Wednesday, December 10, 2008

Condos --- Glut or what?

I was looking at the condo situation here in Lexington today. Did you know that we have brought 341 condos on l1ne so far this year? Does that sound like a lot to you? Well, it is only 58% of the total put up for sale last year. That would bring us more in line with the year before, 2006 shows that we had 353 condos built or converted being just a difference of 12.

The breakdowns give us a little detail about where they are (or think they are) heading.
  • This year
  • 69 new and 30 conversions in the downtown area
  • 64 conversions in the University area
  • 46 new in the Hamburg area
  • 76 conversions off Richmond Rd across from Lexington Mall
  • Last year
  • 92 new in the Hamburg area
  • 142 new and 99 conversions in the downtown area
  • although 85 of those conversions could be said to be in the University area
  • 36 new in the northern suburban area
That is a whopping 928 condos in two years and 1,281 in three years.

The ones with at least three bedrooms are not convenient to downtown and the ones downtown don't have enough space. All of them with space are priced out of the reach of most families. The conversions downtown(along E. High St.) are barely more than efficiencies or very tiny one bedroom units.

Where does this leave us. Well, many appraisers and Realtors may tell you that we are in good shape, but we have nearly a 3 year supply and in a down market.

I don't understand what the developers are thinking when I look at some of the university area condo projects of the past. The primary one that comes to mind is on Woodland Ave and was built for the students, although most were bought by parents so that the kids could live off-campus. The last time I checked the PVA web site the ownership was concentrated in a very few names of property management companies. These condos have not appreciated as the rest of the market and have barely kept their value. Given that track record, why do they still convert apartment houses into condos?

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