Downtown Condo Market Hangs On – Memphis Daily News

Downtown Condo Market Hangs On – Memphis Daily News
A cyclist passes Riverside 648 condos at 648 W. Georgia near South Bluffs. Photo: Lance Murphey

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Tuesday, August 24, 2010


JEFF IRELAND | Special to The Daily News


Cautiously optimistic. That would be a pretty accurate phrase to describe the mood of condominium brokers who sell primarily in Downtown Memphis.


Sales in the county’s densest condo submarket totaled just eight in July, a 53 percent decline from 17 the same month a year ago, according to real estate information company Chandler Reports,


But 2010 has given Realtors a reason to remain optimistic despite last month’s poor showing. Downtown has seen 87 condo sales through the first seven months of the year, a 28 percent improvement from 68 condos during the same span in 2009.


“It’s certainly picked up since last year,” said Jason Durston of Crye-Leike Realtors Inc. “With things like tax credits and low interest rates, it’s going good, but we’re still not back to the heyday of the market. ? This past week I closed on three.”


Joel Hobson of Hobson Co. Realtors has sold 19 condos in the Goodwyn Condominiums at 127 Madison Ave. The building’s 21 unsold condos had been foreclosed last fall, leaving the future of the historic building in doubt.


But First Tennessee Bank NA hired Hobson to market and sell the remaining units, and the tower’s turnaround has become a success story, even though the condos were sold at severely reduced prices.


“There’s always a demand for condos Downtown,” Hobson said. “The problem has been oversupply. Prices have come down and some people have been willing to come down on their prices. But some have not been willing to do that and have decided to lease.”


Sue Tines, a broker for Downtown Condo Connection, has certainly sold her share of condos in the Downtown area.


Over the last few years, many of those sales occurred in the South Main Historic Arts District, but in recent months Tines has been focusing on selling condos in the Pinch District at a new development called River Merchant Lofts, 497 N. Front St., near the Pyramid.


When the University of Memphis and Memphis Grizzlies basketball teams quit playing in the Pyramid and moved to FedExForum, the Pinch District suffered. More than one restaurant closed and the area was no longer a hot spot.


But Tines is hoping that when Bass Pro Shops moves into the Pyramid the area will be rejuvenated, thus improving the condo market there.


“So far I’ve sold four of 19 units there,” Tines said of River Merchant Lofts, which has been converted from an old river merchants’ building, using much of the original design and materials. “I feel like the North End is about to pick up.”


When the economy is not going well, the trend is for people to rent instead of buy. For someone who’s not sure where their next paycheck is going to come from, the prospect of a large down payment and a long-term commitment can be daunting. It’s also tough for someone without a steady income to qualify to buy.


That has led to more renters and, of course, increased the allure of Downtown apartment complexes like Metro 69 and The Washburn.


But in a more traditional real estate market, which brokers hope is coming, there’s still a place for buyers.


“Usually you’re either a renter or a buyer,” said Durston. “It’s two totally different groups. People who want to buy condos don’t rent, and people who want to rent don’t buy.”


Another positive sign for the Downtown condo market is the price for which units have been selling. Generally speaking, prices have remained steady or increased.


Last month, the average selling price for Downtown condos was $227,813, up 8 percent from $210,523 in July 2009. The averaging selling price from January to July this year has risen slightly compared to 2009.


The average price per square foot has dipped a little ($137.18 this year, $144.16 last year), but brokers believe things are headed in the right direction.


“I sold two this week for full price,” Durston said. “We went through some rough times with foreclosures, but I think it can be healthy. That got some inventory off the market. I’m a firm believer that there’s a stressed market and a healthy market. I think we’re getting back to a somewhat healthy market.”


Tines said plenty of people are still looking to live in Downtown, an area that offers unique amenities.


“I don’t think we’re overbuilt right now,” she said. “I’ve lived in Memphis my whole life and I’ve seen a lot of people who live in the suburbs for a while but want that urban feeling again.”