Luxury condo sales on the rise
(Atlanta Business Chronicle)
Editor’s note: Karen Rodriguez is a broker with Dorsey Alston Realtors and her listings include the Residences at Mandarin Oriental.
In the midst of the recession, luxury condominium sales in Atlanta all but stalled as an overwhelming amount of supply was delivered to the market and potential homeowners took advantage of the dropping price of residential real estate.
My, have things changed.
Zillow recently reported that its new survey-based index gauging consumer sentiment about housing markets and homeownership indicates that more U.S. consumers feel positive about the real estate market than not.
This sentiment rings especially true of Buckhead’s luxury condo market. In 2013, FMLS and Fulton County tax records reported 60 Buckhead condominiums sold for more than a million dollars. In the first quarter of this year alone, almost 20 condos have sold for more than a million dollars. These same two resources show that in 2013, the average price per square foot and overall sales volume of luxury Buckhead condos reached their highest levels since the Great Recession.
Show Me the Money
Luxury condo pricing has seen consistent year-to-year growth. For example, a two-bedroom condo at the Ritz-Carlton Residences that was priced around $799,000 in 2011, today sells for $1.25 million.
The rise in price indicates buyers are regaining confidence in Atlanta’s condo marketplace, which had been plagued with unfavorable press for years. The luxury Buckhead condo market in particular suffered from the negative perception. The ultra high-end projects that came out of the ground during the recession all felt their fair share of financial woes and negative news, some true and some false, with a few high-profile projects selling to new owners and developers. This turned out to be a smart move with new owners bringing a fresh perspective and new life to many projects. Buildings like The Brookwood, St. Regis and the Mandarin Oriental, all of which were resuscitated by new owners are now either sold out completely, or have fewer than 18 residences remaining.
How We Got Here
The shift began in 2012 with buyers reentering the market as financing guidelines began to loosen. Soon, the first wave of previously vacant luxury Buckhead condo buildings sold out. Shortly after, word began to spread there were no immediate plans for new condo projects in Atlanta on the horizon, so if prospective buyers wanted to own a new condo, they needed to find something soon.
This resulted in further speculation that all of the “good” inventory was being sold and prices would increase—and they did. As demand started to exceed inventory, pricing began to rise for not only new construction projects, but in the luxury resale market as well.
In 2013, it was not uncommon for buyers to compete in bidding wars, with many resale properties going under contract within hours of hitting the market. By the first half of 2013, buildings like The Brookwood with 219 units had completely sold out in just two and a half years. Additionally, 125 of the 126 Ritz-Carlton Residences had been sold. It became clear at that moment that the condo market had indeed rebounded.
What About 2014?
The demand for luxury condos is very much alive again and will increase as in-town growth continues. Dan Wagner of CBRE reported in a Real Talk Blog recently that metro Atlanta has exploded in population growth during the last 12 years, third only to Dallas and Houston. This kind of growth will only add to the already problematic traffic, which means the amount of people looking to relocate and move into the city is likely to increase.
In addition, America’s aging population continues to look for ways to improve their lives. Many are downsizing from large family homes to maintenance-free condominiums that not only provide the “lock and leave” lifestyle that has grown increasingly popular, but also the ability to live somewhere that allows them to walk to the best restaurants, shopping and the arts.
Last year’s frenzy seems to have died down a bit so far in 2014 as interest rates have started to inch upwards, but resales in the luxury condo market are still seeing nice returns. In fact, several homes that were sold within the last two years have seen returns of 25 to 35 percent. Previously stalled new construction projects like the Residences at Mandarin Oriental are picking back up and unfinished units are getting built out.
Certainly none of us know what tomorrow will bring, but it is safe to say that as long as Atlanta’s growth continues, demand for in-town living will remain.