After several boom years, the downtown Milwaukee condo market crashed as part of the U.S. housing bubble burst that was largely responsible for the Great Recession.
Since then, condo development in downtown Milwaukee has been almost nonexistent. No new condo buildings have been built downtown for about three years, said Mary Beth Waite, of Milwaukee-based Metro Condo Connections LLC. The only new condos currently under construction downtown are in the Moderne, a 30-story residential tower that will have 203 apartments and 14 condos.
Meanwhile, apartment development has boomed as many downtown area residents now prefer to rent instead of buy.
With a lack of new condo development, the supply of new, unsold downtown condos has dwindled and is starting to get scarce, said Robert Monnat, chief operating officer for Milwaukee-based multi-family housing developer Mandel Group Inc.
"There's not a lot of new (downtown Milwaukee) condos out there that have never been lived in," Monnat said. "Condo shoppers looking today to buy will very quickly find that most are re-sales and lived-in units. The inventory of new/newer lived in units is nearly gone."
The inventory of condos for sale in the downtown area has fallen from 1,276 in December of 2010 to 414 today, Waite said.
"We're at pre-1997 levels now (for the supply of condos for sale downtown)," she said. "It is shocking how low we are. People are starting to complain that there's not enough for them to look at."
A perfect example of that is the 147-unit Point on the River. Only six of the condos in building are still available, and Mandel Group plans to sell them by the end of June, Monnat said.
Mandel Group was hired in 2008 to complete the project, originally known as First Place on the River and located at 106 W. Seeboth St., near downtown. The original developer, KeyBridge Development Group, ran out of money and could not complete the project. Mandel Group was hired to complete the project for the banks that had financed it, including Madison-based AnchorBank.
Recently, some hesitant buyers that waited awhile before deciding to buy a condo at Point on the River, have called back to discover that the condo they were interested in has been sold, Monnat said.
"If people want to buy a downtown condo they better get off the fence right now," he said. "I think people are going to wake up and realize there aren't any (new) condos left to buy (in downtown Milwaukee)."
Downtown Milwaukee condo sales have surged this year, according to the Greater Milwaukee Association of Realtors (GMAR). There were 127 condo sales downtown during the first four months of the year, a 41 percent sales increase from 2011. In April there were 51 condos sold downtown, a 122 percent increase compared to April of 2011. Also, the GMAR reported that in early May there were 24 "pending sales" of downtown condo units.
"The dramatic increase (in downtown condo sales) is due to an overall improvement in the residential housing market as well as a limit on new units available in the downtown market," said GMAR president Mike Ruzicka.
The improvement of the overall housing market has helped suburbanites who wanted to move downtown sell their suburban home, which has enabled some of them to buy a condo downtown, Waite said. High apartment occupancy levels downtown in the upper 90s has also helped the downtown condo market, she said.
The increase in downtown condo sales is encouraging, but Monnat said that increase comes in comparison to poor sales levels the last few years.
"You're really just comparing bad and better than bad," he said. "It's good that it's going in that direction, but it's not like this huge uptick."
There were 804 condos sold in downtown Milwaukee in 2006, according to Mandel Group. Downtown condo sales fell to 561 in 2007, 468 in 2008, 411 in 2009, 276 in 2010 and then improved a bit to 304 in 2011, according to the firm's analysis.
"Clearly, when taken with the 2012 data we can comfortably call the bottom of the market," Monnat said. "It's all uphill from here."
Prices for downtown condos have come down significantly, which has also helped attract buyers.
"As the market bottomed in 2010-11, prices slipped as much as $100 per square foot," Monnat said. "It appears that small unit owners may have taken a bigger hit percentage-wise as compared to luxury units, when measured on a dollar per square foot basis."
Mandel Group has sold out of downtown condo units priced under $500,000 and the price decline for condos that cost more than $500,000 appears to be waning, Monnat said.
"Prices have floored and are now beginning to firm up," he said.
"We're baking the cake and then (prices) are on the way back up," Waite said. Low interest rates and an increase in financing for condo buyers have helped attract buyers and is helping to firm up prices for downtown condos, she said.
But it will take three to five years for prices to return to 2007 levels, Monnat predicts.
And it will take several years before developers again build new condo buildings downtown, Monnat predicts. A lot of developers and banks were burned by the downtown condo market crash and will be leery of the market for some time, he said.
"The condo market wasn't a good outcome for a lot of people," he said. "It's uncertain when conditions would be conducive to new condominium development in the future. No one is anxious to jump back into condominium development anytime soon."