Condos grow from disputed sale.
A condominium complex with a twist - small, entry-level units with low price tags aimed at first-time and single buyers - will hit the local housing market Saturday. The condos are part of Westmoreland Village, formerly student housing owned by the University of Oregon, until a controversial sale last year.
The four one-bedroom models, with about 500 square feet, will be offered at $94,900, and the remaining 82 units, which have two bedrooms, will start at $99,900, developer Mike O'Connell Sr. said. He estimates that the monthly payments for most of the condos - principal, interest, taxes, insurance and homeowner's association fees - will be less than $900. O'Connell said he expects to sell as many as 20 condos the first day.
The price alone should bring many would-be homeowners to take a look at the Westmoreland Village condos, said Charlotte Boxer, director of commercial real estate markets for Pacific Continental Bank.
"Even though the units are small, there is a very strong demand for entry-level home ownership, and these are units almost anyone in the homebuying market can afford," Boxer said. "For someone just out of college, or a single parent with a child, at those prices, something like this is ideal, to let them get into homeownership, build up equity and then move up. I applaud people who bring this kind of home ownership to the market."
Sale raised controversy
Not that O'Connell's purchase, and development of, the property proceeded without snags. Some students and faculty members, as well as neighborhood groups and several state legislators fought to derail the sale, citing financial hardship for students trying to complete their educations on tight budgets in the face of escalating tuition and market rents.
O'Connell drew additional ire when he said he might divide the entire Westmoreland property into individual tax lots, selling off the individual fourplex and duplex buildings to other investors, an option he is still considering.
Eventually, the state Board of Higher Education approved the sale; the university used the proceeds to retire other housing debt and to purchase the vacant Romania automobile sales property on Franklin Boulevard, east of the campus.
As part of the sale agreement, Westmoreland Village LLC agreed to keep apartment rentals at the low end of the market. The University of Oregon agreed to subsidize the rent on UO student-occupied units through June 2008, O'Connell said. One-bedroom units rent for $495 per month, two-bedroom apartments for $550.
David Richey, who lives a few blocks away, started out as an outspoken critic of the privatization of the Westmoreland complex. He became its first condo purchaser, on behalf of his mother, who will move to Eugene from Austin, Texas, to be nearer her grown children.
"I followed the issue as it transitioned from the UO, through the neighborhood group process and the sale," Richey said. "I was sorry to see it go from UO ownership, but once the scales were tipped, now I think this is an excellent use. There's nothing else like it for location, price and amenities, and it opens up new avenues for affordable housing, which is also important."
Some area real estate brokers, too, are enthusiastic at the prospect of condo units coming on the market at a price affordable to first-time homeowners.
"I think that's very exciting," said Patti Burke, a broker with John L. Scott Real Estate and agent for the upscale Terraces at the Pavilion condominiums on Rustic Place off Coburg Road. "I think there should be an excellent market for condos in that size and price range."
Condominiums selling well
Since completion of the $10.5 million Rustic Place development in March, 60 percent of the condos - including all the one-bedroom units and five of six freestanding townhouses - have been sold, Burke said. Those units range in price from $190,000 to just under $300,000.
The market for condominium housing continues to be hot, agreed Maria Roberts of Windermere Jean Tate Real Estate, one of a three-member marketing team that has closed deals on all 46 units of the posh Tate Condominiums at 1375 Olive St. in downtown Eugene.
"If it's in a good location and it's priced right, it's gone," Roberts said. "I think the demand for condos is just going to get greater."
In Lane County, 193 condominium units changed hands last year, with a median price of $168,000, said Natalie Middleton of the Regional Multiple Listing Service in Portland.
Although real estate people say there is a brisk market for condos, requests for conversions of apartment units to condominiums have slowed considerably, said Linda Dawson, grants manager for the city of Eugene and tracker of conversion permits. Dawson said she's had only one request besides Westmoreland - and that for only five units - in the past several months.
