Where are the $200-300K condos?

[brick]

I know we already have a thread on affordable housing. I think this level is a little above that.

Recent threads have all had a bunch of folks pining for this kind of lower priced condo built. Take away the amenities associated with normal luxo places and don't charge a premium, kind of thing.

Now, I'm a pretty simple guy. Maybe I am missing a lot of subtleties that others know about. However, one thing I learned at a pretty young age and has never proven me wrong, is that in a free market economy, you only need to follow the money. So I have to think that if there were money to be made by building this style of housing, as several folks here have opined, that some enterprising developer would have done it already. The simple fact is that while you may have one or two or ten people make dumb decisions that leave money on the table, usually there is someone else who is smart enough to pick it up.

As I can see it, here are some economic realities of the situation.

1) This point I made it elsewhere, but the marginal cost of luxury versus the fixed costs of building in the first place means that the rate of return is much higher on luxury places. As pete alluded to in one of the threads, there is some elasticity of demand here and the housing bubble could potentially make this point moot.

2) There just isn't a lot of demand for this type of space. My guess is that if you polled 1000 people in the Providence Metro, the 5 of them that would pay $200 K to live in a 800 s.f. studio in the city are folks on this board. the other 995 would want to pay a little more to live in the Centre of New England or some such.

3) There aren't enough middle class (say $50-80K) jobs in the city. Either people make too little to afford anything or they make enough to afford the luxo place. This point could obviously blow up - there is a circularity to it, e.g. if Providence had the middle class folks to work those jobs, then a Fidelity or Citizens might stay in the city rather than buildup suburban sprawl. This is a much larger issue than simple housing, of course.

4) Because of low office space availability, a developer would be more likely to build Class A or B office space than low priced residences. Again, this has to do with margin.

5) The good-hearted folks that would look to make less profit in order to provide better housing don't have the capital to start large scale projects, and even if they did, they would probably look to provide low income folks with housing. There isn't a lot of sympathy (or relief) for the middle class.

[ruchele]

There are a number of condos currently listed for $130K-$230K in the Armory. There are also a couple of them further down in the West End (although they list as "in the Armory.")

I think I'm the demographic a lot of housing in this price range appeals to- median or below median-income young family- and maybe there aren't condos in this price range because there isn't much of a market for them.

I think a lot of people in the income bracket looking for $200K-$300K housing think like me about the issue:

We're trying to get set up for the future, to have kids, to make a real estate investment that is going to give us both the space to grow into and equity to build a life off of. Our jobs don't pay very well, so a smart real estate investment is going to mean the difference between paying off our debt or not, and sending the future kids to college or not. We don't need granite countertops, new applicances or anything. We have a lot more sweat equity available than we do cash, so a fixer-upper would be way more up our alley than a space someone else has fixed up.

I don't even want fixtures and appliances someone else has picked out, so why would I spend money for them? A condo just doesn't seem like a smart investment- either money-wise or life-wise- to someone in my position. Especially if things go the way they look like they're going, and we might be able to wait a couple of years and probably get a multi-family for just a little more than a condo. What people like me (and I think there are a lot of us) need is a one-or-two family in bad shape for cheap, not a condo.

Of course, we also need better-paying jobs. But if I had a better-paying job, I would just go for a bigger house (or any house, as I can't afford a house at all, at this point).

[abdiorio]

I payed $200K for a 600 SQFT loft, which is right downtown. If you go on www.riliving.com, there are at least 5 condos between $200-300K currently for sale.

[Cotuit]

We need a middle-class, not just here, but nationally. I'm pretty much in the same boat as ruchele, except for the kids part. I can't imagine how I would afford kids, aside from my Peppermint Mocha problem, I try to live within my means, how on earth do people have kids?

I'm fine with a 2 bedroom condo, but I agree, I don't need all the amenities someone else picked out. I don't need an on-site pool, or gym, or media center. The city is my media center. I think there is a huge untapped market of DINKs and GUPPIES and singles that are not served by the current market. But I also think with the cost of materials skyrocketing and salaries not keeping up with inflation makes it terribly difficult to serve us. There is money to be made from the middle and lower middle class, the margins are not as large though.

I wish the people who can afford the "luxury" units would wake up and realize what they are paying for. Granite counter tops and stainless steel appliances do not alone add $100,000 to the list price of a condo, but that's what developers are doing. If I could get away with that I would, so I can't blame them.

[runawayjim]

I payed $200K for a 600 SQFT loft, which is right downtown. If you go on www.riliving.com, there are at least 5 condos between $200-300K currently for sale.

[Cotuit]

I payed $200K for a 600 SQFT loft, which is right downtown. If you go on www.riliving.com, there are at least 5 condos between $200-300K currently for sale.

[runawayjim]

We need a middle-class, not just here, but nationally. I'm pretty much in the same boat as ruchele, except for the kids part. I can't imagine how I would afford kids, aside from my Peppermint Mocha problem, I try to live within my means, how on earth do people have kids?

