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 Riverside, Avondale, Ortega and Murray Hill 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 Riverside, Avondale, Ortega/Venetia, Murray Hill, San Marco, San Jose and St. Nicholas:
• 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
“Of the almost 60 closed condominium sales for Ortega, Avondale and Riverside as reported by our local MLS since this time last year, we are seeing an increase of 27 percent in total number of closings and an increase of 14 percent in average price increase from this same time last year,” said Lorri Reynolds, managing broker/vice president, Watson Realty, Avondale/Ortega.
“It is predicted that condo living will see a revival in popularity as more people are looking to simplify their lives by downsizing both space and time needed to maintain a home,” she continued. “Couple this with our area’s inherent appeal to homebuyers and you can expect to see top dollar paid for multi-family properties that are well maintained and located near restaurants, shops and entertainment.”
“Condos were hit harder and are now starting to come back. The low, low prices are starting to work their way out of the market,” said Janie Boyd, broker owner, Janie Boyd & Associates, Avondale/Ortega. “Buyers who are downsizing are selling their houses. That is helping. And people who were holding onto their money now have a new confidence level. They are willing to step out and make a move.”
Boyd believes it’s a good time to buy condos because prices are still good and interest rates are going up. “We’re excited about the condo market,” she said.
“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 strapped for cash. It was a terrible situation,” said Linda McMorrow, broker owner, The Legends of Real Estate, and president elect of NEFAR. “We are slowly 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.”
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.”
Balanky called the whole Riverside-Avondale area spectacular, with its welcoming presence. “It’s almost like going into the past. Its grid street systems are very popular and you can walk for miles and miles,” he said, adding that in addition to the charm of the neighborhoods’ many parks, churches and shops, areas such as Park and King and Five Points have an eclectic feel.
“As long as the market continues to grow, downtown will evolve and the more its periphery will evolve, and vice versa,” Balanky said of condo sales in the Historic District. “Rates are still historically low. Even though they spiked recently, they are expected to stay low for the next year or two.”
“It’s the community,” agreed John Snyder, broker at Turnage Realty, Avondale. “Places like Avondale, Park and King, and Five Points are drawing folks. They are real friendly places to live.” He sees the condo market trending up in terms of lower inventory, less time on the market and higher prices.
Gunnel Humphreys, co-owner of Edge City, a women’s clothing store in Five Points, moved a block from an apartment to a condo at 1661 Riverside Avenue. “I absolutely love the location,” she said. “To be able to walk home from my store in five minutes is fantastic. I can stop by the grocery store to pick up food, and we have every type of restaurant. It’s perfect.” She said she also appreciates the security, convenience and low-maintenance of condo living.
Charm and luxury in demand
According to Boyd, condos in the Five Points area are “hot properties,” including the relatively new 1661 Riverside Avenue and The Chelsea Lofts as well as older buildings like Park Plaza. Condos on the water such as Beau Rivage and Ortega Yacht Club have had multiple sales in the past few months.
Sellers who are modernizing older condos are helping to create “a big explosion in popularity in the Historic District,” Boyd said.
An example of creative condo conversion is The John Gorrie. The old junior high school on College Street was purchased by philanthropist and former Jacksonville Jaguars owner Delores Barr Weaver, who transformed it into 68 condos with mixed floor plans. About 50 remain available – ranging from the low $100,000s for a studio to about $250,000 for a spacious two-bedroom unit, according to Lee Elmore, sales associate with Prudential Network Realty, listing agent for The John Gorrie.
Besides contributing to community revitalization, Weaver’s motivation was to provide affordable housing to young professionals, first-time owners and other buyers who want to live in an urban setting, Elmore said.
“I couldn’t be more positive about what is going on not only with The John Gorrie but the whole area in sales of condos,” Elmore said. “Riverside-Avondale is becoming the place to be, with new restaurants opening and the nightlife.”
Condos became a “sellers’ market overnight,” particularly in luxurious high rises on the St. Johns River, said broker Lee Norville of Norville Realty, Avondale. For instance, only four condos are for sale at the 66-unit Villa Riva at Riverside, where prices can top $1 million. Two years ago availability was considerably higher, he said.
“Condos at Villa Riva sell very well for good prices,” said Sally Suslak, managing broker, Traditions Realty, LLC. “They are quality built, on the river, with the smallest almost 2,300-square-feet, so they work for people who are downsizing and have a lot of furniture.”
Suslak said condo units within walking distance of Five Points are selling well because of the restaurants and Publix. “It’s a good time to buy,” she said. “Prices and interest rates are still low. With a scarcity of units, prices are only going to go up.”
Across the river in San Marco, the nearly 10-year-old, 37-floor Peninsula is sold out after a 30 percent fallout by 2008, when the economy soured, said Nicole Dana, special agent for The Peninsula and Realtor for Prudential Network Realty, Avondale. She 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.
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.
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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