Wednesday, March 11, 2009

Do Condos Mean the Death of the Neighborhood?

With the housing market in turmoil across the nation, it might seem a little out-of-date to spend much time discussing condos – both new and conversions – in Uptown. But I ran across this Liberate Uptown website today, and thought it raised some interesting questions. Do condos belong in Uptown? Are condos destroying the neighborhood? Is this even still an issue?

First, the anti-condo argument. The Liberate Uptown website, written in 2007, makes the following assertions:

  1. Condos only “belong” downtown.
  2. Condos are and will continue to force current residents out of the neighborhood.
  3. Condos will gentrify the neighborhood.
  4. Condos are created and sold by rich people who are out to make a buck on the backs of the people.
  5. Condos are not affordable and will never be affordable.
  6. Condos are a form of class warfare.
  7. Condos force up rental rates.

These are fairly typical arguments, and shouldn't be seen as strictly the view of one lone author. I agree on some points, while in other places I think the anti-condo arguments are flawed. Let’s take them one point at a time:

Condos only “belong” downtown.

This seems to be a fairly common view. I’m guessing that the people who share this opinion have limited familiarity with other cities and their housing markets. Condos are a type of housing option; at their most basic they are apartments that people own rather than rent. They don’t represent a specific aesthetic style, they’re not all luxurious, and in many places they are located in neighborhoods of all price points. There is nothing inherently wrong with condos being located in residential neighborhoods.

Condos are and will continue to force current residents out of the neighborhood.


Condos will gentrify the neighborhood.

The condo critics have a better argument for these points. Still, this snippet from the Liberate Uptown site was a bit dated, even for its 2007 publication date:

Uptown is full of young people, artists, musicians, people who want to live in a vital area with grassroots communities, as well as working class and middle class people who can’t afford to live elsewhere and/or want to live close to where they work rather than driving for hours each day to and from work.”

The unfortunate reality was that by the 2000s the gentrification movement had already largely displaced many residents. The conversion of Uptown apartment buildings added to the numbers, but it wasn’t the root cause of the problem. That paragraph could just as easily – and probably even more accurately – refer to the 1980s instead of the mid- to late-2000s.

The addition of new condo buildings, luxury or not, doesn’t bother me, assuming they are replacing either surface parking lots or bland, unessential neighborhood buildings. The new places do tend to be expensive, or “luxury,” but they do offer additional diversity to the neighborhood’s housing stock. I also believe that density is a good thing in the long run, and the new buildings open up higher-end spaces that take up less room than the neighborhood’s traditional expensive single-family house options. Not all of the “luxury” condos are even that expensive – in many cases you can buy a modern Uptown condo in a new building for less money than it would cost to buy even a dumpy Uptown house. I’d take a historic home with character myself, but I think it’s a positive thing if we can provide people with more options. If nothing else, maybe people who want that modern aesthetic will be more likely to just buy a new condo than to buy an older place, gut it, and install an out-of-place modern interior. (as someone who appreciates older buildings, I cringe every time I see references to "updated" kitchens or bathrooms - this can be a good thing if done well, but just as often it means a shoddy modern suburban-style shoehorned into the stripped hull of a formerly stately historic kitchen.)

The conversion of existing apartment buildings is a more difficult issue. It is terrible to see longtime residents forced out of their homes. Many condos were purchased by investors. It did drive up prices. On the other hand, condos offer would-be buyers more opportunities to purchase property of their own. Middle class people who didn’t want to lose out on the tax incentives and possible long-term financial gains associated with home ownership often actually had a shot at buying a condo, while a more expensive freestanding house was more likely to remain out of the realm of possibility. Lower income people are the real losers here; they are unlikely to be able to buy a house or condo in Uptown, and they have at times been forced out of their apartments when their buildings have gone condo.

Condos are built, converted, and sold by rich people who are out to make a buck on the backs of the people.

The developers and sellers of condos understandably want to make a profit. That doesn’t mean that everyone involved with the condo market is evil, or even necessarily rich. Many of the condo developers do have long roots in the neighborhood, and do genuinely care about Uptown and its problems. Others didn’t, or don’t. I don’t think that this can be counted as a valid argument against condos specifically, though, as this could also be said about apartment owners. There are some very good landlords in Uptown, and there are also slumlords. Landlords also want to make money from their investments. In their case the profits come from the rents paid by their tenants.

Condos are not affordable and will never be affordable.

