Real Estate News
Condos Linger on Missoula’s Market
By Robert Struckman, 7-18-08
|Heat is included in the condo dues, said real estate agent Sheryl Mickelson to prospective buyer Bob Miller. Photo by Alexia Beckerling|
A pair of Missoula retirees walked through the Dearborn, the fresh condo unit across the Bitterroot railroad
spur from Southgate Mall.
“I assume you’ll have a happy hour, starting at about five,” joked Bob Miller, as he poked his head into the building’s common area on the first floor.
Miller and Patricia Adams began their comparison condo shopping with the Dearborn’s beautiful demo unit, fully furnished with comfortable furniture, wood floors, air conditioning and a flat-screen television. The building has other features, too, including secure underground parking and ambient in-floor heating.
“It’s a buyer’s incentive. We’ll buy you a flat-screen TV,” explained real estate agent Sheryl Mickelson, who took Adams and Miller through the unit’s main bedroom and a smaller one, which has been outfitted as a home office.
Dearborn developer Collin Bangs offered the flat-screens, he said, rather than lowering the price, (all sellers avoid price drops, which push down future property appraisals). But it’s a delicate balance. The units went on sale about 10 months ago; only 10 of its 33 units have sold.
Five or six years ago, condos in much of West - outside cities like Boise or Denver - remained an anomaly. Championed by the likes of economist Larry Swanson of the Center for the Rocky Mountain West as a solution to the region’s future housing needs, condos and other variations from the detached-single-family-home model have gained traction in places like Missoula.
According to one developer’s survey, almost 200 condos have entered the Missoula market over the past 18 months. Yet the only sizeable project to sell fast has been the sold-out Wilma Theater building on Higgins Avenue downtown, which had prices as low as $88,000. Small condos in the $150,000-range and larger units priced above $250,000, on the other hand, have lingered.
And more are coming onto the market. The 44-unit Mullan Heights condominium near the intersection of Broadway and Mullan and overlooking the Clark Fork River has only just come on sale - with units priced from about $180,000 to about $325,000. (The sale plan generously projects sellout at 18 months.)
Developers, planners and economists in the region agree that condos will increase housing market share over the next decade and beyond.
“If you look at the change in the demographics, household size, age of the population, incomes - if you look at all that - products other than single-family-detached will house a significant fraction of the population,” said Missoula planning director Roger Millar.
The biggest demographic blip is the looming retirement of the Baby Boomers, who will be selling their homes in favor of easy condo living.
“More people are going to be looking for maintenance-free living,” said Mike Priske, developer of the 36-unit on Mullan Road called The 4100.
Yet timing - and price points - means everything for developers who can see profit margins vanish as holding costs eat up their cash.
Every developer has a story why their project is different, and some of them are probably right. Priske has kept his price-per-unit relatively low while keeping what he thinks are the best amenities, including soundproof walls and secure parking. Camille Austin at Mullan Heights said the unique qualities of her offering - the large floor plans and the proximity to the river - set them apart.
“I’ve tried to do comps, but you can’t,” Austin said, referring to pricing comparable condos around town.
Yet it’s hard for any development to escape the overarching housing downturn. All sellers said they’ve encountered prospective buyers who said they would love to get into a condo - if only they could sell their house. Others also complained about over-skittish lenders, who they say refuse to finance all but the most secure borrowers. Yet no developer wants to be the first to admit - publicly - the hard lesson that his or her particular building is overpriced or ahead of its time.
One builder said, “If I would have seen what was coming two years ago, I would not have built that building.”
Correction: An earlier version of this story incorrectly spelled Mike Priske’s name.
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