I'm fine with a 2 bedroom condo, but I agree, I don't need all the amenities someone else picked out. I don't need an on-site pool, or gym, or media center. The city is my media center. I think there is a huge untapped market of DINKs and GUPPIES and singles that are not served by the current market. But I also think with the cost of materials skyrocketing and salaries not keeping up with inflation makes it terribly difficult to serve us. There is money to be made from the middle and lower middle class, the margins are not as large though.

I wish the people who can afford the "luxury" units would wake up and realize what they are paying for. Granite counter tops and stainless steel appliances do not alone add $100,000 to the list price of a condo, but that's what developers are doing. If I could get away with that I would, so I can't blame them.

[Cotuit]

what's a dink and a guppie?

[runawayjim]

DINK = Dual Income, No Kids

[abdiorio]

That should be an obscene amount of money for Providence though. I'm looking for a two bedroom. I live with someone, we need rooms to get away from each other and do our own thing every so often. A 600 sq. ft. loft doesn't cut it. If I was still in my early 20s I'd kill to live alone in a Downtown loft, but not now.

And we're not even discussing what people who currently have kids are doing. Is there any production of 3-4 bedroom apartments and condos going on now anywhere in the city?

[Cotuit]

i don't consider myself a yuppie... although i was called "so suburban" by driving my subaru to go camping and having a propane camping grill when i went. i don't know how that's suburban or yuppie, but ok.

[Cotuit]

Personally, I do not think it's a great idea to put low-income housing right downtown. I do think there should be more affordable 1-2 bedroom condos.

[abdiorio]

Low income today is nurses, school teachers, fire fighters, secretaries, bank tellers... We're not talking section 8 here, we're talking about the people who make this city function, there's no reason they should not and cannot be accommodated in the Downcity area.

My apartment on Federal Hill is $750/month. However I cannot find something comparable to buy for a price that would set my mortgage at anywhere near that.

I think we have every right to complain about housing costs. No one wants to see Providence become a playground for the rich like Central Boston and Manhattan have. We should be complaining right now before it's too late. No one is asking for something for nothing, but in the richest country in the history of humankind, asking to live someplace nice, is far from too much to ask.

[Divot]

I agree with the need for more affordable condos. In fact the lack of supply could very well stop me from moving to Providence which is unfortunate. However, there is something to be said for three luxury buildings that are moving in. The amenities that they offer are pretty impressive compared with a Boston or NYC but you obviously are paying more then seen before in Providence. Also, people should consider while there is a need for middle class housing downtown the amount of property taxes that the residences of these buildings will add to the base should help provide improved services for everyone.

[Cotuit]

People will still have to pay for parking.. That's one thing I don't see going away. If someone was to rent downtown for 700-800, parking alone would set them to over 1000. I don't see people giving up cars just yet, especially when theres no grocery store downtown.

[jencoleslaw]

That sounds more lesbian than suburban to me.

[Cotuit]

he didn't say anything about tennis, though.

[runawayjim]

That sounds more lesbian than suburban to me.

[ruchele]

5) The good-hearted folks that would look to make less profit in order to provide better housing don't have the capital to start large scale projects, and even if they did, they would probably look to provide low income folks with housing. There isn't a lot of sympathy (or relief) for the middle class.

[ruchele]

The conversation seems to have turned to housing downtown, rather than in the rest of the city. I think most families would want to live in the more residential neighborhoods, near schools, parks, etc. rather than downtown, so I don't think it would make much sense to build apartments downtown targeting families.

If you're talking about 1- or 2-bedroom apartments downtown for $200K-$300, you're talking about single people or couples (young with no kids, gay with no kids, or some other no-kids configuration) making 120%-150% of the area median income (which is way higher than median income within the city). Your original assessment is probably right, that there just aren't enough jobs here paying that kind of money to pre-kids aged people.

[eltron]

There is actually much talk recently of upping the income levels to more accomodate the middle-class...I am all for this, as a true income mix really makes for the best projects and neighborhoods...

This is also where inclusionary zoning and linkages REALLY make a difference- since those units or dollars are dictated on the local level, there are many more creative and interesting possibilities to use them...

[Cotuit]

The organization I work for surrently has 10 REALLY NICE 3- bedroom townhouse condos available in Elmwood for $165K (priced for a family of 3 or 4 making 80% median income, $53K-$60K/yr). You'd think people would be beating down our doors for them, but they are a hard sell to folks in this income bracket. They all want 2-families, and they hate the idea of a condo!

[urbie]

you're talking about single people or couples (young with no kids, gay with no kids, or some other no-kids configuration)

[ruchele]

Back a ways, you asked:

how on earth do people have kids?

[dtown]

^haha

I dont live or know much about Providence, but i agree, downtowns across the nation need to allow the middle class to live there. Im not talking about putting up projects all over downtown, but affordable condos downtown would really add to a cites tax base. That in turn would allow them to improve inner city schools and parks. And that in turn would allow families with kids to live in cities, further adding to their tax bases while combatting sprawl and the nations obesity problem.