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Condo conversion homeowner study

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First American Title Co. recently commissioned a study of condominium conversion buyers in San Diego County. MarketPointe Realty Advisors developed the survey and analyzed the results.

Methodology

In November 2004, First American Title Co. generated a mailing list of some 4,000 persons who had purchased condominium conversion units in the past three years. MarketPointe developed a survey form to send to those buyers. The survey was mailed to each buyer along with a self-address stamped envelope.

More than 550 completed returns were sent to First American Title Co. through January 2005. MarketPointe then entered all the survey data into a spreadsheet with a program designed to allow cross-tabulation of the question responses.

The return rate of almost 15 percent is considered strong, as most mail-out surveys of this type (which take 15 to 20 minutes to fill out) rarely return higher than 4 percent to 5 percent. The high rate of return allows the findings to be statistically valid.

Surveys were tabulated for only those buyers who were owner-occupied. Of the total returns, 95 percent were owner-occupied.

Survey format

The survey form was four pages in length and contained more than two dozen questions relating to demographics, household composition, the type and size of condominium purchased and their opinions on their satisfaction with their new home.

Comments offered by survey respondents were tabulated by category. Selected commented were culled and appear at the conclusion of this report.

Findings

The homeowners, by and large, were young prior renters. On average, they had lived in San Diego for 15 years and intended to buy a detached home when they sold their condominium conversion. In fact, 72 percent of all of the buyers were previous renters.

The household composition was dominated by adult households. Forty percent of the households were owned by one adult living alone and another 38 percent were owned by two adults living together. A total of 22 percent of the owners had children present, mostly of younger age.

The median age of the adults was 31 years.

Almost all of the adults worked. In some cases, where the household had children, the second adult in the household listed their occupation as homemaker. Fewer than 5 percent were retired and few were students.

Three-quarters of the respondents stated that they wanted their next home to be a detached home, while 19 percent said they wanted their next home to be a condominium. Only 1 percent said they wanted their next home to be a rental apartment.

Almost three-fourths of the respondents said they want their next home to be in San Diego County.

The typical complex had 121 units. A relatively low percentage of projects were under 25 units.

The average unit was 924 square feet in size and had two bedrooms. Most had washer and dryer hook-ups and covered parking.

More than 80 percent of the units were substantially remodeled. More than two-thirds of the projects were less than 25 years old and one-fourth were less than 15 years old. Only 5 percent were built earlier than 1960.

One-half of the buyers paid less than $250,000 for their home and another 24 percent paid between $250,000 and $300,000, while another 24 percent paid over $300,000.

It should be noted that the average new detached home in San Diego County sells for than $781,000 (fourth quarter 2004 MarketPointe survey) and the average new condominium sells for $490,000. The average condominium conversion unit in 2004 sold for $303,000.

The following table indicates the income required to quality for new sale housing based on the MarketPointe survey:

Homeowners were asked about their level of satisfaction with their conversion home. MarketPointe analysts were surprised to find that 92 percent were either somewhat satisfied or very satisfied. In general consumer surveys, it is almost impossible to find that level of satisfaction with anything.

Eighty-two percent thought their conversion was a good value, and 97 percent said their home had gone up in value and that they are satisfied with the increase in value.

On balance, the buyers are satisfied with the acquisition of their condominium conversion unit, and based on their comments, are glad that they had the opportunity to buy an affordable home.


Nevin is director of economic research for MarketPointe Realty Advisors

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