How to Play the Condo Game

The Year of the Condo in Dallas-Fort Worth home-buying circles was 1979. Squeezed by the soaring price of conventional housing, thousands of home buyers turned to the condominium as an alternative. Major real estate investment firms from Canada converged on the local market to claim their share of the condo-conversion bonanza. Meanwhile, newspapers headlined scare stories about tenants being “swept from their homes.”

When the dust settled, more condominium units had been introduced into the Dallas-Fort Worth market during that single 12-month period than in all the rest of the decade. Prior to 1979, fewer than 6000 condo units had existed in Dallas County. Dallas alone added more than 6200 new units that year, compared to just 1200 in 1978. Meanwhile, apartment construction was dropping sharply. In 1978, some 16,000 new apartment units had been started in Dallas County, but in 1979, the total dipped to just 11,000. Because of this drop, and because well over half the condo units being introduced locally are converted apartments rather than new structures, there is concern in some quarters that a severe apartment shortage is imminent. Most local authorities maintain that there is no shortage of apartments here, even though the vacancy rate for desirable rental properties is low (about 4 percent in Dallas), and that no serious shortage is likely in the foreseeable future. However, tight money and uncertainty about interest rates among both investors and consumers will cause 1980 to fall well short of the 1979 record in local condo production. This year’s total is projected at 4000 units or fewer in Dallas-Fort Worth, but once economic conditions become more favorable – by early 1981, experts hope – a second major epidemic of condomania is expected to hit the area. As many as half of the home owners in urban centers like Dallas-Fort Worth may be living in condos by the end of the 1990’s. That, at least, is what the Department of Housing and Urban Development (HUD) predicts.

The reasons for this trend are mostly economic. The fact is that what once seemed an inexhaustible supply of land for residential development is rapidly disappearing in Dallas-Fort Worth. As the supply of land dwindled, the cost of the traditional single-family home skyrocketed to a median price of $70,000 by the end of last year. For the first-time buyer, the condominium has emerged as the last hope of finding something affordable. Attractive one-bedroom condos in security buildings convenient to principal employment centers, shopping, etc., can still be purchased for $30,000 to $35,000 in Dallas, and for $25,000 to $30,000 in Fort Worth. And no other type of housing in choice locations is available at anywhere near that price – not anymore. Since some condos are available at 95-percent financing, the down payment on a $50,000 unit might be only $2500. Also, young couples and singles are feeling intense pressure to buy something quickly as at least a minor hedge against runaway inflation. Widows, widowers, retirees, and couples whose children have grown up and left home frequently find condominium living a desirable alternative.

Paradoxically, condominiums can also represent the epitome of luxury living. The high-rise condominium buildings along Turtle Creek, just north of downtown Dallas, offer elegance with prices to match. The opulent Gold Crest boasts what must certainly be the highest-priced condo currently available on the local market – a six-bedroom penthouse with a $650,000 price tag. It also has some smaller units priced at $330,000. When the War-rington and the Beverly – high-rise projects currently under construction in the Turtle Creek area – are completed, their penthouse condominiums are expected to sell in the $800,000-plus range.

The primary difference between condominiums and other types of alternative housing (zero lot line homes, patio homes, townhouses, etc.) is that the purchase of a condo unit involves no individual land ownership. Only the unit, from wall to wall and floor to ceiling, belongs to the buyer. The building and grounds are owned in common by home owners within the project, and each pays a monthly assessment to ! cover maintenance on the building and grounds and such amenities as may be offered.

Right now, condos are available only in selected areas of Dallas and Fort Worth. In Fort Worth, most are concentrated in the southwest corner of the city and in the northeast around Woodhaven Country Club. In Dallas, they are mainly along Turtle Creek and in Highland Park, Oak Lawn, and the northwest quadrant of the city, with a lesser number available in the northeast. There are no condominium developments to speak of in other sections of either city or in the suburbs.

Assuming that a solution can be found to the problem of ruinous interest rates, the picture could change drastically by the end of 1981. By then, virtually every area in the Metroplex could be rushing full-speed toward the fulfillment of HUD’s predictions, and the condo could well be the most popular housing choice for local buyers.

“We’ve barely scratched the surface inconversions,” says Ron Witten, president ofM-PF Research, Inc., a marketing researchfirm for the real estate industry, “with nomore than about 15 percent of the potentialapartment projects converted to condominiums. The next few years are likely tobring some really dramatic developments inthis area.”