Ok, so that's a pretty strong title. I am a house (or Residential Detached, as our FMLS now calls it) proponent for the cities of Atlanta and Sandy Springs. Why is this? Well, the biggest reason is resale value. For me, the resale value of Condos and Townhomes in Atlanta is horrible for the next five to ten years.
First, we've had tremendous overbuilding of Condos and Townhomes by developers and banks who thought they could make more money with less land by filling it up. The number of listings grew in a ten year period from just over 1k units to almost 12k units listed. (And sadly, most units are not listed individually, but as one floor plan is listed in a building, not all of the units that have the same floor plan, so the actual number of true listings is much higher!) Today, there are officially about 10k units listed for sale.
As a contrast, Single Family Homes listings grew from about 20k units to a high of 60k units in a slightly longer 12 year period. Today, there are about 37k units listed for sale. So basic, supply and demand, we are returning to a period that's NORMAL for number of units that typically sell a year. We aren't going to have normal sales this year, with folks putting off buying, mortgage and appraisal challenges. However, we have a shot with a city of 5.5 Million of getting back to normal levels of buying for Single Family Homes.
I don't think the same can be said of the Condo and Townhome market, which has a much higher level of "neighborhoods" in distress. By distress, I mean that the whole building is under water and no one is buying or there are still too many builder units in foreclosure and no one is buying at a level of what it cost to build, let alone with profit. There is also way too many units over $1 Million available with even less possible buyers today in our changing economic times. (Even if the economy hadn't changed, I still believe we would have had an oversupply of these high end units, now it's worse.
Another challenge to the Condo and Townhome market is the monthly fees collection and no lease policy. First, if a number of units aren't paying their monthly fees, those fees are then added onto the folks that are paying the fees and can DOUBLE the amounts that they are charging for fees to try to keep the association numbers in balance. Second, a number of units have a no or limited lease policy. I read an article in the Atlanta Journal and Constitution where a Condo would prefer an owner foreclose than lease the unit, as they didn't want tenants in the building. (I can't even begin to make sense of how that is better for all in the building. I am all for minimum tenant guidelines, but no tenant at the risk of foreclosing seems to be more detrimental.)
A big aspect of resale that is affected more in Condos and Townhomes is land. Every tax bill I see has land value and house value. What folks don't realize is what's appreciating slightly more (or had been) is the good old dirt their home is built on. So, some of the appreciation in a property is the land itself, which made the tear down concept so popular, where the house has little or no value over what the land itself will yield. Of course, this is less today, but this will return as our market balances out.
Lastly, I see my job as helping folks make a very large "stock" purchase, typically the biggest of their life. I haven't sold any Condos and Townhomes yet and don't want to, as I prefer to maximize my clients rerturn on investment as much as possible. Call me crazy, but very few folks who sell their properties are looking to lose money!
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