We’ve all been glued to stories detailing how the real estate market has avoided doom and roared back to life as quickly as dentists (one needs open houses, the other open mouths). But all the reports of low inventory surround the single-family home market. I’ve yet to see a report that talks about the multi-family condo market in any detail.
How’s that doing? Let’s see.
Last August, I wrote a trio of columns detailing the high-rise market in Dallas. At that time there were 133 high-rise condos on the market with a further 11 under contract. I noted that The Warrington on Turtle Creek has 132 units in total – meaning that the sum total number of high-rise condos on the market equated to the units in one building. Not a lot of choice for prospective high-risers or high-rise hoppers.
As of this writing, there are 151 high-rise condos listed in downtown, Uptown, Turtle Creek, and Knox – equating to a 13.5 percent increase from August 2019. However, units under some form of contract increased by 45 percent from 11 in August 2019 and 16 today – yes, it’s just five more, but it’s not a huge amount of inventory either. More inventory has equated to more sales.
Should You Buy a Condo?
There is a smart way to interpret this information, which is that it’s time to buy a condo. The reason is simple, do what others aren’t. Maybe you’d been looking at condos when COVID-19 hit and pulled back to see how the market played out. Now we all know that the purchase market isn’t cratering.
Maybe you’ve been holding out for that dreamy floorplan that never becomes available – the increase in inventory means it might be available now. Maybe you’d gotten frustrated because there was so little to look at. Now there’s more to see, but also more contracts, so don’t dawdle.
That said, not all price points have seen an increase in inventory.
More Affordable Units Available Today
In August 2019, there were just 11 condos available priced between $150,000 and $300,000, today there are 25 – more than double – with the same number under contract. So as we’re hearing of affordable single-family homes being snapped up out in the boonies, you can make the decision to live that urban lifestyle you wanted pre-COVID-19. And next year, when all your friends are kicking themselves for running away to Runaway Bay, Texas you’ll be sitting pretty.
More Luxury Condos on The Market
The other big change from last year is in the $1 million to $1.5 million bracket. What last year had 17 units for sale, now has 26 with the same number under contract (one). This should be great news for downsizers who can sell the big house to a fearful upsizer while enjoying a lot more selection.
Outside the highest $2 million-plus market, the remaining markets between $500,000 and $1 million and $1.5 to $2 million actually have less inventory than a year ago. In fact, that $1.5 to $2 million bracket has less than half the number of units for sale this year.
The other change this year is that while there were two brackets with no pending sales last year, this year all brackets have at least one sale in the hopper – and the two with zero pending last year each have two this year.
Worried About Coronavirus? The Air is Fine
Single family home purchases are on a strong rebound now that open houses are back. Some of those buyers are legitimately doing what they’d naturally be doing. Some are seeking a reasonable increase in size. But many are buying into fear.
In the condo market, some potential buyers are concerned about multi-family living, believing they’re inherently less safe – all those people … breathing. It’s not true. First of all, condos don’t share air, per se. Whether it’s a high-rise or low-rise, heating and air-conditioning are dedicated to each unit.
If you’re ever been on the roof of a modern low- or mid-rise, you will see a sea of air conditioners, each one corresponding to a unit. High-rises use commercial cooling stacks that use water as a heat exchanger. In other words, a dedicated water pipe enters a condo and runs through a heat exchanger that heats or cools the air that’s recirculated in that unit – the water then leaves the unit never having left the pipe. The heat exchangers have air filters to clean the air within the unit. Hallways, lobbies, and other public areas are on their own separate systems.
You Can Social Distance Easily
Social distancing guidelines say to stay six feet apart. In a condo, about the only way to be within six feet of someone not already in your condo is to stand against an adjoining wall – and there’d still be a wall between you.
Dallas high-rise condos are notorious for being low-occupancy – typically one or two people – because Dallas isn’t a family-friendly high-rise market. On my floor at The Claridge, there are six people (soon to be seven) in five units encompassing approximately 18,000 square feet.
Studies have shown that COVID-19 thrives where individual homes are overcrowded – regardless of whether it’s single-family or a condo. Last weekend, the New York Times reported that overcrowding in Silicon Valley’s low-wage areas drives infection rates. Their example was a three-bedroom house with 12 people from three families. One person brought it home from his janitorial job and everyone in the house, but the four children, tested positive.
That same story reported on Chelsea, Massachusetts, home to a large outbreak. On the same blocks studded with overcrowded living conditions there were 375 subsidized apartments run by a non-profit. Those subsidized apartments have an infection rate a tenth that of the surrounding dwellings simply because they’re less crowded.
The enemy is overcrowding, not density.
Older Versus Newer
In New York City before there were condos, there were co-ops. For those who don’t know, before the “invention” of the condo in the late 1960s, multi-family meant either rental units or co-ops. A co-op is where you purchase a share in a company that owns the building which equates to your unit.
Manhattan co-ops are the stuff of legend with prospective tenants wheeling bankers’ boxes of financial records to meet their co-op board’s stiff requirements for entry. There are reports that after a period of unpopularity, they’re seeing more interest in these COVID-19 days.
One of the reasons is that the age of most co-op buildings means they are more likely to have separate rooms instead of open-concept. Work-from-home scenarios and multiple occupants home all day equates to people wanting a door to close. (Remember, single-family/townhouse living is fairly rare in New York City, so families are ubiquitous in their multi-family buildings.
In Dallas, we don’t have co-ops (Park Towers was the only one I’m aware of that had planned to be one). But we do have older high-rises dating from 1957 to the 1960s that would offer more segmented spaces for the couple that needs Zoom call separation.
Walk Away From The Herd
With more inventory in condos than normal and less than normal in single family homes, condos offer more opportunity and less competition. Of course it depends on your budget, because some price brackets offer even less selection this year. But happily, one of the brackets with more inventory is the most affordable.
All it takes is a little fact-finding to belay unfounded fears and a little memory to recall what life was like last year and faith it will return. I have kept up to date on the situation and have not for one day regretted living in a high-rise throughout COVID-19.