Why Condo Listings are Growing
I’ve been seeing a lot of great condos coming on the market lately. Why the surge? It has to do with changes to state law that took effect on May 23, 2017 with Governor Hickenlooper’s signature on H.B. 1279.
As noted in this article from the Denver Business Journal, condos had accounted for approximately 20 percent of the housing stock in the Denver metro area as recently as 2008. That plummeted to roughly 3 percent by the end of 2016, making Denver “an aberration among comparable cities.” Some said the drop was due to millennials who weren’t interested in owning property or who couldn’t afford to. Others said the drop was the result of market forces in which high rents made it more profitable for developers to build apartments rather than condos.
But developers and builders linked the drop to laws that made it easy for them to become the target of lawsuits with the potential to put them out of business. Under those laws, condo association boards (sometimes comprising as few as three people) could sue builders and developers for “construction defects” as their first option — without giving these companies the opportunity to correct the problems without involving the courts.
House Bill 1279 established commonsense procedures for resolving construction-defect issues. These included requiring the vote of a majority of condo owners before proceeding with legal action, as well as a 90-day period for use by lawyers and developers to present benefits and drawbacks to the contemplated lawsuit.
When he signed the bill, Governor Hickenlooper said he “expects the new law to get developers to put up reasonably priced condominiums…” And we’re starting to see the effects. The chart below shows the number of active listings for “attached homes” (real estate-speak for condos and townhomes) skyrocketing since late last year.
Why a Condo Can Be a Great Option for a First-Time Homebuyer
There are five big benefits to choosing a condo as a first-time homebuyer:
- Lower Price and Lower Down Payment – Generally, condos are priced more affordably than single-family homes of comparable size. For instance, assuming you can find a listing for a 2-bed, 2-bath single-family home, you can expect to pay around $390,000. A condo of the same size will average around $275,000…much more attainable for a first-time buyer. When your purchase price is lower, the total amount of your downpayment is automatically lower.
- No Exterior Maintenance Worries – Your monthly condo association fees go to the upkeep of all of the property’s common areas. You won’t have to deal with lawns, painting, fences, etc. Millennials, busy professionals, and seniors alike appreciate the “lock-and-leave” lifestyle offered by condo living.
- You Can Finally Decorate and Renovate – Unlike an apartment, a condo is YOURS. No more asking a landlord if you can paint a wall. No more “will I get my damage deposit back” worries. You can make all the renovations you like and can afford (assuming, of course, that you get permits if needed and inspections as required). This sort of control is very appealing.
- Condo Amenities – Not every condo building or community will have these, depending on its age and location. But many do offer amenities comparable to – or better than – those at apartment communities. Your condo may have a doorman, pool, workout room, clubhouse, or more. Condos in downtown areas may even be built above a ground floor with retail, dining, and services such as a market or dry cleaner.
- Investment Potential – Buying a condo can be the first step toward real estate investing and reaping the benefits of passive income. Let’s say you own your condo for four years and are then in a position to purchase a single-family home (better salary, better credit, married with two incomes, etc.). When you move up to your next home, you can decide to turn your condo into a rental and become a source of income. (Be sure to consult an accountant and/or other tax professional about your situation.)
Ready to Buy a Condo?
If you’ve been waiting to get into the market as a first-time homebuyer – or if you want to purchase an investment property – now might be the right time to look at condos. Higher inventory levels mean more for buyers to choose from and the prices can usually be negotiated. Contact me at 303-204-6494 or email@example.com.