condos, which usually are a quarter percent higher than those for a 30-year fixed single family home, jumped a whole percent in June to 4.875.
Patel acknowledged that condos are generally still harder to finance than single-family residences. Considerations include the ratio of renters to owners, solvency of the homeowners associations’ reserves, and location. For buyer protection, he strongly advises potential buyers to have the association complete a condo questionnaire that provides the lender information such as number of units, percentage of owners, delinquency rates and snapshot of the financial situation.

Financing easing up
As more homeowners opt for condos, lenders become more willing to finance them.
“The problem has been getting financing. We had a flurry of rental apartment properties that went condo and investors flocked to them for little or no money down. Then the value fell and there were a lot of defaults, short sales and foreclosures. Associations were sitting there with people not paying fees and they were trapped for cash. It was a terrible situation,” said Linda McMorrow, broker owner, The Legends of Real Estate, and president elect of NEFAR. “We are slowing clawing our way back from that.”

In addition to a significantly more favorable owner-renter ratio, which plays a major role in securing financing, McMorrow said an overall improvement in the Northeast Florida housing market that is allowing people to sell their big houses is “probably the single most prominent factor that has loosened up the condo market.”

For example, availability of condos at Epping Forest in San Jose decreased from nine to four from the beginning of the year. “We are definitely seeing a market improvement in higher-end condos,” she said. “People don’t want to have to care for yards. They want to lock up and go away for extended periods of time and, in the case of Epping Forest, enjoy the amenities.”

A big change is the health of condo associations, echoed Jim Branch, consumer lending production manager/vice president, Regions Bank. “Lending is restricted any time 15 percent of condos are behind on dues,” he said. “Now we are able to lend on condos we were not able to lend on before. Another thing is the levels of investor concentration have decreased dramatically. Mortgage lenders want to have at least 50 percent owner-occupied units before we make loans.”
“Eventually the ratio of investor to owner-occupied has become more owner-occupied,” said Charles Boyett, director of market development, Coldwell Banker Vanguard Realty. “And living in the Historic District is just cool. No matter what age or walk of life, you’ve got the flavor of old historic homes with trendy new vibes.”

Location is key
Developer Michael Balanky, president/CEO of Chase Properties Inc., agrees it’s all about location. “We’re not getting back to 2004 through 2006 prices any time soon, if ever, but for the right location, there certainly is a market,” he said. “People enjoy the condo lifestyle – lock the door and leave.”

The Mediterranean-style luxury condos in the 21-story San Marco Place, which he developed in 2005 on the southern banks of the St. Johns River, are 100 percent occupied, he said.
With its mix of residential, commercial and high-rise office buildings, “San Marco’s got a great feel to it. It’s very vibrant and gets better every day,” Balanky said. “As long as the market continues to grow, downtown will evolve and the more its periphery will evolve, and vice versa. Rates are still historically low. Even though they spiked recently, they are expected to stay low for the next year or two.”

Carol Grimes, a professor of public speaking at Florida State College at Jacksonville who recently moved from a townhome on the Southside to a condo at San Marco Place, said living near downtown fulfills her desire to be more involved in the city and close to its cultural attractions.

“Condo living allows me to be high up and have a sweeping view of the stunning river and the beautiful skyline of downtown Jacksonville,” she said. “Also, it’s safe, clean and convenient. I can walk to my bank and take the river taxi to the symphony and other events. I’ve always been attracted to the Historic District but didn’t want the responsibility of a historic house to take care of. Here I have a modern, maintenance-free building and feel I am part of the historic neighborhoods. Everywhere I go I walk or drive through them.”
Professionals such as Grimes, including an increasing number who are moving to Jacksonville for employment opportunities, are buying new and old condos on both sides of the St. Johns River near downtown. Demographics also include empty nesters and others who are downsizing as well as young families starting out who prefer the carefree lifestyle that condo living affords.

“People like that urban look and aspect where they can walk to restaurants and shopping and coffee shops and be where the action is,” said McMorrow.

Luxury condos are hot
The Peninsula on the Southbank, now sold out, stands as a testimony to the condo resurgence.

“It’s a huge success. We saw the best and worst of times,” said Nicole Dana, special agent for The Peninsula and Realtor for Prudential Network Realty, Avondale.
Built in 2004, the 37-floor, 234-unit luxury high rise was sold out by 2006 but had a 30 percent fallout by 2008, when the economy soured. “Then we sold only 10 to 12 units per year until 2011 when we remarketed and took the prices down,” said Dana, who continues to service resales and rentals in The Peninsula. “All of a sudden people are doing better. The higher end market on riverfront homes started to move. People wanted to downsize but because high end was not moving, it was not possible to purchase a condo. That directly affects how condos are selling.”

Dana has seen condo pricing come down 50 percent then stabilize at about 20 percent less than original costs. About 15 units are available on the resale market in The Peninsula.
She often receives as many as 15 calls a day from out-of-towners. “The job market is hot in Jacksonville. People are rapidly moving here from other metropolitan areas. They want to live in upscale high rise living downtown. And as the residential market has picked up, we are seeing the retail market follow suit,” she said.

Likewise, around the bend of the St. Johns River, the luxurious Old San Jose on the River condos are sold out. On the site of the former River Reach Apartments and following a failed tower endeavor at the location, Old San Jose – midway between San Marco and Epping Forest – quickly sold out after the developer bought it from a bank, according to Victoria (Vikki) Robbins, owner, Victoria Robbins Realty, Inc., which is responsible for sales there.

“The condo market has come back. Starting with the holidays in 2012, prices escalated considerably,” she said, adding that she gets numerous calls from developers interested in duplicating the success of Old San Jose.

For the most part, lenders burned in 2008 remain reluctant to make commercial loans for condo construction unless developers have considerable cash and units sold, according to Dawn McGovern, Lakewood branch retail executive, BBVA Compass. “Developers are applying for loans to develop in the San Marco and Riverside areas but the amount of cash flow they have to put in is more than they have available,” she said.

However, retail lending for buyers such as first-time homeowners and empty nesters is easing up, “depending on the customer, credit and amount of money they are putting down,” she said, cautioning “if you don’t know how much you can afford, come in and ask. People get their hearts set on something they can’t afford, then get disappointed.”
Gil Pomar, market president, Northeast Florida Region, CenterState Bank, said with the market improving he wouldn’t be surprised to see new condo development in the Historic District, depending on availability of funding and land.

Pomar is optimistic about the condo market as long as prices and rates stay low. “A year ago, people did not even try to sell homes. Now they are able to sell their houses and downsize into condos,” he said.

“If anyone comes out of the ground with new waterfront condos, they would be a gold mine,” said Suzanne Cash, adding that buyers have not been craving condos like this since 2006.
Cash is a Watson Real Estate agent who exclusively represents La Terrazza, where all of the constructed villa homes – similar to condos on a ground floor – are sold. Four are under construction with more to be built. The luxury Mediterranean-style development on Goodby’s Creek near San Jose and San Marco also features townhomes, which are sold out, too, she said.

Although condo inventory is down in the Historic District, real estate experts concur that units remain available in new and old buildings to buy or rent. With prices and interest rates creeping up, most agree this is a good time to buy. “You can get a condo from under $100,000 to more than a half million, depending on where it is and the features,” said McGovern.

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