First-time homebuyers looking to stay close to the District’s urban culture may want to consider the condo conversion market.
Unlike new, built-for-the-market condominiums, converted condo units largely start out as for-rent apartments or town houses. They are now for sale and, given the near-freeze in fresh construction, form the foundation of what is available to buyers still searching for that perfect place.
“There isn’t much new construction going on,” said Chris Ballard, a principal with McWilliams-Ballard, an Alexandria-based sales and marketing firm specializing in multifamily properties. There had been a large supply of condos already on the market, he said, and — though that inventory is gradually dwindling — the tough economy makes it hard to get financing for new projects.
As a result, condos may get harder to find.
“I believe that over the next year, we’ll actually see a shortage of supply in the new condominium market because of the current situation,” he said. “But until then, the resale and conversion markets are really taking off.”
Converted buildings also include amenities, said Dave Cochran of the Condo Conversion Group in Seattle, which has developed conversion properties in the Washington area. Those special features can include ground-floor retail, parking garages, fitness centers, views, common areas for gatherings and parties, and a business center.
Conversions can also be uniquely stylish, especially when they are in historic structures like old schools and train stations or former industrial buildings — the sort of places you will find the now-classic open loft so many crave. Most developers try to maintain a building’s architectural details, said Cochran, who noted that such units can range in size from studios “in the hundreds of square feet” to much larger two- and three-bedroom units.
Ballard said most of the converted “midline” condos suited for first-time buyers in the Washington area are studio and one-bedroom units selling for $250,000 to $350,000. Two-bedroom condos are priced from $400,000 to $600,000.
A condo buyer owns the unit purchased and a divided interest in common areas.
“For instance,” Ballard said, “in a 10-unit building, you don’t own the shrub on the front lawn, you own 10 percent of the shrub, so to speak.”
Buyers must also remember that buying a condo means they will have to pay monthly condo fees and likely join a condominium association.
In Washington, Ballard said condo fees average about 30 cents a square foot, meaning that a 900-square-foot condo will carry a $270 monthly fee in addition to the mortgage payment.
Condominium associations govern operations of the condo building. They act as a board of directors, overseeing bylaws typically set up by the developer, monitoring maintenance and capital spending, and making sure the bylaws are enforced. The association also sets the monthly condo fees.
“They handle when someone has an unregistered pet, or when someone is parking in the wrong parking space, things like that,” Ballard said.
