Some San Diego Condo Conversions Are Losing Money

The Voice Of San Diego reports:

University City, with its high-rise condo blocks, flashy hotels and shopping malls, could easily be mistaken for Downtown San Diego North.

Like downtown, University City has been experiencing a real estate boom that has largely centered on condominiums. But unlike downtown, University City's boom has been primarily driven by the conversion of existing apartments into for-sale condos.

In the last few years, as those condo conversions have flooded onto the market in University City, however, prices have stagnated there, leading some Realtors and home owners to worry about the future of their neighborhood's real estate prices.

Sherry Sangan is a Realtor with Prudential California Realty who lives and lists in University City. She said the past couple of years have been tough for sellers in all but the best University City condo projects.

"I have buyers who bought two years ago over in Lucera (a condo conversion project) that are getting less right now to sell it than they paid, and that doesn't include our commissions," said Sangan.

"They're getting killed," she added.

Analysis of sales and price data from University City does not show any substantial drop-off in condo prices in the area. Indeed, since 2001, condos have markedly inflated in value. However, data compiled from Dataquick and ZIP Realty, two real estate data providers, shows that condo prices have completely stagnated since late 2003. Indeed, the median price of condos sold in January 2006 was $45,000 less than it was in January 2004.

At the same time, condo sales have also been drying up in University City.

In 2005, there were fewer sales in every single month of the year compared to 2004. Sales in 2005 were down 23 percent from 2004.

The top is probably in on these condos for a while unless San Diego experiences massive job growth.