Condo appreciation.

WITH downtown condominium prices rising at a faster rate than the rest of the county, the inevitable question is how long it can last.

"Prices are going up $10,000 to $20,000 every other month," said Mirza Alli, president of Bunker Hill Real Estate Co. "The late '80s was the last peak, but (prices) are probably about 30 percent higher now."

Few places locally have had a stronger run-up than downtown. The median sale price of a condominium north of Third Street, including parts of Chinatown and Echo Park, was nearly $259,000 in 2003. That's a 92 percent increase from 1998 and a 3 percent premium on the countywide average, according to DataQuick Information Systems.

South of Ninth Street, where the 1999 completion of Staples Center has helped spur residential projects like the Flower Street Lofts, prices have more than tripled in the same period.

"It's been rather phenomenal," said Charles Le, broker at RE/MAX Beverly Hills. "Once the interest rates dropped, that really stimulated people who had reservations before."

The appreciation is hitting both newer projects and high-rises built in the 1980s. A two-bedroom unit in Promenade West Condominiums that traded for $171,000 in March 1998 sold for $375,000 last month. Units at Toy Warehouse Lofts, built in 2000 and selling in the $350,000 range the following year, are on the market for $550,000.

About 20 percent of the new buyers are downtown renters lured into the market by low interest rates, which are projected to rise. Also, a spate of projects will add substantially to downtown's supply.

While a few new projects are coming on line, that influx is too small to saturate the market, according to Leslie Appleton-Young, chief economist at California Association of Realtors. But thousands of new rental units are already affecting the rates that condo owners can get when they lease out their units. That could ultimately affect condo sales.

"The condos are not renting as fast as they were a year ago," said Alli, who estimated that rents for high-end units have fallen about 20 percent in the past year.

Across the county, the rate of condo appreciation has outpaced the single-family home market. Higher apartment rents, low interest rates and a median single-family home price of $360,000 have made condos the most viable option for first-time buyers.

As a result, single-family homes in L.A. County appreciated by about 21 percent last year, while condo prices jumped by nearly 24 percent.

That rise is no protection against a fall. By the mid-1990s, downtown prices were at about half the levels of the late 1980s. More recently, in the economic downturn of 2001, condo prices, up 9 percent countywide, dropped slightly in downtown.

"The condos are doing what the move-up market did two years ago," said John Karevoll, an analyst at DataQuick, noting that entry-level homes and condos tend to lag more expensive markets in both up and down markets.