When most people buy a condo their payment often will be more than what they’d pay for a comparable rental unit. On the other hand, they won’t be at the mercy of a landlord and will, if lucky, have a fixed rate mortgage that won’t seem like such a bad deal in the future. Some of this is also relative; a condo payment may be more than a rent payment, but those who want to buy but can’t afford to buy a freestanding single-family home have more opportunity when they have access to condos. In the short-term condos are more expensive, as they’re a recent phenomenon in Uptown and the sales prices reflect the housing and condo boom and the related escalating property values. In the long-term it’s possible that condos will be more on par with rentals. On the other hand, this readjustment will have come at the cost of a large-scale rise in price that has made lack of affordable housing in Uptown an increasingly pressing issue.

Condos are a form of class warfare.

Again, condos are in themselves not the problem. The problem is the larger issue of lack of affordable housing. Large-scale apartment conversions certainly didn’t help, but it’s only one aspect of the bigger picture.

Condos force up rental rates.

I’m sure that they often do, at least in the beginning. In the cases where a building goes condo, buyers move in, and then turn around and rent their units. In that case of course the rent is probably going to go up – the new owner has a higher mortgage, and would need a higher rent just to cover their payment. Affordable housing is obviously a problem for Uptown.

I believe the concept of condos to be good for a neighborhood. They offer a viable home alternative to many potential Uptown residents, both in terms of housing style (in the case of the new buildings) and housing cost (as compared to a freestanding single family home in the neighborhood). In Minneapolis there seems to be a much higher stigma attached to renting than there is in many other major cities; as a result there's more social pressure for people to buy rather than rent long-term. Those who like apartment living but prefer to own would be well served by condo options; so, too, would be people who want to buy in Uptown but can't or don't want a house. Condos should not be automatically written off as a bad thing for Uptown or for Minneapolis, or the larger issue of affordable housing lost in a haze of allegations of class warfare.

The market may have cooled, but condos are now a permanent fixture in Uptown. Like it or not, there is no way to “liberate” Uptown from condos. There is room for increased dialogue and creative thinking about ways in which to encourage the preservation and creation of affordable housing. Perhaps in the future condos can even be a part of the solution.


  1. I agree with you on this post. Condos are simply an ownership form. I think you nailed it about the widespread condo conversions putting pressure on the rental market, but that's more about supply and demand than anything else.

    The good news for Uptown is that people want to live here. The bad news is that if the market doesn't continue to grow supply and demand continues to go up, it's only a matter of time until rental rates start to push people out.

    Uptown's most affordable units now tend to be dumpy buildings or the older 1950s-1970s apartment buildings in the interior of the neighborhoods. Had Uptown continued to grow more steadily in the 1980s and 1990s, some of the supply/demand issues may not have been as significant.

    Great post.

  2. What I find infuruiating is seeing new construction with 2 units full, having displaced working class people and the artists that supposedly everyone wants to be around.

    Rather than going rental, which would actually make some sense, the developer sits on the "loss."

    How is this good for anyone?

  3. MnDesign, Do you think that the developer really wants to sit around with two units sold? They can only sell them for so low, as their lender also has a say in how low they release them for. In addition, if you're one of the people who bought one of the units and all of a sudden the developer sells the units for well below what you bought your for, you'll be absolutely pissed. Your investment will be undermined.

    Luckily in Uptown, there really are very few projects that haven't sold well (of the new construction projects at least). Lumen sold all but 3 of its 44 units. I believe Edgewater sold all but 2 of its units, and Midtown Lofts sold out a long while ago. Track 29 still has a number of Townhomes left.

    And I agree, most Uptowners don't want displaced working class people and artists. But how do you legally keep them around? Places like Uptown are popular and there is a huge demand for housing. Rental property is an investment to its owner and they have rights to redevelop their land.

    As I mentioned in my previous post, I think Uptown would have more development in the 1980s and 1990s, we would have had more supply of housing and that housing stock would have been cheaper now than that of the new apartment buildings (Blue, Lake Calhoun City Apartments, etc) because of their age. Uptown needs to continue to grow so that there are continuing opportunities for housing. As those new units age, their prices will be relatively less than either what is new or has been renovated and brought on the market.

    A friend of mine manages an apartment building in Uptown. It's a beautiful (from the outside) brick building from the 1920s. They're putting in new kitchens and new windows because the units were in sort of cruddy condition. Rents now on those updated units are $300 more a month. But they also dropped a hefty penny on updating the units. They are no longer in the reasonable-to-a-college-student-or-artist category. But they aren't insane either.

    So I don't know how you keep around those who need more affordable housing, but it probably involves building more housing and figuring out creative solutions in the short term. That's my opinion at least.