The risks of buying into a new construction condominium project

In the city of brotherly love, Philadelphians have long cherished their habit of residing in one of the many of the pre-war (aka- pre- 1940's) styled condominium buildings. As Will Rogers once said: "Buy prewar- They're not making them anymore." With the recent extended period of building growth in the high rise condominium sector, Philadelphians are now faced with an alternative to the confines of plaster walls, ornately detailed ceilings, and graciously elegant lobbies.

Floor to ceiling glass window walls, java hued kitchen cabinetry, and walk-in closets the size of a station wagon now present themselves to the buying public in many urban areas across the United States. Elevators that run at the speed of light, along with on-site parking, and windows that actually open are now all options that many urban dwellers may now enjoy. The options seem limitless, and the amenities varied when shopping for a condominium in a new construction project. "The attractiveness of living in a new condominium building is strong. You know that no one else has yet used your new dishwasher, the bathtub in the master bath, or left their dirt behind", says Jim Thornton of www.CenterCityCondos.com, a prominent condo sales agency with Prudential Fox and Roach Realtors in Philadelphia. "Like a new car, or a new shirt, I just like the idea of new. And with Philadelphia's unique tax abatement program for new construction condos, it makes for a powerful one-two punch" say Zachery Skidmore, a visiting future transferee from the Chicago area looking for his first condo.

In many instances, that attractiveness does come with potential volatility. Many condominium buildings are operated as businesses. In a newly formed venture initial start up/growing pains are sure to ensue. Properly hiring and training staff to use the computerized entrance system, the remote garage door, or maintenance of the pool areas all take time to perfect. Properly responding in emergency situations is also a concern for many buying into new condominium projects. Accountability for unauthorized access into your unit, general security of the building, a new management company can all wreak havoc on the use and enjoyment of your new home.

Should you be one of the unlucky "very early buyers" in many of the new condominium buildings lately, you may be stuck in a building where sales quickly became stagnant. If indeed only 15% of your current building has sold, and you need to sell your unit within the first few years, you may be out of luck, as other units are being sold with either steep discounts, or builder incentives. And as you attempt to sell, you find yourself competing with the developer, who has an entire arsenal of goodies at his disposal to dangle in front of potential new buyers entering the building. From lowered interest rates, to preferred parking spots, or additional storage spaces, it should come as no surprise that competing with your developer, is like betting against the house. You seldom win.

And the possibility does exist that you could suffer from some short term initial depreciation if you decide to pack your bags and move. You may not be able to offer the attraction that often accompanies the idea of being brand new. If you have opted to paint your dining room "Royal Red", and your furnishings are not as presentable as what might be in the model unit, you are likely to be on the short end of the stick as far as being saddled with your condo for some time to come. Again, when buying from a developer, no potential buyer needs to ask if the bathroom grime transfers with title. Or if that awful futon that your better half insisted on keeping is going to be lingering in the den after you move away.

Often the choices of condominium styles vary with location, exclusivity, and amenities. There is no "One size fits all", and old buying habits die hard. Philadelphians will continue to enjoy the options being offered in the current real estate market, and the competition may encourage some older pre-war buildings to shake the dust off their loafers, and invest in the appearance and perception of those Grande Dames of the Philadelphia condo set.

A graduate of Bowling Green School of Business in Northwestern Ohio, Mark began selling in Philadelphia (Society Hill real estate and other Center City areas) in 1989 and has been in love with it ever since. He still resides in a low rise, four unit condominium building in Old City and loves the area!
Feel free to visit his website at http://www.CenterCity.com or send him an email at Mark@CenterCity.com

This article was published on 12 Sep 2008 and has been viewed 2395 times
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