Commentary: Condo craze-Developers convert apartments to for-sale

Gen Xers and baby boomers are being brought together by a trend heating up in residential real estate.

Many would-be first-time homebuyers are finding themselves priced out of the single-family and townhouse market, thanks to soaring housing prices across Maryland. And while boomers may have fuller wallets, their empty nests often drive them to give up their suburban ranchers and move to more urban areas.

The housing solution for both: condominiums. The younger homeowners are better able to afford condos, and the older residents are attracted by the convenience and lifestyle the units afford them.

Because interest rates are so low right now, it can be less expensive for younger people to buy rather than rent. Furthermore, there are a lot of programs for first-time buyers that make it possible to buy with very small down payments - as little as 3 percent to 5 percent - as long as the buyer has good credit and can afford the monthly payments, according to Pat Turner, president of Baltimore-based Henrietta Development Corp.

Chuck Covell, president of Bozzuto Homes Inc., adds, Condos are an increasingly popular choice, not only with younger buyers, but as a very appealing lifestyle choice in general.

To keep up with demand from buyers of all ages, many apartment projects that are on the drawing board are being converted into condo projects.

In Maryland's D.C. suburbs, for instance, 200 apartments were converted to condominiums in 2002, according to Washington-based Delta Associates. By 2004, that number - along with new condos being constructed - had shot up to 4,900.

The craze began in the district and Northern Virginia, but more recently has spread into Montgomery County and to Prince George's County, as well, said William Rich, a senior associate with Delta, which provides real estate data.

In Baltimore, condominiums are going up - or conversions are being made - throughout the city. Not unexpectedly, condos are especially popular in urban areas where land available for building is tight.

There's a lot of development in Fells Point and elsewhere in the city, said Rich. Certain developers are converting to condos and making the upgrades. Often they'll first offer them to their tenants and then to the general public. Or a management company may decide to sell to someone who is willing to handle the conversion and let him take care of all the upgrades.

When it comes to apartment buildings that are being converted into condos, the number of units tends to decrease, while the size increases. Few people would want to purchase a studio or efficiency, said Rich. Consequently it makes more sense to expand a one-bedroom place into the adjacent efficiency.

Last year, Turner's Henrietta Development converted the former Holy Cross Catholic School in Baltimore City into condos and this spring completed converting the old South Baltimore General Hospital on Light Street. In the latter instance, there are 67 units that average between 600 square feet and 1,200 square feet.

Typically there is one bedroom, a living-dining area, kitchen, bathroom and office, said Turner. We put in granite countertops and Berber carpets. The building is secure; there is a small gym in the basement, and we're building a parking garage, which is critical when it comes to convenience and security.

The units start at $199,999 and go up to about $350,000. Monthly condo fees have yet to be determined.

For those who are inside the Washington Beltway, the prices, not surprisingly, are significantly higher - running about $400 a square foot and going as high as $800 a square foot.

The average total square footage is about 1,000 to 1,100, said Rich. This will include standard stainless steel appliances and Berber carpeting and ceramic tile floors, with the option of upgrading the carpeting to hardwood flooring. There's garage or surface parking and additional storage space is available.

The fees vary, says Rich, depending on the size of the unit and the number of amenities. However, for a one-bedroom, the fee will be about $250.

Not to be outdone by their D.C. counterparts, Baltimore condos are commanding prices that are often equally steep. Bozzuto's Spinnaker Bay - 32 upscale units set on the water between Little Italy and Fells Point - will range in size from 1,400 square feet to 4,000 square feet and come with fireplaces, upscale kitchens and breakfast rooms, a concierge service, fitness center and on-level parking. Prices begin in the $600,000s.

Also in downtown Baltimore, developer Mark Shapiro and his partner Mark Weinman are completing work on Ridgely's Commons LLC - their first residential project together.

We bought an abandoned church and its adjacent buildings in Ridgely's Delight that had sat vacant for years and originally considered it for a rental property, said Shapiro. But as we watched the market change, we decided to make them two-story townhouse condominiums, especially as we saw the increased demand for housing in the city.

In total, there are six condos, about 1,400 square feet each, with a price of $399,000 to $450,000 and monthly fees that run about $300 a month. In addition there is a historic real estate tax credit: For 10 years the tax burden of four of the six units will be what it was before the renovations were begun.

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