Not every home for sale is flying off the market at record prices, despite the frustration felt by hopeful buyers. Interest in downtown Portland’s luxury condos has fallen so much that next-door neighbors are snapping up an adjacent unit to expand their living space, a condo combining concept seen in Manhattan and San Francisco, but new to Portland.
High-rise condominium buildings are no longer beacons to home shoppers who were once willing to pay soaring prices and fees for concierge services, never-ending views and walkability to social and cultural pleasures.
Penthouses and luxury condos are valued at less than they were before the coronavirus pandemic shutdown and last year’s civil unrest in the streets, according to experts, including Nick Krautter of City and State Real Estate, who analyzes Portland’s top-tier condo market for investors and commercial clients.
While the median sale price for homes across the Portland area has vaulted 10% in the last year, penthouse properties priced or sold for $2 million or more, while only a handful, lost as much as 18% in value, from an adjusted $970 per square foot before March 15, 2020, to $799 on average to the end of last year, found Krautter.
The average price per square foot for high-priced condos currently for sale is $920, Krautter said.
Overall, Portland metro residential properties spend only 27 days on the market before they find a buyer, and the 0.8-month supply of homes for sale – which means it would take about three weeks to zero out all the available homes on the market at the current pace – remains the lowest ever reported in the 30-year history of the Regional Multiple Listing Service (RMLS).
But in the $2 million and more condo market, six sales closed in the last 12 months (for 10% below list price on average) and seven are on the market, said Krautter. That represents a year’s worth of inventory.
Tower dwelling lost its luster instantly when the perks of easy urban living – being near shops, dining and stages – came to a halt due to the pandemic and businesses closed, causing an exodus of workers to less-dense housing with a garden space.
Retirees, typically reliable tower residents, no longer wanted to downsize and trade in a backyard in the burbs for a high-rise with no social distancing space in a shared elevator.
“The communal aspects of condos present a challenge, especially if it’s to be owner-occupied,” said Sean Z. Becker of Portland-based Sean Z Becker Real Estate, who has been selling real estate for 17 years. “When you look at single-family homes, there’s nothing for sale. Then you look at the condo market and it’s the exact opposite. I can’t think of any time when they have been polar opposites.”
Pearl District condo owners like Matthew Krinbring are sticking it out. They see a benefit in urban units that drop in price the longer they linger on the market. He, like a few others in the seven-story Marshall Wells Lofts, have purchased the condo next door.
The plan: Install a wide interior door to link the two lofts, doubling the living space for now and betting the future will be brighter.
At that time, they can seal up the wall that separates the two condos and either rent one out or sell it. In the meantime, one of the kitchens can be a bar area, where the refrigerator becomes a wine cooler, and they can enjoy the expanded patio space overlooking the interior atrium.
Krinbring’s real estate agent Israel Hill of John L. Scott Real Estate’s Portland Northeast said his clients coming from downtown Seattle and other dense metros want to be in the city, but were getting cabin fever in a 700-square-foot loft during stay-at-home orders.
The units remain as two separate tax lots “since we know COVID will end and the market will be viable again,” said Israel. “If you have the funds to ride it out and add assets with low mortgage interest rates, there are new ways to make that happen.”
In other words, literally think outside the box.
Tim Thigpen of Oregon First Realtors specializes in selling “cityscapes to mountain escapes,” and he recognizes that the pandemic shifted priorities.
Elevated views aren’t a trophy anymore, he said. During open houses, he talks to home shoppers who live in a high-rise, often in south Portland, who are hoping to find a place with a balcony where passersby “look like people, not ants,” he said.
Most important, he said, is they want to be protected from downtown issues, but still be close to enjoy cultural and entertainment activities as venues reopen.
“At the start of the COVID nightmare, people were less picky and just wanted to get away. Now buyers are looking longterm,” said Thigpen.
He said his clients are sensitive about rent caps and don’t like that downtown condos have turned into hotels, judging by the number of lockboxes. “At these price points, they seem to be making more of a personal choice,” he said.
Thigpen has a listing that seems to fit newfound preferences: A two-story, midcentury modern condo along the Willamette River in Johns Landing’s Bankside complex that was designed by architect Saul Zaik.
The 1,639-square-foot condo at 5736 S. Riverpoint Lane #20 in Portland is listed at $979,000. It’s been on the market for 173 days.
Thigpen’s client is in no hurry to sell since he doesn’t have a replacement property yet. The owner also hopes to negotiate a package deal to include the condo’s furnishings and a 26-foot Sea Ray Sundancer powerboat plus a 36-foot boat slip.
Some sellers are relying on millennials to enter the urban condominium market, since investors are staying out, said Matthew Gardner, chief economist for Windermere Real Estate.
People who were previously priced out of a condo are now taking a closer look while investors wait on the sideline as vacancy rates rise in urban apartments, making rents drop, said Gardner.
Krautter of City and State Real Estate advised his clients in a newsletter that there is a risk that recovery might take years and rising mortgage rates limit the buying power for borrowers.
“Overall, we recommend selling now or looking at a holding period of five to 10 years,” he wrote.
Tyler Coble of Keller Williams Realty Professionals has had success with a lower-priced, townhome-style condo in Beaverton’s Cooper Mountain-Aloha North area.
He listed the end unit at $280,000 on Feb 26. After four days on the market, Coble accepted an offer for $25,000 over the asking price.
The condo has a garage attached to 1,184 square feet of living space on the second and third levels. “There are few shared walls and a private entrance, and no shared hallways, elevators or stairs,” said Coble. “It’s close to the experience of a detached home.”
Coble said home shoppers with a budget of around $500,000 can either find a fixer-upper house or a move-in ready condo. Odds are they will get a condo, he said, since there are twice as many condos for sale in this price range.
Unlike with most single-family houses, condo buyers have to factor in the monthly cost of homeowner’s association fees. Coble said his clients see this added expense as cutting into their buying power.
“My clients aren’t willing to pay exorbitant fees for community amenities they’re not using, like rec rooms and gyms,” he said. “The last year has made people aware of having their own space and what’s important to them.”
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— Janet Eastman | 503-294-4072
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Originally Appeared On: https://www.oregonlive.com/realestate/2021/05/have-portlands-luxury-condos-lost-their-luster-people-want-less-density-more-sanctuary.html