A 29-year-old man from Bosnia has lived in America nearly half his life. Recently, he gained citizenship and a solid government job. But he itches to complete his American dream with one more accomplishment: homeownership.
Yet as this true tale illustrates, the man has his own version of the ideal property. Rather than seeking the classic detached house on a suburban cul-de-sac, he hankers for the ease and convenience of a condo in a vibrant, walkable city center near a strong public transportation system.
Stacy Berman, a longtime realty company manager who also relishes urban living, doesn’t know the homebuyer in this story. But from the future resale standpoint, she says he’s wise to focus his search on a community with excellent public transit, especially if that includes a light rail or subway station within a mile.
As with all real estate purchases, she says it’s best to buy a condo you could hold for multiple years, the longer the better.
“Look for a place you could easily rent out if you plan to live there for only a few short years. There’s a strong demand for rental housing in vital city neighborhoods,” Berman says.
Here are a few other pointers for urban condo buyers:
-- Trust your gut level reaction when it comes to location.
Resale data can tell you a lot about the desirability of a condo building. But your emotional response to a building is also telling, says Fred Meyer, a real estate appraiser and broker who’s sold homes since 1963.
“If you love it wholeheartedly, chances are good others will love it, too. That means when you put it on the market years from now, it should be easier to sell,” Meyer says.
-- Look for a community with a strong job base.
It’s no secret that the vitality of a local real estate market is tied closely to the employment strength of the area. But as Meyer says, the buyers of condos shouldn’t count on a single employer to keep the local economy afloat.
“You don’t want to buy in a one-factory town that would be badly hurt if that single employer closes. Look for multiple employers. For example, in the Seattle area, it’s highly unlikely that Microsoft and other high-tech companies will all move away or that most federal employment will bail out of Washington, D.C.,” he says.
-- Consult statistics to validate your hunches about the right condo building.
As Meyer says, your emotional reaction to a condo building can be helpful in the selection process. But you, along with your real estate agent, will also want to search out data that help you analyze the pros and cons of buying in a particular building.
“Look at the resale history for the building going back for as long as four years. Notice especially the median number of days that it takes to sell units in the building. The more days it typically takes to go from list to sell, the less liquid the building,” Meyer says.
Also, he says you should be sure to check the “reserves” of the building -- the amount of money owners there have set aside for key repairs and renovations.
“If the building needs a new roof and there’s no money available for this, all the owners could be hit with a big special assessment,” Meyer says.
-- Question the desirability of buying in a building with rock bottom condo fees.
Nearly all condo buildings impose “condo fees” on all their residents. Among other expenses, these monthly charges cover the cost of routine upkeep on a building and its grounds, along with support services.
John Rygiol, a real estate broker who counts many luxury condo buyers among his clients, advises buyers that seeking a building with rock bottom fees could be a mistake.
“In my experience, you get what you pay for in condo fees. A building with very low fees might actually decline in value, due to poor maintenance. That could make your unit hard to sell in the future,” he says.
-- Avoid a building with a large number of renters.
Homebuyer advocates are wary of buildings in which a large percentage of the units have been rented out by their owners.
What percentage of owner-occupants is sufficient? That depends on the location of the building. In most cases, Meyer says you’ll want to see more than half the units occupied by owners. However, this rule may not hold in a resort community where seasonal rentals are the norm.
Even though it’s not wise to choose a building with a large number of renters, Meyer says it’s also important to avoid a building that prohibits owners from renting out their units should they wish to do so.
-- Pick your condo unit carefully.
Even in the ideal building, not all apartments are created equal. Some would be more salable when it comes time to put your property on the market.
Meyer says it’s usually unwise to buy one of the most expensive condos in a building.
“Buying one of the least expensive condos in a building with much larger and fancier units will help hold up the value of your property over time. That means in the future you’ll probably be able to sell more quickly and for more money. In real estate, you always want progression in values rather than regression,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)