Sunday, April 02, 2006

Build Them and They Will Come

The media is feeding the condo frenzy in this area with stories such as "A Suburban Switch: the Condo's the Thing" in a special supplement to this Sunday's Times.

Here's an excerpt:

For decades, ornate homes with lush yards and multicar garages have been staples of suburban life and the objects of desire of countless families yearning for better schools, safer streets and greener environs far from the city. But as the scarcity of vacant land drove prices to stratospheric highs and many outlying communities began to impose restrictions to curb sprawl, builders trained their eyes on urban neighborhoods.

There they can still buy old or abandoned property at market value, tear it down and replace it with condos, which can be as fancy as a McMansion and as spacious as a single-family home. Though the properties at the high end are not cheap, they typically cost less than a house of comparable luxury and are easier to maintain.

"People that used to be able to afford a 1,200- or 1,500-square-foot home in the suburbs are still moving to the suburbs, but buying a 1,200- or 1,500-square-foot condo instead," said Tim Cashel, a division manager at Baker Residential, a developer in Pleasantville, N.Y., that is building two condominium communities in Bayonne, N.J., a long-neglected city on the Hudson River waterfront.

"Condos have become the new starter home for a lot of these folks," Mr. Cashel said. "But because some of these condos are so posh and so close to the city, they have also become a retirement home for many other people who were already living in the suburbs, but were looking to trade their mansions for a smaller place."

Developers, spotting an opportunity, have been investing in condo construction at a feverish pace. According to the Crittenden Builders Report, a trade publication, the number of new multifamily condo and town house projects increased by about 50 percent nationwide between 2004 and last year.

Much of the new construction has sprouted in urban communities that developers bypassed when they blazed new frontiers deep in the suburbs. Local officials enticed them with tactics like tax incentives, selling public property for a fraction of the price and easing the approval of construction permits. In return, the developers promised to fatten municipal coffers with property tax revenues.

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