David Black, a broker with the Kentwood Co. in Cherry Creek, recently searched the listings for a client seeking a condominium.
The buyer wanted a one-bedroom unit, costing less than $150,000, in the Southeast Denver area. Black, who typically sells pricier properties, typed these criteria into his computer.
“Six hundred came up right away,” Black said. “To me, that was surprising.”
Welcome to Colorful Condo-rado.
“Colorado’s inventory of unsold condos is at an all-time high,” said Gary Bauer, an independent real-estate analyst in Denver. According to Bauer’s analysis:
* Condo sales have slipped 1 percent year-to-date, compared with a year ago.
* The average price of sold condos year-to-date is down 1.5 percent to $185,000, compared with a year ago.
* Condo owners are increasingly renting their pads instead of selling them in a depreciating market.
Nationally, it’s worse. Condominium and cooperative-housing sales are down 14.6 percent from last year, according to the National Association of Realtors.
Ironically, condos have been a victim of a red-hot real-estate market. As interest rates fell to 46-year lows three years ago, condo owners realized they could afford single-family homes and put their condos up for sale. At the same time, low interest rates lured many first-time homebuyers to the condo market, but they didn’t want old condos.
“Why pay for a resale condo when you can buy a new one?” said Bauer.
Indeed. Even amid the slump, new condos are cropping up like weeds, in fields, in urban parking lots, in former airports and military bases, and along new tollways and light-rail lines. With all these shiny, new residences, used condos are about as appealing as used condoms.
“I just can’t get any showings,” said Carol Richardson of Re/Max Alliance, referring to a property near Hampden Avenue and Tamarac Drive in south Denver. “Someone tried to show it last week, and they canceled before they saw it.”
The property is priced in the low $60,000 range. It was built in the 1960s but has new appliances, new paint, new carpet and access to a swimming pool. It’s a short walk from Wal-Mart, Whole Foods, restaurants and movie theaters. It’s on a bus route and not far from light rail. It’s probably cheaper than renting.
But for months now, nobody even wants to look at it, said Richardson, who has sold real estate since 1983.
Prominent Denver Realtor Ed Jalowski, of Classic Advantage Realty, said he hasn’t seen a condo market like this since the savings-and-loan crisis devastated Colorado in the late 1980s. Then, condos in cities such as Aurora and Colorado Springs could barely fetch $25,000.
Jalowski rattled off a list of condos and days-on-the-market in an area he’d recently researched. “Here’s one for 90 days, another for 153 days, 388 days, 160 days, 268 days, 188 days,” he said. “The shortest sale I see here is 63 days.”
He said many condo sellers he sees owe more on their units than they are worth due to slipping values and aggressive financing. And Colorado has had the highest foreclosure rate in the nation.
Despite condo slumps in many parts of the Denver metro area, pricey developments in Cherry Creek and downtown Denver continue to defy gravity. But even in areas of relative strength, anyone selling an old property is likely competing against a developer selling a new one.
Eventually, condo builders will feel the squeeze. Buyers used to line up to make competing bids on new units, but now developers are turning to auctioneers.
“Our business is up,” said J. Craig King, CEO of national auctioneer J.P. King, based in Gadsden, Ala. “The market has cooled with the rise in interest rates. So developers are falling behind on projections. An auction will allow them to get back up to speed.”
Auctions save builders money because they dispense with inventory quickly and attract buyers who perceive they are getting a bargain, King said.
Given the market, he says, he’ll be doing several auctions in Condo-rado this year. But no matter how bad it gets, there’s always a bright side.
“There’s so much on the market,” said Black. “It’s a good time to buy.”
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to him at denverpostbloghouse.com/lewis, 303-820-1967 or alewis@denverpost.com.
