Nelson & Associates Realtors®… Call Today 608-438-5230 • Jon@jonnelson.com
Your Complete Guide to South Central Wisconsin Real Estate for Sale.
That’s right! Not all Downtown Madison Condos are horrible investments but the simple truth is they are not all good investments either and anyone who is trying to tell you differently is frankly probably more interested in selling downtown Madison condos than they are in helping you find a good investment.
There’s Lots of Downtown Madison Condos on the Market
Here’s the breakdown: right now in the downtown Madison condos market there are over 230 active listings ranging from $99,900 to $1.5 MM. These condos have been on the market for an average of nearly a year. In the last 12 months, from June 2010 to June 2011, only 76 downtown Madison condos have been sold. This amounts to a 3-year supply of condos. THREE YEARS!
Why Would You even Consider Buying a Downtown Madison Condo?
Despite agents’ efforts to put a happy face on this scenario, this market really isn’t a case of a whole lot of downtown Madison condos to choose from so much as it is a case of a whole lot of downtown Madison condos that aren’t selling! Believe me, you are not alone if you are thinking, “Why are we even considering buying a downtown Madison condo when there is a three-year supply of them on the market and people are obviously having trouble selling them?”
There is a Market for Re-Sellable Downtown Madison Condos
Imagine this: There are certain downtown Madison condos that can actually deliver all the wonderful pleasures of living in the heart of the city that are so aptly described on nearly every real estate web site you can trip over… strolling by the lake, bathing in entertainment and sampling the city’s epicurean delights. And if you buy one of these downtown Madison condos, there’s a very good chance you will not be left holding the bag when it comes time to sell! Well you may not have to just imagine this because I can point you to some downtown Madison condos that could very well turn out better than you might think when it comes time to sell. Here’s the scoop:
Some Downtown Madison Condos Remain in Demand Even in a Lousy Market
That’s right. Believe it or not, downtown Madison condos with two bedrooms and two bathrooms, listed in the $220,000 to $375,000 range are more likely to sell than units outside of this range, and they sell in less time.
Here are the most recently listed condos with 2-beds and 2-baths in Downtown Madison.
But How Well do Downtown Madison Condos Hold their Value?
How well these downtown Madison condos held their value depended on when they were originally purchased. If they were purchased after 2007, on the declining value curve, on average by the time they reached the selling window of June 2010 to June 2011, they saw their assessed values decrease to about 91% of their original purchase price. Ouch! Probably had these buyers realized that prices were falling they might have thought twice before jumping in. Unfortunately, it is difficult to spot a trend until there is enough data to tell that there even is a trend and many thought the early price weakness was just going to be a transient thing. When it was time to sell, in an effort to recoup some of this devaluation, these downtown Madison condos were listed on average at 116% of assessed value. Fortunately, because condos in this price range still had demand, on average they sold for 110% of assessed value. This significantly helped sellers and they just about broke even compared to their original purchase price, but at the end of the day after selling costs, they lost money and it took 354 days on market. Demand kept this scenario from becoming a total disaster for these sellers.
What About Downtown Madison Condos Purchased prior to 2008?
Sellers of downtown Madison condos who purchased them prior to 2008 had an entirely different experience as timing and demand joined forces to keep them sitting pretty. By the time they sold in the same June 2010-June 2011 period, their assessed values increased on average to 140% of their original purchase price. They were able to list their condos for a more modest 105% of assessed value and sold them for 98% of assessment. But, these sellers got an average of 134% of their original purchase price, which covered their selling costs and gave them a nice return on their investment. Best of all, it only took on average 154 days on market. They purchased downtown Madison condos that remained in demand and they purchased them at the right time.
Second to Demand, Timing is Everything
Clearly, buying at the beginning of a declining market is a recipe for loss, but buying at or near the advent of a recovering market may well prove to be a much better investment. It seems the mounting consensus is that Madison real estate, including downtown Madison condos, has been bumping along at the bottom with improvement finally anticipated to commence in the late third early fourth quarter of 2011. If this is the case, then this might just be a truly great opportunity to buy a downtown Madison condo and catch the appreciation curve on the way up. It is always better to invest on the way up than on the way down. Everyone’s situation and investment objectives are different, but most of us would very much like to sell property for more than we paid for it. I believe that by selecting a condo in the $220,000 to $375,000 price range and buying it now when interest rates are still low and the outlook is favorable is a confluence of events that spells opportunity!
Nelson & Associates for Downtown Madison Condos You can Live In and Live With!
It’s easy to describe all the benefits of living in downtown Madison condos, you already know it’s going to be a blast. But knowing which downtown Madison condos will likely also be good investments takes a broker that frankly cares more about you than about selling a condo. If you remember only one thing from this article, remember that not all downtown Madison condos are going to disappoint you when it comes time to sell. I can help you find downtown Madison condos that will make you happy from start to finish. Call me today and let’s get to work!