A Short History of Condominiums in Austin
In the beginning
Before the 70’s the word “condominium” wasn’t known in Austin. During the 70’s a few condominium complexes were built as “condos” and not “apartments”, the difference being they were better built (especially in sound & thermal insulation) and condos started including washer/dryer connections that most apartments did not. Most of these early condominiums were really more townhomes (typically 2 story with no neighbor above or below) than what most people think of as condominiums. Austin was in a serious growth mode during the 70’s. In the central part of the city, land was just starting to get expensive. It no longer made sense to built single or multi-family properties on these plots of land. Then in 1977, Orange Tree Condominiums was the first condo complex built in the west campus of the University of Texas. These were the first “condos” like most people think of condominiums – larger, many unit, multi-storied (typically 3), more modern styled, with upscaled common facilities like pools, covered parking, etc. It wasn’t long after that Austin started to experience it’s first ‘condo boom’. Every year brought more redevelopment of existing housing being torn down to build condominium communities, not without conflict. These were the growing pains of a city on the move. Even though interest rates were sky high during the late 70’s, these condominium projects met with considerable success.
The 80’s were THE decade of condos…..until the bust
By 80’s the boom was on. Some of the earlier communities were Encinal and de Saligney (still one of my favorites) near downtown, West End and Villa West slightly further west, Edgecliff in NW, Brandywine in north, many complexes started in the campus area like Seton Ave & Palmetto & Elms & Gazebo & Hyde Park & Nueces Park & Nueces Corner & many others. The interesting thing about a lot of these early condos are the locations they were able to purchase in those early days for “reasonable” prices that allowed the developers to sell moderately priced housing in very good areas. These days those areas are so expensive that either the prices of the individual units has to be much higher or the development has to go higher, as in hi-rise, to make the land cost a reasonable investment. It’s still evident in the prices that you can get these earlier condo projects for compared to more modern condos in the same area. Then in 1985 it all came to a screeching halt. The economy of Texas was dealt the triple whammy of deregulation of banking and oil and the tax laws changed to make investment real estate support itself on its true cash flow instead of the false profit of tax deductions. Several communities were already in construction by the time the handwriting was on the wall. Many of these late projects ended up in foreclosure along with many other single family properties after real estate values dropped to 50% or more of the values they had been selling at only a year or two or three ago. Condominiums were considered some of the worst excess in this recession.
The 90’s were a slow rebuilding
In 1986 there were zero condominium projects built in Austin and then for the next 10 years until 1996 there were no significant condo communities built. The first few tenative steps after the recession were Brigadoon in far NW Austin (at least it was then), upscale Liberty Park & Treemont and other luxury communities in Westlake, a large affordable complex in far north Austin at Reflections of Walnut Creek, and Centennial and Bristol Channel near UT. Either they were upscale or affordable further out to work in that economy and where bankers were willing to loan the money. The late 90’s saw the condo market starting up again, and by 2000 in was back in full swing.
2000 and beyond
The early 2000’s saw the first “loft” projects downtown with conversions of older office buildings like Avenue & Brazos Lofts. Then the march was on. Condominiums in Austin no longer were a “bad word”. They became the first preferred choice of many of the younger, more mobile, upscale people that were calling Austin home. It became a lifestyle and not just a type of property. Land values were becoming so high in the center part of the city that the only way most people could afford to have home that wasn’t a major commute was to own a condominium were the land value was divided among the many owners on that property. Additionally, there were community amenities likes pools and work out facilities that became more common place in addition to affordable prices and good locations. In 2005 the City of Austin granted approval for the first hi-rise condominium project in downtown, the Spring Condominiums. The emphasis at the time was to re-concentrate downtown into a desirable living area and the march was on. The construction of 360 Condos, The Shore, Austin City Lofts, The Plaza, and others soon followed. Did the developers do what they did back in the early 80’s and overbuild? If the “tech wreck” “dot bomb” and other unfortunate incidents of the early decade had not happened, then we probably would have right on target. As it is, the early projects sold out completely and quickly while later projects had a slower time of it. Will prices drop precipitously on the unsold condos? No way. Some projects that were in planning stages have been pulled back, so there are less than what would have been. The fact that you can see these properties all in one place makes it appear like it is overbuilt, but if you took all the unsold homes in suburbia and stacked them in one spot, it would be a lot larger, but people don’t talk about an overbuilding of the suburbs (at least not as much). No, as I write this at the end of 2009, it appears we have turned a corner on the condo market. There will be no decline like there was in the late 80’s. Instead in a couple of years, we will need to get more projects going to keep up with demand. If you are waiting for better prices, wait no more. The time is now. With the current low interest rates in the 5.00-5.50% range and the tax credit stimulus plan, this is it. This is the best and the bottom. It’s time to move!