Why does it feel like it's so HARD in the condo market right now?

Question

My real estate strategy includes (potentially) purchasing a condo in Washington, DC to rent until I'm in a position to move back there BUT it feels like the condo market is under siege right now. I live in Charleston, SC where the condos here are under emergency evacuations for structural issues and I can't get a read on if there is ANY market where condos are a good investment? HELP!

Troy Gandee · Answer

@Kerri Forrest Here is SC and other coastal markets, we're getting absolutely battered with insurance issues on condos. Regimes usually do their best to budget for insurance renewals, but insurance has been spiking so much year over year that it's almost a guarantee they're going to have a shortfall on the budget when the policy renews. Then they usually need to charge special assessments to raise the funds for the renewal amount. We're also seeing a lot of regimes suing builders and contractors for construction defects if they discover chronic issues, which can take years to resolve. For some reason, it seems a lot of buildings are under litigation due to significant capital expenditures. Either of those things can make a property "unwarrantable" in some circumstances and many lenders won't touch them. Even a standard special assessment for an insurance gap or run of the mill capital repairs may scare buyers off.

Jack Seiden · Answer

The D.C. condo market is basically like a stock market after a major crash, there are many neighborhoods and buildings that simply were overvalued/market has changed and are arguably in some cases still overvalued however there are definitely some diamonds in the rough, I’ve even looked into buying, especially in areas with limited new apartments, abd limited row homes that possibly compete at all on price, so basically downtown and west of the park is where I’d look. The biggest remains even putting 25% down you bleed cash flow, you need to get close to 50% to breakeven which is a lot down. And obviously now you general economic uncertainty, I still condos in the city and maybe even the suburbs still do represent a decent low risk (because they’ve already declined so much) medium upside play if you can stoumch a large down payment.