DEAR MR. MYERS: My job requires that I travel around the country a lot. Just a few years ago, nearly every big city that I visited was filled with construction cranes to build new condominium projects. Now, most of them are gone. Is the condo market dead?
ANSWER: No, not by a long shot. In its most recent report, economists at the National Association of Realtors say that the median sales price of a U.S. condo in January of this year was $231,600. That was up 7.1 percent from a year earlier.
The median price of a single-family home rose a smaller 5.7 percent, to $241,700.
Several factors, though, have caused a slowdown in new condo construction. For starters, it’s easier for builders to get bank financing for apartment projects because they create steady monthly cash flow. Condos, conversely, are a “one-shot” deal: If they don’t sell quickly, the builder might not be able to repay its development loan.
Further, the steady rise in prices for condos and single-family homes alike has increased demand for rental units, because millions of Americans can no longer scrape up a down payment or qualify for a mortgage to buy a home. On top of that, many cities and states recently have passed laws that make it easier for the buyer of a condo to sue a builder for construction defects or other problems. Renters have more-limited options to file a lawsuit.
Most economists say that the drop in the construction of new condos bodes well for those who already own one. That’s because they won’t have to compete with as many similar properties when they eventually sell, encouraging potential buyers to meet or exceed the seller’s asking price.
REAL ESTATE TRIVIA: The U.S. Census Bureau’s latest report states that only 7 percent of new multifamily projects in 2016 were for-sale condos. That’s down from an average of 22 percent a year from 1985 through 2003.
DEAR MR. MYERS: I occasionally see real estate advertisements for properties that are called “gut renovations.” What are they?
ANSWER: The definition of a gut renovation varies among real estate agents. But most use it to describe a home that is in such terrible shape that it requires a major structural overhaul – often involving the installation of a new roof, replacement of much of the framing, an entirely new plumbing system or all three – in order to make it livable.
Because these properties require such costly repairs, they’re offered for far less that similarly sized homes in the same neighborhood that are in better shape. But buying a gut renovation isn’t for the faint of heart, which explains why they usually are purchased by veteran real estate investors or skilled contractors who have the knowledge and experience to tackle gigantic renovation projects.
DEAR MR. MYERS: I am trying to find a tenant for a unit in a small apartment building that I own. One applicant has a great credit history and seems very nice, but she is blind and has a guide dog. She seems like she would be a perfect tenant, but I don’t want to rent to people who have pets. Can I reject her application because she has a dog?
ANSWER: I can understand your concern about pets, but your worries about the blind applicant’s guide dog are completely unfounded. Such dogs are not pets, but are highly trained “support animals” that are, frankly, better-behaved than a lot of tenants I have dealt with over the years.
Equally important, you admit that the blind applicant has a sterling credit history and would make a “perfect tenant.” Refusing to rent to a creditworthy tenant simply because she or he has a guide dog would violate both state and federal fair-housing laws.
Such laws supersede all “no-pets” policies, even in large apartment and condo complexes where dogs are strictly prohibited.
Smart landlords always rent to the best possible tenant. In your case, that tenant just happens to be blind. Leasing the property to her not only would be a good financial move, but also could help you avoid a costly housing-discrimination lawsuit.
Contact your local fair-housing council, rent board or apartment association for more details.
David W. Myers’ column is distributed by Cowles Syndicate Inc.