Recession Proof-ish Condos: Buy In Financial Districts

I’ve mentioned many times that the condominium market in financial centres will always retain more value in a recession and bounce back quicker. New stats out of NY continue to show this trend.

Top end condominiums (the top 10% by price in any quarter) are down a very modest 16% from their height in Q1 of 2008 (4.17m vs. 4.99m) – where outside the financial district we are easily seeing values that have plummeted 60%, and in rare cases 90% (You can get HOA property for as low as $52 per sq. foot in Las Vegas).

This quarter and the last quarter have the highest number of 10m+ units sold in Manhattan. 12 completed sales of units 20m+ occurred in the three months ending September 30^th (here’s one).

Finally, One57 developer still believes he’ll sell out his development – the tallest residential building in Manhattan when it goes up – at prices ranging from $3,500 – $8,000 a sq. foot (up to $91,425 a sq. m.).

It’s nice to know the 1% are still buying, and buying, and buying.

Don’t Fear Volunteering To Be On Your Board

The one piece of advice I have for all condominium owners – spend the time to participate on your board for at least one term. For most people, their house will be the largest part of their financial holdings in their life. Most people will never have more cash and securities than the value of their house. For condo owners, that house equity is directly impacted by how well your condominium, strata, or HOA is managed. Poorly managed condominiums could cost you a lot of extra money.

By being on the board you will get a special look, and insight, on where your fees and contributions go to. It also presents you the “other side of the story” for complaints brought against the corporation, or between condo neighbours. There’s nothing like the experience of dealing with all the different complaints and trying to resolve as many as possible of them gracefully.

Finally, you’ll likely realize that the condominium isn’t evil. It raises money against a budget, and most boards try to make sure each and every penny is used properly. By working with the budget you can see if your fees are well managed (they normally are – the majority of fees go to electric, water, natural gas, and insurance).

You don’t need to spend your life on the board – but you have chosen a living arrangement where you share some building costs and responsibilities with your neighbours. A year or two helping out with the condominium will be beneficial not only to you, but your financial understanding – and hopefully financial health – as well.