August 7, 2017
Owning in downtown

Hartford tests condo demand in center-city housing push

HBJ PHOTO | Steve Laschever
HBJ PHOTO | Steve Laschever
Hartford developer Jose Ramirez sits inside 289 Asylum St. downtown, where he plans to create eight loft condominiums — the first new condos downtown in more than a decade.
HBJ PHOTO | Steve Laschever
Jose Ramirez says lender reluctance for funding condominiums prompted him to seek financing alternatives for his downtown condo project at 289 Asylum St.
HBJ PHOTO | Gregory Seay
Jose Ramirez's condo project at 289 Asylum St.

Hartford Area Condominium Communities

Bushnell Tower/Bushnell in the Park

The Metropolitan, Pearl Street

The Linden

Capitol Avenue

Buckingham Street

Charter Oak Avenue

Riverpoint Condominiums, East Hartford

Source: Realtors' Proprietary Multiple Listing Service; area Realtors

Downtown Hartford's housing inventory has gotten a big boost from the spate of office-to-apartment conversions. But there's one segment noticeably sidelined from the conversion spree — residential condominiums.

One Hartford developer, however, has drawn up plans and petitioned the city to create eight owner-occupied living suites above the former Baby Burger and Mayor Mike's restaurant space at 289 Asylum St., in the shadow of the Goodwin Square skyscraper on downtown's western edge.

Developer Jose Ramirez's plan for his Asylum Lofts Condominiums cannot come soon enough for some downtown apartment residents and others — many of them Millennials — who covet an urban lifestyle, yet prefer to own their spaces rather than rent.

Realtors knowledgeable about downtown Hartford's housing market concede the dearth of condo units in and around the central business district. They say buyers' demand is tempered by their inability to obtain mortgages, frustrating sellers who find it takes much longer to sell a condo/townhome than a single-family dwelling.

"We're swimming in rentals, but we don't have a lot to sell,'' said Realtor Rebecca "Becky" Koladis, of Berkshire Hathaway HomeServices New England.

That could be changing. The Capital Region Development Authority (CRDA), a funding fixture for nearly all of downtown's apartment conversions, has pledged a $426,000 loan to the $1.2 million to $1.5 million Asylum Lofts conversion.

CRDA Executive Director Michael Freimuth said the condo-lofts' development and unit sales may provide a bellwether as to how much residential-condo demand truly exists in this market. The city also confirms its keen interest in Asylum Lofts' future.

Among the last downtown Hartford condos built more than a decade ago were those in The Metropolitan, which abuts the 289 Asylum building. Thirty-five of The Metropolitan's original 45 condo units are in the hands of a commercial owner, who rents them to commercial tenants.

"It's somewhat of a 'pilot project' at modest sale prices that may appeal to a slice of the current marketplace … ,'' Freimuth said via email. " … If successful, we'll take the lessons and apply it to another, perhaps larger effort."

The nonprofit Hartford Community Loan Fund (HCLF), which was involved in financing several small office-to-apartment conversions downtown, has committed an unspecified sum of capital to Asylum Lofts. HCLF CEO Rex Fowler said the organization's involvement is tied directly to conventional mortgage lenders' unwillingness to book condo loans.

"We talked to Realtors who said the need is there but developers struggle to get financing,'' Fowler said.

The HCLF, Fowler said, surveyed some area Realtors, who confirmed the need for condos in and around downtown. However, they heard the same refrain: Tough for developers to obtain financing for condo developments, because of lender reluctance due to the difficulty selling off development loans and condo-buyer mortgages on the secondary market.

HCLF is working with one unnamed lender on a blueprint that involves the lender granting mortgages to condo buyers. But rather than selling them on the secondary-mortgage market, the lender would retain the mortgages on its books, giving the condo developer time to sell remaining units. That ultimately, Fowler said, makes the packaged condo loans more attractive to mortgage-buyers in the secondary market.

Financing headaches

Ramirez, a city resident and Trinity College alum who last Oct. 7 joined with project co-partner and Los Angeles architect Christopher Compton to outline their Asylum Lofts concept to CRDA's housing committee, said demand for condos exist despite too many misperceptions about them.

However, the one reality, he said, is that lenders remain reluctant about financing condominiums. Many lenders, observers say, are still smarting after getting burned from investing in the construction and sales of condos before the home-mortgage meltdown that resulted from the near-global financial collapse in late 2008, which precipitated the Great Recession.

Area Realtors, too, cited inaccessibility to mortgage financing as a key reason that the Hartford region's and the state's condo/townhome sector has been mired in uneven sales and median sales pricing. Unsold units contribute to a glut, which further lowers condo market values and sales prices, further fueling misperceptions about attached-housing demand, observers say.

Meantime, lenders generally confirm the trend of tightened mortgage-loan standards for condos.

The Greater Hartford Association of Realtors (GHAR) recently reported that June attached-home sales rose 2.6 percent to 319 units vs. 311 sold the same month last year. Median price fell 2 percent to $149,900 from $152,900.

Condo/townhome sales year-to-date are up 8 percent to 1,327 units sold vs. 1,228 sold the same period a year ago, GHAR said. Median price is down 2.44 percent to $140,000.

Statewide that same month, the Connecticut Association of Realtors counted 1,016 units sold in June, up 9 percent from June 2016. Their median price rose 8.8 percent to $185,000.

Within Hartford's borders alone, just 41 condo units were sold in the last six months, through June; only 33 units were sold in the six previous months, said Rocky Hill Realtor Curtiss Clemens Sr. In an 18-month period before those, just 47 units sold, he said, citing Realtor's proprietary Multiple Listings Service data.

For those reasons, the president of Century 21/Clemens & Sons Realty Inc. says he doesn't see any meaningful rise in local condo demand or sales anytime soon.

Ramirez, who said he spent several years as an administrator for the Hartford school system before turning to development, said no firm sale prices have been set yet for Asylum Lofts' units. But he added they likely will be in the $200,000 range.

Half, he said, will have 1,100 square feet and the rest 1,200-square-foot units. All will have two bedrooms, a single bathroom and an openly configured kitchen-dining-living space. Compton's firm designed the spaces, Ramirez said.

The building is already vacant and gutted and awaiting interior construction, which is due to begin this fall and the first units ready for occupancy next spring, Ramirez said.

Sean Fitzpatrick chairs CRDA's housing committee and is the city of Hartford's director of development services, effectively its economic-development czar. Fitzpatrick said the city is "watching this project carefully to gauge the interest of Millennials and others in this kind of housing product in downtown Hartford."

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