Real Estate Downturn Produces Condo Glut

Scott Webb holds up a condo sign. i i

Street-corner advertiser Scott Webb has been pointing buyers in San Diego, Calif., towards condominiums for two years. Sign-twirling earns him $14.20 an hour. Scott Horsley, NPR hide caption

itoggle caption Scott Horsley, NPR
Scott Webb holds up a condo sign.

Street-corner advertiser Scott Webb has been pointing buyers in San Diego, Calif., towards condominiums for two years. Sign-twirling earns him $14.20 an hour.

Scott Horsley, NPR

The real estate slump on both coasts has left a glut of condominiums on the market in places like San Diego. That's forcing some sellers into big price cuts. Many developers are responding to the changing market conditions by converting vacant condos into rentals.

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STEVE INSKEEP, host:

Here's some more grim news if you were thinking of selling your house. Existing home sales fell last month, in another sign of a softening real estate market.

The National Association of Realtors says July home sales were down more than 11 percent from a year ago. The average price of a home rose by less than 1 percent.

The average price of a condominium dropped slightly in July, and condos remain a popular option in some of the nation's most expensive housing markets. From one of those, San Diego, NPR's Scott Horsley reports.

SCOTT HORSLEY reporting:

Scott Webb's livelihood depends on a healthy condo market. He's not a developer or a real estate agent. He's a sign spinner.

For $14.20 an hour, Webb stands on busy street corners, twirling a big cardboard arrow and director drivers to nearby condos for sale.

Mr. SCOTT WEBB (Sign Spinner, San Diego): Just get peoples' attention and let them know where the condos are.

HORSLEY: After two years on various street corners, Webb has helped sell a lot of condos. But no matter how handy he's become at twirling that arrow, even he's not sure which direction the condo market is pointing.

Mr. WEBB: As a sign spinner, I hope it goes up. But I rent right now, we're looking to invest in something with my parents, so for those reasons I hope it goes down.

HORSELY: On this day, Webb is steering customers to the Campus Walk Condominiums near San Diego State University. Twenty-one units went on the market two weeks ago with a starting price of $349,000. Six have already sold.

Sales agent Melissa Diaz(ph) says the market isn't as hot as it was a year ago, but her company is still busy converting apartments to condominiums to sell to first-time buyers.

Ms. MELISSA DIAZ (Sales Agent, San Diego): Yep, they still have a demand. Because, I mean, condos are at the lower end of the market, so first-time buyers, that's the only thing they can get into for now.

HORSLEY: According to one market analyst, the number of these apartment condo conversions in San Diego has nearly doubled in the last year. But all those extra condos on the market are making it hard for would-be sellers like Salvator Ardide(ph).

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Ardide and his wife, Jackie(ph), are packing for a move to Orange County, where he works as a video game designer. He says they haven't been able to sell their San Diego condominium after more than two months on the market.

Mr. SALVATORE ARDIDE (Condo Owner, San Diego): There's been a lot of showings, but no offers as of yet.

HORSLEY: The Ardide's are asking $449,000 for their condo. That's $50,000 below their original asking price, and about $100,000 less than their upstairs neighbor got a couple of years ago.

Mr. ARDIDE: He put it on the market on a Tuesday. Sunday he had an open house, and he had a bidding war. So he actually sold it for more than he wanted to sell it.

HORSLEY: The Ardide's plan to lease their condo for the time being, since they haven't bought in Orange County yet, they're not in a rush to sell.

The number of condos sold in San Diego dropped 33 percent last month, from the same month a year ago, while the median price of a condo fell slightly to $384,000. Russ Valone, of the research firm MarketPointe Realty Advisors, says a little cooling in the condo market is not a bad thing at all.

Mr. RUSS VALONE (MarketPointe Realty Advisors): We've lost the speculator. Thank God. The cycle has gone from one of immediacy to one of I can afford to wait. There's always going to be Harry and Maude, who are forced to sell, but that's going to be the exception. I think what we're looking at is flattening, stabilizing prices.

HORSLEY: An older couple shopping for a condo this week said they're not worried about losing value, even as more residential high-rises take shape on the downtown skyline. What really worries them is that the continued growth of the condo market might one day block their waterfront view.

Scott Horsley, NPR News, San Diego.

(Soundbite of music)

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And I'm Renee Montagne.

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