New study dispels myths about local condo market
Wednesday, April 02, 2008
Most downtown condo dwellers are young people.
Many downtown dwellers work downtown.
Many people buying downtown condos are investors from outside of Austin.
Wrong, wrong and wrong, according to a survey of Austin's downtown condo market to be released today.
The Downtown Austin Alliance, an organization of downtown property and business owners, commissioned the study by Charles Heimsath, president of Capitol Market Research, an Austin-based real estate consulting firm.
Heimsath said the group sought to dispel some myths about the local condo market.
Heimsath will present his findings to the group's Economic Development Committee today. He obtained sales data and buyer-demographic information from six condo projects: the 360 and Spring towers, Bridges on the Park, the Four Seasons Residences under construction, the condos planned for the W Hotel downtown and Sabine on Fifth .
Heimsath said he was surprised by the broad age range of buyers: 27 percent are younger than 30; 35 percent are ages 30 to 44; 26 percent are 45 to 60; and 12 percent are older than 60.
Heimsath also found that downtown condos are selling well.
About 818 condo units will be finished this year, and 90 percent (736 units) are under contract or sold. Tighter credit stemming from the subprime fallout "absolutely" will cause some pending contracts not to close, Heimsath said, "But I don't think that it's going to be a serious problem."
Heimsath gave the example of the 44-story tower called 360, where 430 units are spoken for, with a waiting list of 140, its developers say.
Most of the buyers in the six projects — a little more than two-thirds — come from the Austin area. And most — 70 percent — are buying units for their primary residence, with only 13 percent purchasing for investment reasons, he said.
And that's good, he said. It helps buffer Austin from speculative buying in other markets, such as Miami.
"You didn't have people actually buying units to live there, they were buying units to make money," he said. "It led to tremendous speculation. And then when the greater fool wasn't there to buy the unit when the building was completed, people lost their equity."
Austin was relatively late in its downtown condo development, Heimsath said.
By the time it started getting a larger number of projects, about 2005, markets were beginning to fall apart in other places, he said. All new projects are capping the number of investors at 25 percent.
Heimsath also found that 14 percent of buyers already live downtown; 13 percent come from elsewhere in Texas, mostly Houston and Dallas; 19 percent come from elsewhere.
In three of the projects, the W, Bridges on the Park and the Four Seasons, 70 percent of condo buyers work someplace other than downtown, "which is exactly the opposite of what I would have thought," he said.
"It says a lot about the quality of life downtown affords," Heimsath said.