The Statesman ran a comprehensive analysis of the current condo building boom — it was the lead story in today’s paper. As part of the article, they interviewed many experts on the downtown condo market.
With the ongoing mortgage crisis, the billion dollar question is how the Austin condo market will fare. The answer: while the Austin market is one of the strongest in the country and condo demand remains strong, nobody really knows. The issue is that this is a new market: there is really no good parallel in the history of the city. According to the Statesman:
Forecasting demand for luxury condos is difficult, partly because there is little historical data for the fairly new phenomenon in Austin, said Eldon Rude, director for the Austin market of Metrostudy, which tracks the housing market.The next 12 months will be telling, Rude said. “We won’t know how strong this market is until we see some of these projects get completed and begin to close units and move residents in.”Their performance will depend on the economy, he said, “and it’s impossible to forecast the state of our economy 12 months from now. ”
As we have discussed, thousands of units are being planned for downtown Austin — more than 1,000 are currently under construction. In fact, hundreds of units have been reserved in the last two months alone. For comparison, only 15 downtown condo units have sold on the resale market in this same time period. The difficult thing is that it is dozens of new projects which are being simultaneously introduced to the market. While demand has been strong for the prime projects, it can’t be bottomless and nobody knows where the market ends.
One thing which is clear is that the market is stronger on the low end than the high end. The lowest priced units are moving very quickly while it remains to be seen how the high end units will fare. Like many other markets, it will likely be years before we know how many people want to live in a downtown condo and have the resources to afford it!