The Traverse City condo craze is showing signs of slowing.
After two years of record condominium sales and new construction trying to keep up with demand, sales of condos in Traverse City slowed in year-over-year comparisons. Data from the Traverse Area Association of Realtors (TAAR) shows that TC condominium sales for the first two months of 2017 dropped 32 percent compared to the same period a year ago.
And it’s not for a lack of inventory. In the single family home market, there's a shortage: Traverse City homeowners can often sell their homes as quickly as they list them because so few are available for sale. That’s not the case with condominiums: A recent online search yielded 125 condos for sale in Traverse City alone, ranging in price from $47,000-$3.135 million. Of those 125 listed for sale, some 40 are in the planning stages or under construction.
A handful of those available are located at Uptown, a development along the Boardman River on State Street. Thirteen of the 15 luxury riverfront condos (pictured above) sold in the past two years; only two remain for sale. But all five “Cityside” Uptown condos now under construction remain unsold.
“I’m a little befuddled about it,” Project Manager Mike Wills says of the smaller units still on the market, though he sees a larger problem throughout the city. “As many projects as there are on the drawing boards, I don’t think downtown can absorb them all. There are just so many offerings in such a small market.”
Bob Rieck of Coldwell Banker Schmidt Realtors, heralded as the “Condo King” just four months ago by the Traverse City Business News [sister publication of The Ticker], has sold dozens of Traverse City condos in the past year alone, primarily in partnership with Socks Construction. Rieck reports sales of all 20 units at North Wind and all 36 at Crystal Cove on Boardman Lake, as well as all 32 units at Capri in Old Town. The common denominator? A relatively lower price point: Condos at all those developments sold for $200,000-$350,000 each. Wills and Rieck say there’s an advantage to developments marketed at a lower price point.
They also agree there’s an advantage to those projects already underway. Reick notes “sometimes you have to have it built and show it.” At his Windward project on Bay Street – where nine of ten units are sold – only one sold before the project was built-out.
So what does that mean for those condo developments not yet underway?
At 124 W. Front, where Federated Capital plans to build a five-story building with condos and commercial space, Chief Counsel Hugh Woodrow tells The Ticker, “Our project is moving along as fast as possible. When it gets done it gets done. If the market is booming that would be awesome, but at this point we are proceeding no matter what.”
Patti Mercer, whose planned Grandview Market project across from the Open Space would include several condo units, declined to comment.
Rieck and Socks Construction are partnering on the new Radio Centre III condo project on Park Street, which is under construction now. Says Rieck, “We feel really good about it.”
Surveying proposed projects that could add even more inventory, Uptown’s Wills observes, “It’s a race for somebody to get started. I think that’s what you’re seeing with some of the projects.”
Kim Pontius, CEO of TAAR, takes longer view of the situation, noting, “Yes, I know that many members [realtors] feel that we¹ve
hit a saturation point in high end condos in downtown Traverse City. However, watching current trends nationally I believe what we¹re noticing is what I like to think of as ‘wave action.’ Think of how waves come in a set with each wave increasing in size until the beginning of the next set.”