Not too long ago condo developers were frantically converting their units into rentals because of the disastrous housing market. Nowadays, there aren't enough condos to meet demand. The Downtown News reports only 64 active listings, a super-tight inventory that's not unlike sub-markets in other parts of L.A. Most properties receive multiple offers and offering prices that are above asking. So why aren't more condos going up? Apparently, the numbers still don't pencil out. More from the DN:
While the supply is indeed squeezed, demand hasn't yet pushed prices far enough above what it costs to build a for-sale structure, said Bill Witte, president of Related California. As the developer of the Grand Avenue project, Related has the rights to build several residential buildings on Bunker Hill. The firm originally envisioned a veritable condo village, but is proceeding with rentals instead. It broke ground on a 22-story luxury apartment tower last year and has plans for a second tower that is also likely to be high-end rentals, though Witte has said it could contain a condo component. When you factor in land price, Witte said construction of a steel and concrete condo tower costs around $700,000 per unit. The cost is higher than apartments because condominiums are usually larger than rentals and require a heftier marketing budget. With the median Downtown condo sale around $400,000, "There's still a ways to go before building condos makes sense," Witte said.