Monday, June 2, 2008

Portland Condo Glut Will Last Until 2011

From the Portland Business Journal:

Today, Portland has about 2,500 unsold condominiums, a figure that includes developers' inventories and another 1,000 "phantom units," which refers to condominiums bought by investors who intended to turn a quick profit and who apparently are holding out for the market to return.
Assuming Portland buyers have an appetite for 700 to 1,000 units a year, it will take nearly three years to clear out the current inventory.
According to the Regional Multiple Listing Service, which tallies most though not all residential sales, there have been just 138 new units sold in the downtown area so far this year, far off the pace that led to a record 809 new condo sales in 2007. RMLS says 1,951 condos of all ages sold in 2007. In 2008, the figure is just 405.
Since 2003, the city has added approximately 5,700 new condominiums in the area that includes the Pearl District, South Waterfront, RiverPlace and downtown Portland. Developers were attracted by the city's seemingly bottomless appetite for condos and buyers who didn't disappear as the average price rose from $203 per square foot to $378.
Today, the pipeline is still turning out new projects, but all broke ground in better times. They include the Cyan, a 330-unit
Gerding Edlen project near Portland State University; Eliot Tower, a 232-unit project in downtown; the 937, a Pearl District project with 114 units; and Waterfront Pearl, a riverfront project with 196 units, to name some of the larger buildings in construction.
Hundreds more are off the market in buildings that have been converted to apartments.
"We probably have about a two-year supply in the downtown area," said Newton, who said barring an economic collapse, Portland continues to attract newcomers and will need to keep adding new housing in the future.
Wells Fargo's Newton said when the market comes back, some of the buildings hat opened as apartments may convert back to condominiums.
Brian Owendoff, newly appointed vice president and general manager of Opus Northwest's Portland office, believes it will take until 2011 to clear out inventories and usher in a new builder's market.
"That's when people will probably start dusting off their plans," he said.

I’ve argued those luxury apartment conversions would change back to condos when the market returns so maybe we should add that to the supply too.


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