"A year ago, even six months ago, I was getting a lot more calls (about conversions)," she said. "But it's not an overwhelming number any more - it's really fallen off."
Fall completion expected
The 86 Westmoreland Village condos are located along the Amazon channel on the northeast corner of the former Westmoreland Family Housing complex, which straddles several blocks of Arthur Street north of West 18th Avenue in Eugene.
O'Connell - along with Ron Howard, Don Jackson and Larry Burr, his partners in a limited liability corporation called Westmoreland Village - purchased the 20.5-acre site, with a total of 404 duplex and fourplex apartment units, from the University of Oregon last year for $18.4 million.
Liberty Bank, through Bill Morris, its vice president for commercial lending, advanced a $17 million loan - the largest in its history - to fund the project, O'Connell said.
Since closing the deal at the end of September 2006, the partnership has spent $2.8 million renovating the condominiums. O'Connell said four models will be completed when the units officially go on the market this weekend, and another 20 will be 90 percent complete.
Renovation of all of the condos should be finished by the end of October, he said. Nationwide, homebuyers purchased 803,000 condominium units last year, with a median sale price - meaning half were more expensive and half less - of just under $222,000, according to the National Association of Realtors. That was a 10 percent decrease in the number of sales from 2005, with a median drop in price just under 1 percent.
A recent survey by the National Association of Home Builders found that 70 percent of condo purchasers choose their units based on location and price. Among the 1,000 condominium owners who participated in the poll, nearly half did not even consider purchasing any other kind of housing, the NAHB said. Two types of buyers - young, highly paid professionals and older people who no longer wanted the chore of maintaining a house and yard - dominated condo sales.
After price and location, condo buyers cited size, neighborhood and investment potential as reasons to purchase a condominium.
Just over half of condo purchasers in the nationwide survey were first-time homebuyers, exactly the niche O'Connell hopes to fill.
"We've really upgraded these units, from stem to stern," he said. "They have all new kitchens, windows, doors, floors and wall treatments. Some have built-in washers and dryers. They are really, really cool, really nice."
Most apartments rented
Monthly homeowner's fees will come to $139.50 per unit per month, which covers exterior maintenance and water, sewer and garbage fees, he said. Comparable fees for the Rustic Place condo development range from $165 to $260 monthly, based on floor plans; those fees also include cable, Burke said.
The remaining 318 apartment units in Westmoreland Village also are undergoing renovation, at a total cost of $2.5 million, O'Connell said. Nearly all of the apartment units have tenants; about 265 have been refurbished so far.
"The situation when we bought the complex was very conducive to the remodeling," O'Connell said. "The university had stopped renting as apartments became vacant, so when we took over, there were only 130 that were occupied. It made it easy to start remodeling, which we did in July - the university allowed us to start that before we closed (the sale)."
No one displaced
Nobody was displaced from the apartment units, he said, and Westmoreland Village worked through the city of Eugene's process for vacating units slated for condominium renovation, a process that can include counseling to help displaced tenants find comparable housing, payment of moving costs and, in some cases, assistance in packing and unpacking for people with special needs, such as the elderly or disabled.
"We were able to move many people to non-condo units, so things went pretty smoothly," O'Connell said.
Eventually, each duplex and fourplex building will be sold, "probably 90 percent to investors" who will maintain them as rental units, he said. Prices have not been established for those buildings.
The mix in one development of condominium and rental units would be her greatest concern about the eventual success of the Westmoreland Village project, Pacific Continental's Boxer said.
"Having the two types of housing in one development can be a difficult thing," she said. "With condos, you have people who are committed to the quality and upkeep of the development, because they own their homes. When you have a lot of rental units with transient populations - especially if the buildings are in different ownerships - there's no guarantee that everyone will be as committed to the neighborhood."
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|Title Annotation:||Business; Westmoreland Village condominiums are expected to appeal to first-time home buyers|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Jun 20, 2007|
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