Experts: Condo project a risk

Brought to you by

Article published Jan 19, 2006

Experts: Condo project a risk
Economy, market may mean few buyers

By DANIELLE QUISENBERRY Times Herald

T o some, building new condominiums in an aging area of a city with a high number of rental units is a bold business venture.

"They say, 'If you build it, they will come,' but that can be a recipe for disaster," said Jeff Hedberg, broker and owner of Real Estate Masters of America Inc. in Port Huron.

To successfully develop an area takes a lot of planning and marketing research. The target buyers need to be drawn to a property because of its established amenities, location and cost, Hedberg said.

Officials with the Community Foundation of St. Clair County think their new development plan will have those necessary elements.

The foundation announced Tuesday it plans to build 12 to 15 detached condominiums in the area bordered by Griswold, Oak, Seventh and Eighth streets. The condos would cost between $120,000 and $145,000 and be marketed to renters, first-time home buyers and anyone who wants to live close to downtown Port Huron and the waterfront. The project is part of the Community Renaissance Program, which provides low-cost loans for renovations or to convert rental properties into owner-occupied housing.

Hedberg is excited about the possibilities of developing the area around Woodrow Wilson Elementary School, where he grew up and some of his family still lives. However, he hopes the project has sturdy legs under it.

"I would like to see it just explode," he said. "I just hope it doesn't implode."

Statistics can talk

Area real-estate agents and landlords share some of the same reservations about the $3.3 million project, scheduled to begin this spring.

To date, there haven't been a lot of residential properties built in the city, Hedberg said.

The number of residential building permits issued fell from 60 in 2004 to 43 in 2005, according to data from the Southeast Michigan Council of Governments, a regional planning agency.

Most developers venture to the outlying township where there is more open land to build houses.

People who live in the city primarily rent, said Bill Johnson, who is part of the Eastern Michigan Rental Housing Association board and owns about 40 city rental properties.

About 40% of city residential properties are rental units, according to the 2000 U.S. Census data, the most recent available.

Johnson attributes the low number of owner-occupied housing units to the economy. Port Huron's unemployment rate has hovered at about 10% for months.

Buyers exist

It is the foundation's mission to get rid of many of those rental units and replace them with owner-occupied housing, said Randy Maiers, Community Foundation president.

Single-family, owner-occupied homes tend to lead to nicer neighborhoods, experts said.

Proof people will buy lies within the renaissance zone, a southern portion of the city that borders the proposed development area, Maiers said. The foundation has sold several homes in the zone, which was targeted by the foundation in 2003 for rejuvenation. It is bordered by Military, 10th, Griswold and Union streets.

Newly renovated or rebuilt homes there have sold for between $100,000 and $150,000.

The average price of a home in or near the development area is $90,000, said Jeff Wine, co-owner of JoAnn Wine and Associates in Fort Gratiot.

However, many of the houses figured in the average are more than 70 years old, and the foundation is selling new homes, Wine said.

The new homes and condominiums will attract people because of their proximity to the water, the downtown shops and the new YMCA, scheduled to be built at Griswold and Third streets by fall 2007, Maiers said.

Houses renovated by the foundation and sold in the renaissance zone have sold quicker than homes outside the zone, Wine said.

In the city of Port Huron, a three-bedroom home listed in the past year has sold in an average 61 days. Homes within the renaissance zone have sold within an average of 58 days, Wine said, quoting information from a real-estate database.

Sean Fletcher-Brister moved into her home at 721 Griswold St. last weekend.

"We like the area and the idea of revitalization," she said.

A lifelong Port Huron resident, Fletcher-Brister said she can walk to SBC, where she works as associate sales director. Her husband, James Fletcher, can stroll along the riverfront, and her two sons and daughter easily can get to St. Clair County Community College.

A three-unit structure on her property was torn down before her two-story home was built.

The "Sold" sign still is on her front lawn.

To the skeptics

Maiers said skeptical real-estate agents don't realize the nonprofit foundation isn't interested in making money and can sell homes at cost.

"We are willing to invest and don't make a profit deliberately," he said.