Who controls the condo market?

Whenever a development that includes residential condos comes before Town Council, count on a small but vocal contingent to object to condos being included in the affordable housing mix. Families with children want single-family detached houses surrounded by lawn, this group claims. Adding one- and two-bedroom condos to the workforce housing pool amounts to substandard options, this group implies.

But the market begs to differ, and data from the most recent U.S. Census shows why.

In applying for a special use permit to build East 54, Roger Perry doubled the number of affordable units town ordinance requires. Those 34 affordable units sold in short order. Sales of market-rate condos in Greenbridge were slow, but all 14 of the affordable units sold quickly.

The 2010 Census reveals that married couples with children, a category making up 75 percent of total households in 1960, dropped to 48 percent in 2010. Family households (which the Census Bureau defines as the householder and one or more people related to the householder) increased by a factor of 1.7 in the past 50 years, from 45.1 million to 77.5 million. In that same period, non-family households (defined as people living alone or with no members related to the householder) grew fivefold, from 7.9 million to 39.2 million.

Real estate professionals note that while family householders look for homes with four or more bedrooms, non-family householders want three bedrooms or fewer. Though family householders are likely choose home size over location, non-family householders value location more than size. Non-family householders want to live close to work, entertainment and transportation.

Banks, on the other hand, don’t like condos, thus their requirement that at least half of the units in a condo project be presold before the construction loan will be approved. Banks have stricter requirements for condo unit buyers, too. Before approving a mortgage for an individual unit, banks want to see 70 percent of the units sold (up from 50 percent not long ago) and no more than half of the sold units belonging to investors. FHA loans require that 90 percent of the units be sold. And mortgage rates for condos are often higher than for single-family detached homes.

Perhaps people who have never lived in multifamily housing can’t imagine a satisfying life without yard work, but millions of people in cities across the country can list the benefits of condo living, such as better security, lower maintenance and more convenient location.

But in Chapel Hill, the majority of the Town Council is enamored of single-family detached houses and is using its veto power to limit housing choices for the rest of us.
– Nancy Oates

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5 Comments

  1. So, who are these people? Did the council do anything? Why does Perry need a special use permit?

  2. Scott Maitland

     /  July 11, 2011

    Listen to the market …..that’s heresy Nancy ;)

  3. Ph. Johnson-Sledge

     /  July 12, 2011

    Listen. Period. To anyone. That’s heresy to CH Council.

  4. Robin Cutson

     /  July 14, 2011

    You just don’t get it, do you Nancy? Condo sales are suffering across America from South Florida to Raleigh, NC. Read the article below explaining how developers are having to auction off condos in Raleigh at cheap prices and how another condo development in downtown Raleigh was seized by foreclosure after no units sold. http://www.creditwritedowns.com/2010/11/not-south-florida-but-condo-problems-in-raleigh-nc-too.html

    Chapel Hill is full of unsold condos. The banks aren’t thrilled with lending for condo developments because when developers default on the loans it hurts the banks and all of us as well. The free market has spoken—and it has said condos are NOT popular with the public.

    And once again for the cheap seats in the back—-residential development costs more in taxes than it generates in revenue. Commercial development generates revenue—we need more commercial development to keep taxes low and to pay for services and infrastructure. Mixed used developments with condos in areas zoned for commercial only eat up valuable and scarce space that should be used for commercial development putting us deeper into an economic hole. High density condo development in areas zoned for low density residential also puts us more in an economic hole—which means increased taxes and fees and cuts in services and infrastructure.

    I truly do not understand how you keep arguing for things that fiscally make no sense and will only hurt every citizen in Chapel Hill—especially the middle class and working poor.

    BTW, are you the Nancy Oats who attended a tax revolt meeting in 2009 and was quoted in the Durham Herald Sun complaining about property revaluations and how high the valuation of your single family house (not condo) was? If so, then your support of more high cost condos and high density residential development which will only increase property valuations and taxes seems rather ironic. Why would you support making a problem you said you were “outraged” about even worse?

  5. Nancy Oates

     /  July 14, 2011

    Robin, it is the valuation set higher than the value that has me outraged. High property values are a good thing — it means my investment is appreciating. But when my property value decreases, that is, the amount that someone would pay to buy it from me goes down, but the county revaluates my property to say it is worth significantly more than what I could sell it for, that outrages me.

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