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Condos sell for $44,500 to $58,000

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POSTED June 4, 2010 2:51 a.m.
Determining value - especially with cash buyers - is an art and not a science.

If you doubt that, consider the Cherry Lane  Condos on Union Road at Cherry Lane that are ground zero for almost 100 percent cash transactions.

Condo complexes - when the majority of units are owned by investors - do not go FFA which is where most of the first-time buyers secure financing in today’s market.

At the height of the housing bubble in early 2006, the 941- and 944-square-foot units peaked at $220,000. Activity since January of this year reflects nearly an 80 percent plunge in some condos.

The sales statistics are as follows:

944-square-foot units
•One closed escrow Jan. 21 for $44,900

•One closed escrow in February for $56,000.

•One closed escrow March 26 for $51,000.

•One closed escrow April 7 for $48,500.

•One closed escrow May 21 for $44,500.

One is being offered as a short sale for $48,000.

941-square-foot units
•One closed escrow Jan. 29 for $46,200.

•One closed escrow in February for $58,000

•One closed escrow March 29 for $56,000.

•One closed escrow May 4 for $45,000.

•One is being offered as a foreclosure for $61,600.

•One is being offered by the owner for $95,000.

At first glance you might ask what gives?

A lot more goes into determining value than just what similar properties have sold for in recent months. That runs the gamut from the condition of the unit to where it is located within the condo complex. Even at $58,000, the units are an investor’s dream. Assume a $200 a month association fee and $750 a month rent payments. $1,000 a year in property taxes and insurance and that is a $500 a month positive cash flow. In a year’s time investing $58,000 has the potential of returning $5,000. That is well in excess of an annual return of 10 percent.

Given the fact financing is so difficult for condos when it comes to first-time buyers rest assured that when the Cherry Lane Condos do show steady and consistent value increases across the board based on selling prices that we will definitely be on the way up - or at least on an even keel.

No other segment of the market was devastated as much as apartment condo conversions in the Northern San Joaquin Valley due to the limited options sellers have as FHA loans for buyers are a “no go” almost all of the time. That is why they the condos will be the last to rebound.
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