Condominium sales buck the trend by remaining solid.

Condominium sales buck the trend by remaining solid

Relative scarcity and increased demand appear to be keeping the outlook for condominium sales relatively healthy in spite of the recession.

In California, the median condominium price appreciated by 3.8 percent from 1989 to 1990, compared to a .8 percent decline for detached homes, according to statistics from the California Association of Realtors.

Inventory unsold, the number of months it would take to deplete the current housing supply, has risen relatively less for condominiums than for detached homes, increasing by 69 percent from last year for condominiums and 80 percent for detached homes.

Still, the inventory increase confirms expert opinion that should the economy continue in low gear, condominiums will not be exempt from sluggish sales. Condominiums are increasingly the choice of California property owners, with condominiums up 27.7 percent of the total resale housing market in 1990 compared to 21.1 percent in 1987.

"The condominium market is expected to continue to outperform detached homes in all facets," said Lotus Lou, a spokeswoman for the California Association of Realtors.

That was not always the case.

"I remember when you couldn't give them away," said Charles Lamb, owner of Century 21/Lamb Realtors of Northridge. "You couldn't get loans on them."

Now, he said, resale demand is hot in the valley, which along with West Los Angeles is the area of largest condominium development in Los Angeles County.

Lamb said that of 40 condos his company listed in September, within 75 days, 36 were in escrow. "As long as the seller is realistic and can give it a good marketing, we get a sale."

Lamb agreed with others that a price of $300,000 has functioned as a dividing line for both detached homes and condominiums. Properties below that benchmark are selling briskly, while properties above it face slowgoing, he said.

The addition of new condominiums to the market has been sluggish. "It's been slow all year, with the Mid-East the capper of a bad situation," said Bill Paumier, president of Urbanalysis of Marina del Rey. "For over a year there has been no real estate market for new product."

Paumier said that while many projects have been approved in West Los Angeles only a fraction are being built.

Condominium project size is also smaller. A 15-unit project in West Los Angeles and a 25-unit project in the San Fernando Valley today are deemed large projects, even though they are only half the size of typical projects during the early 1980s.

The worst market for new condos may be Beverly Hills, which one real estate expert termed "grim, dismal and abysmal." Seven projects with 130 units which came on the market during Fall 1989 today are only roughly half-sold, the expert said.

"It's typical pastelish, no one spent the time to design," said Wayne Tipton, project manager of Tekno Development of Beverly Hills, of the Beverly Hills projects. "The land costs are so incredibly high that they can't afford to do anything better."

Other experts agreed that buyers are demanding more for high priced projects. "There's a lot of competition on the street and a limited market," said John Hekhuis, an architect at Richard Magee & Associates of Westwood which is involved in the design of two luxury buildings along the Golden Mile of Wilshire Boulevard in Westwood.

Despite earlier forecasts that the Golden Mile's exclusive product would resist the economic downturn, projects along the row have experienced significant slowdown from a year ago. The number of presold units at the exclusive The Wilshire, for instance, fell from 79 a year ago to just 55 units today, according to The Meyers Group.

The Golden Mile, however, may have scarcity on its side, as there are only three existing buildings selling condominiums and three more buildings with entitlements to build, Paumier said.

The waterfront in Long Beach also offers a golden opportunity for highrise condos, as it is the only area of development with water exposure in Los Angeles County.

Two downtown highrise condos in Long Beach built two years ago sold quickly, spurring demand for further developments, said Cliff Ratkovich, executive vice president of the Ratkovich Co.

The Ratkovich Co. will submit plans to Long Beach in the next two weeks for 400 condominium units in its Pike Property opposite city hall in downtown Long Beach.

"Long Beach has emerged as a hot condo market over the last several years in what was heretofore an unproven market," Ratkovich said.

As density in the county increases, condominiums are being blended with commercial and cultural activity in new ways.

Ratkovich touts his company's Craft and Folk Art Museum Tower across from the Los Angeles County Museum of Art as the first Los Angeles County project to combine residences - 55 high-rise condominiums - with a museum, the Craft and Folk Art Museum.

Like the Pike Property condominiums, construction on the project will begin in the first quarter of 1992.

Style and quality are spelling the difference between the projects which sell and those that remain vacant, Tipton said.

One condominium sales specialist, Mikki Wood, manager of the West Los Angeles condominium division of Merrill Lynch Realty, said that buyers have become increasingly specific about what they want in condominiums: security systems, exercise rooms, valets, controlled access, attractive lobbies and more spacious units.

Lamb added that condominiums have become more than just a first home for many residents over the last five years.

"People move from one condo to another," he said. "They learn to enjoy the lifestyle and there is a lot of movedown from houses, people who want to stop mowing the lawn."

Paumier agreed, adding that the townhouses are also becoming rarefield in the minds of some buyers. "The values of classic townhouses are becoming premium," he said. "They are becoming quasi-private homes."

Condominium conversions are also doing well, said Lamb, selling at 10 to 15 percent less than comparable-quality condominiums built as such.

Paumier said that there have been few recent conversions, largely because of parking and other regulations and because many units that could be converted were converted during the early 1980s condominium boom.

The late 1980s housing boom was not a boom for condominiums. Condominium builders kept product development in check as condominium prices failed to mirror the appreciation seen in the detached home markets and as builders remembered the overbuilding of condominiums on the Golden Mile market in the early 1980s that left the market glutted until late 1986.

Paumier said, however, developers are planning for the days when demand tightens and financing becomes more available. He noted that the number of West Los Angeles subdivision units recorded with the city of Los Angeles - a step required prior to selling condos as individual units - actually increased despite the slowing economy, from 265 units in the second half of 1989 to 278 units in the second half of 1990.

PHOTO : Condos: Market continues to outperform detached homes