The price per square foot of a new condo downtown climbed 6% in March from February to $656, according to a new report from the Mark Co., which tracks downtown real estate.
The number of condos for sale, meanwhile, fell sharply as buyers snapped up units at downtown’s lone new condo building: the Barker Block on Hewitt Street.
At month’s end, Mark said, there were only 27 new units for sale downtown, and the inventory of existing condos for sale would burn off in less than three months — half of what’s considered a healthy supply. Prices for condo resales slipped in March but remain 23% higher than a year earlier, at $534 per square foot.
“There is a dearth of condos,” said Alan Mark, the Mark Co.’s president. “People are not even selling existing condos because there’s no place for them to buy.”
The tight for-sale market contrasts sharply with a boom in apartment building.
After the housing market tanked in 2008, some downtown projects that had originally been designed as for-sale switched over to become rentals. And big institutional investors, desiring a safe, stable return, shifted their money into high-end apartments, helping to fuel a building boom that has 5,000 rental units now under construction, and 3,000 more units approved by the city.
That surge in rental supply may lead some apartment owners to flip their buildings back to condos, but Mark said he doesn’t see that happening yet. The numbers don’t quite pencil out, and the wounds from the downturn are still too fresh.
“There are definitely people circling, trying to figure out does it work and do they have the wherewithal to put 200 or 300 units on the market for sale,” he said. “Some developers still feel the scars of the recession.”
As for new construction, that could happen — there’s one 38-story condo tower in early development on 9th Street north of Staples Center — but it’s going to take a while.
“To build any building that’s sizable, it’s 18 months to two-and-a-half years to deliver,” Mark said. “You just don’t see this thing changing soon.”