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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Comments

Isn't the 4100 a tv show about people who get nabbed by aliens? Hmm... Maybs that's the 4400.
it's very simple robert. somebody needs to sell their house so they can buy your house so you can buy someone else's house. it's all a big wonderful circle. and the circle is broken.
While many of these new condominiums have attractive, well thought-out designs, they are missing the all important "location component". IMHO the Wilma sold out because of price and location. One can live there without having to use one's car to go everywhere. Not to pick on the 4100 exclusively, but its location locks you into using your car for everything.

As a "boomer" I want my condo close to downtown, with good sidewalks and bike paths connecting me to essential shopping and dining.
Condos close to downtown are convenient. But everyone can't live downtown. Both the 4100 and the Dearborn are close to bus routes and trails. Missoula's bus service is excellent. People living as far away as the subdivisions west of North Reserve can use it. And the biking/walking trail system extends south to the Mall and west to Russell. If developers want to sell those condos to "Boomers," they'll need to show us the alternative routes to downtown and services. Not hard to do in Missoula.
Not to get into a long-winded debate here:

The Dearborn is well connected, the 4100 is not. Bus, pedestrian, bicycle and riverfront trail connections out Mulan are not such that one would want to use them daily.
Here is the housing bust in a sentence:

TO AFFORD a $150K condo means $50K a year in income or $1000 a week or $25 PER HOUR

OK people look in your local paper and tell me how many $25 hr full time jobs that have some security are listed this week.

Even at $88,000 you still need a $14 hr real job to buy it.
"The biggest demographic blip is the looming retirement of the Baby Boomers, who will be selling their homes in favor of easy condo living. "

And why should they buy? Why not rent? They'll just have to sell again to move south or into Grizzly Peak or wherever.

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