It’s a grim scene for condo owners in the city of Charlottesville. Among all the real estate options available to buyers and sellers over the past few years, condominiums have taken the steepest tumble. According to the Charlottesville Area Association of Realtors’ 2009 year-end market report, sales of attached homes in Charlottesville are down 28.6 percent while sales of similar homes are up 26 percent in Albemarle county. Why the discrepancy?
In the real estate boom of 2004 and 2005, there was a mad dash by investors and developers to buy up existing apartment buildings in the city of Charlottesville and convert them into condominiums. “Apartment complexes were being converted so fast—it was a great way for investors and developers to make a fair amount of money,” says CAAR President Greg Slater of Real Estate 3, dubbed “The Closer” by C-VILLE in 2006, in part because he sold all 180 units at the condo conversion Hessian Hills in less than a year. “There was a lack of affordable housing, grad students would buy them and flip them because of appreciation.”
Condos in the City of Charlotteville—like these at Walker Square—sold much faster in 2006 than in 2009: Citywide condo sales dropped from 275 to 66.
Creative financing by lending institutions helped fuel the rush, and pretty soon the market was flooded with condos. “In 18 months, the supply side went up, like 1,000 percent,” says Slater. In fact, in 2006, there were 275 condo sales in Charlottesville City and 306 in Albemarle County. Compare that to only 66 condo sales in Charlottesville and 83 in the county last year. And because the town house and detached home markets have also fallen, would-be condo buyers are choosing to buy those instead.
The reason sales are up in Albemarle County, says Slater, is because the market wasn’t oversaturated with condo conversions in the first place. A good percentage of the condos there are new construction, not converted apartments from the 1980s and ’90s.
Where does that leave Charlottesville condo owners? Saddled with properties valued at 2004 levels, unfortunately. Sale prices, median prices and price per square foot are all still down while days on the market are up, according to the Nest Report’s Charlottesville Condominium Market Statistics. The one bright spot, according to the report, is that sales in the fourth quarter 2009 were up—14 sales, as compared to 12 in the same quarter the previous year.
If you are trying to sell a condo, upgrading by installing new appliances or renovating for a more modern feel are always big selling points, says Slater. “Some of the condos I’ve seen are exactly like they were as apartments in the 1960s—those won’t sell right now.” If the unit is on or near the first floor, consider adding features like a grab bar in the shower to appeal to older buyers who may be looking to downsize and not have to worry about property maintenance. And you can always lower the price—the most painful option.
If you’re looking to buy a condo, the ball is in your court. Before you buy, cautions Slater, make sure to ask what’s the owner/occupant ratio. “Owners generally take better care of a property than renters,” he says. The percentage of owners to renters will affect your own unit’s value too. Also, ask about the dues structure—how much you have to pay in fees each month. Now is a great time to ask for a reduction—and get it.—Jessie Knadler