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DAA study says condominium sales remain strong
Thursday, April 3, 2008 by Austin Monitor
Despite the gloomy news coming from other parts of the country about entire blocks of empty condominium projects, there is high demand in the downtown condominium market, according to a study commissioned by the Downtown Austin Alliance.
Charles Heimsath of Capitol Market Research gave the good news to members of the DAA on Wednesday. In addition to confirming the positive news of an earlier study, Heimsath looked into the demographics of downtown condo buyers and whether they intended to be owner-occupants or were buying the unit as an investment property. (See In Fact Daily, March 6, 2008).
Heimsath told his audience that many downtown condo developers had capped the number of units being sold purely as investments. “Most of the projects are now limiting investment sales. They require a declaration of your intention to reside in the unit,” he said. “If you don’t intend to reside in the unit, you have to put more money down…or in some cases, once they hit their threshold, they won’t let you buy a unit.”
Sales so far have been strong, Heimsath said, with a majority of the condos being sold to existing Central Texas residents. His statistics showed 68 percent of condo buyers are from Austin, and 14 percent were already downtown residents. “A majority of the other people are coming from other big cities in Texas,” he said. “Only 19 percent of the buyers are coming from out of state.”
While few condos may meet the city’s definition of ‘affordable’, Heimsath also said that only a handful of units were being marketed in the ‘super-luxury’ market. Of the seven condo towers either finished or under construction, he said, “there are only two of them we would classify as ‘super-luxury’, where the unit prices exceed $1 million. Most of the other projects have prices that range from the mid-$200,000 to $600,000 range, with an average price of about $400,000.”
One condo developer, Perry Lorenz, confirmed Heimsath’s conclusions anecdotally, telling In Fact Daily, “It is truly remarkable. We just had the best month of sales at Spring that we have had in seven months.
Following his presentation to the members of the DAA, Heimsath answered a few questions from members of the audience, including one on the feasibility of having 25,000 people living downtown. Mayor Will Wynn has expressed a desire to reach that population level downtown by 2015. Heimsath, however, offered a caution about the possibility of reaching that goal.
“We’d have to have a lot of really tall, 40 and 50 story towers,” he said. “You’ve just got to do the math and look at the Capitol View Corridors. We would have to sacrifice a lot of other things, for example that wonderful old historic district in the northeast part of downtown,” he said. “I’m not sure that’s a desirable goal. Certainly, you can put a lot more people in the Rainey Street area at CBD zoning than we could at SF-3, and I think we’ll see a number of projects pop up over there.” But Heimsath said he was not objecting to the Mayor’s push for more densification. “It’s going to be tough to get 25,000, that’s for sure, but that’s what goals are all about,” he said.
The study is available on the DAA’s web site at www.downtownaustin.com .
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