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From boom to bust?: Downtown Salt Lake City's condo market was on fire, but it may be slowing
(Salt Lake Tribune, The (KRT) Via Acquire Media NewsEdge) Jun. 11--Downtown Salt Lake City's condo market has gone from sizzling to fizzling.
Although prices haven't fallen yet, sales have, and if the latter continue downward, prices could follow.
Just 12 months ago, buyers signed contracts to purchase more than half of the available units at The Metro condominiums downtown in just the first two weeks they were on the market.
Through December, dozens more people committed to buy units. But since then? Just one buyer has signed on the dotted line.
Developers of The Metro, 350 S. 200 East, are fortunate in that the market's downturn comes when only 16 of the building's 117 units are not under contract.
"Our timing, in that regard, was fortuitous," said Andrew Pratt, director of sales and marketing for the project.
And in the condo market, timing is everything. A decade ago, condos in the downtown area weren't selling very well. In recent years, the market has improved as more people have been drawn to downtown living and the proliferation of attractions. Utah's strong job and population growth have added to the momentum.
But as with the single-family market along the Wasatch Front, tighter lending standards put in place last summer after the nation's subprime lending crisis have taken their toll.
Veteran downtown real estate agent Babs De Lay doubts that the condo market, while slowing, is headed for serious trouble because several projects that would have substantially added to inventories of properties for sale are on hold.
"Lenders aren't willing to finance anything right now, and that will keep inventory very reasonable for the next few years," she said.
De Lay said how well a condo unit might sell today depends in great part on its location and price range.
"Anything under $175,000 is going very fast," De Lay said.
The 30-unit Armista condominium project at 555 E. 100 South was sold out in about six months, she said. Units were priced at just under $170,000.
At The Metro, units originally sold from $150,000 to $900,000. The 16 unsold units are priced from $330,000 to nearly $583,000. The building will be ready for residents to close on their properties and move in this summer.
Andre Ausseresses of Salt Lake City, who is under contract to buy in the project, said he has noticed the lack of sales activity in recent months.
Ausseresses sold a condo in the Cottonwood Heights area last spring, so he doesn't have to worry about selling another property before he can close on his new one. The only worry now is that the remaining condos in The Metro get sold and that the developer doesn't resort to cutting the asking price below what Ausseresses and other buyers committed to pay earlier.
Pratt said that isn't likely to happen given the small number of remaining units.
Even with the shift in the market, Ausseresses said he's excited about moving into The Metro and living downtown, where he can walk to work and to many leisure activities.
Across downtown, to the west, Howa Capital expected to start work on its 90-unit condo and town-home development along 300 West between 500 North and 600 North in January. Instead, the company is set to begin construction shortly on the planned retail and office space of the Marmalade project.
"It's just not a great business situation to start a condo project right now," said Dru Damico, director of development for Howa Capital. "We're seeing a lot of inventory on the market in the price range we're looking to sell these for, and we're not seeing a lot of sales volume."
Damico said his company probably will start construction on the condos and town homes, priced from $350,000 to $1 million, this fall, if all goes well with financing. Completion, originally set for next summer, now could be as late as 2010.
One big unknown in the downtown Salt Lake City condo market is The Church of Jesus Christ of Latter-day Saints, which has yet to release details such as pricing of the approximately 700 condos and apartments it plans to build in its City Creek Center project in downtown Salt Lake City.
Church spokesman Dale Bills said City Creek's first residential buildings will be finished in early 2010, with additional units coming online in 2011 and 2012.
About 100 condos in the project will be developed by Utah real estate firm Cowboy Partners. Dan Lofgren of Cowboy Partners said construction won't begin on his company's condos until around 2010.
"If I were poised to break ground today, would I be concerned about the market? Sure," he said. "The market as a whole is clearly different than it was two years ago. There are reasons to be cautious right now."
Just how fast the real estate market turned in the Salt Lake area has surprised developers such as Craig Mecham, who is redeveloping part of the heart of Sugar House with a mix of offices, retail space and condos. He said he's concerned that as he nears the point of breaking ground, commercial and residential real estate are slowing down. The condo market, he said, is one of his greatest concerns.
"Everything is softening. It makes us nervous, to be quite honest."
lesley@sltrib.com
To see more of The Salt Lake Tribune, or to subscribe to the newspaper, go to http://www.sltrib.com.
Copyright (c) 2008, The Salt Lake Tribune
Distributed by McClatchy-Tribune Information Services.
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