Tucson condo market cools off

Last year, some condo sales had people waiting in line, even camping out overnight to buy multiple units. Investors, including local real estate agents, might hold onto a unit for a few months or just a few weeks before selling it for thousands of dollars of profit. At some complexes, finding a buyer was easy.

This year, there were plans for dozens of condo projects with most involving conversion of apartment complexes.

In January, Dino Paone, president of Paone Mortgage Corp., estimated more than 2,000 new units would become available this year for sale in the Tucson area. Now he believes that number has dropped to less than 1,000. He said he's worked with three different developers who have postponed plans to build or renovate 600 units around town.

"I would say that the temperature to convert condos has cooled," Paone said.

Cooled but not frozen: Those developers who have delayed plans aren't abandoning them, Paone said. Instead, they expect to wait until the fall, when students and snowbirds start to return.

While the market is still healthy, the days of buying a condo and flipping it for quick profit are over, Paone said.

In the first six months of this year, there were 2,840 condo and townhouse units listed for sale on the Tucson Association of Realtors Multiple Listing Service, a 74 percent increase over the 1,629 units listed during the first half of 2005.

Sales are up, too, but not as much as listings. There were 1,587 condominiums and townhouses sold in the first six months of this year, a 34 percent increase over the 1,183 units sold during the same time last year, according to MLS. The median sale price of a condominium or townhome unit was $169,000 in May, a 19.9 percent increase over the May 2005 median price of $141,000.

"Sellers are trying to find the right pricing right now," said Rosey Koberlein, chief executive officer of The Long Cos., parent of Long Realty. "Buyers are still waiting on the fence, possibly maybe waiting too long to purchase or to put in an offer because as they're waiting, interest rates are ticking up. And every time an interest rate ticks up, that decreases their buying power."

The slowing market wasn't a concern for Jerry Valencia, who has bought several condos for investment and is trying to buy two units at Village at the Foothills, 2600 W. Ina Road. He expects to pay between $140,000 and $160,000 for each unit.

Valencia also owns other condos in the Catalina Foothills as well as Southwest Indoor Air Quality, an air-sampling and mold-detection company.

Valencia said he's not interested in flipping condos for fast money. Instead, he tries to rent out the units to visiting executives and to baseball players from the Arizona Diamondbacks, the Colorado Rockies and the Chicago White Sox while they're here for spring training. He plans to hold onto some condos for at least seven more years, when his son and daughter should be out of college.

Valencia said he's not concerned about the slowing condo market.

"In Tucson, you have to pick and choose. Over a course of time, I'm still seeing an influx of people coming here. I'm seeing a lot of need for people buying condos in the Foothills just because the price of the homes are twice as much. Condos are a good way for people to start out," Valencia said.

Interest highest in Foothills

The strongest condominium sales in the last few years have been in the Catalina Foothills, said Tucson housing analyst John Strobeck. Condos in any other location may face a tougher time selling.

Parents like condos in the Catalina Foothills School District because other forms of housing are cost-prohibitive. With a condo, they can afford to buy a home and put their children in district schools, Strobeck said.

But even projects in other areas have their appeal — to buyers and sellers.

Tom Benson is close to closing on a $252,000 unit from the Condominium at Williams Centre — formerly called Sonterra at Williams Centre — 5400 E. Williams Blvd., near East Broadway and Craycroft Road. Benson, the resident scenic designer for The Gaslight Theatre, said he wanted to live somewhere in Midtown but didn't want to worry about buying a house.

"I'm just not a gardener or a repairman or any of those things and I looked around at prices and with the package that they offer, I'm going to have everything the way I want it and never have to do anything again if I don't want to," Benson said.

Benson hopes to close on the sale at the end of August.

New amenities for old units

On the Northwest Side of town, local apartment developer Ross McCallister brought together a group of investors last year under the name VFH Property LLC to buy the Village at the Foothills apartments, 2600 W. Ina Road, for $16.2 million. The complex is in the Marana School District. The group will invest another $3 million to $5 million converting the 180 apartment units to condos, said Barney Thompson, sales manager.

The apartments, built in 1984, range in size from 757 square feet to 1,160 square feet and in price from $139,900 up to $218,900. The units will be gutted and renovated a la carte, with buyers deciding what improvements they would like to see. New carpet, tile floors, granite countertops and stainless steel appliances are options. New air conditioning/ heating units, water heaters and paint are standard.

Thompson said 22 units have sold in the first month of sales.

Investors had some concerns about the slowing market and about selling condos in an area away from the Catalina Foot-hills, Thompson said. But they were persuaded largely by the complex's location near Interstate 10 and Foothills Mall and its distance from other condo projects, he said.

"It doesn't really require any major renovation. We don't have to move walls," Thompson said. "That's why we're in this place — because we see it as a place that has a lot of natural beauty and a very convenient location."

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