Fall Real Estate 2002

Publication Date: Wednesday, October 16, 2002

Condo complexities
Purchase prices are less volatile, but monthly fees vary widely

by Bill D'Agostino

In the late 1990s, the residents of Parkview West, a 180-unit condo complex in Mountain View, faced a financial fiasco after they replaced their roofs.

Mike Crader, a resident of condominium complex Parkview West in Mountain View, is also president of the homeowners' association board. This year the board has had to deal with replacing failing roofs.

The replacement roofs were tiled with a brand new product known as Cemwood, a cement and wood mixture. After five years -- instead of the 75 years guaranteed by the manufacturer -- the roofs began to fail.

"The manufacturers filed for bankruptcy and the installers went out of business," remembered Mike Crader, a Parkview resident and the president of its homeowners' association board. "So instead of reserving for replacing the roofs over 50 years, we're replacing them over 10 years."

Condominiums are one of the few affordable housing options for people in the area who want to purchase their homes instead of continually throwing money into a rental. They're popular with retirees and younger families, especially since a monthly fee pays for all exterior costs: roof and structural repairs, painting, landscaping and insurances.

Still, complexities abound. When someone buys a condominium, they don't purchase the building -- just the airspace inside. Instead, it's the homeowners' association that owns the buildings and the land underneath.

That board, which is responsible for the maintenance of the units, can thus change the outside appearances at their whim. Residents "can't touch the exterior," Crader noted. "You can't have your own painting. You can't change your windows, you can't change your doors, you can't change your fences."

"In a condominium, the association also controls much of what goes on inside the unit, as far as any kind of structural changes," according to Tim Johnson, president of Community Management Services. Johnson's company manages complexes for associations in the area, including Mountain View's Cypress Point Lakes.

Overseeing condo owners who want to expand their decks or change the color of their homes is done to maintain uniformity, Johnson said. "In all cases, the restrictions are pretty precise, for good reason, because people do not want things happening to their homes to change the appearance or to alter the overall look of the complex."

Condo owner's monthly rates can vary greatly, depending on the age of the complex, the general state of the buildings, and the type of amenities offered. They generally range between $100 and $700.

At Parkview, located at the corner of Rengstorff Avenue and Central Expressway, near Rengstorff Park, the rate is between $220 and $320, depending on the size of the unit and the number of bedrooms. Unlike many associations however, the rates at Parkview also include water, gas and garbage. That's because the units, converted from apartment units into condos in 1979, don't have their own meters.

Since Parkview's association has nonprofit status, none of the fees -- including any special assessment costs for damage that needs immediate repairing -- are tax deductible. Fees don't necessarily go up every year (in the late 1990s at Parkview West for instance they dropped two years in a row) but this year, many are facing increases due to rising insurance costs. Parkview's rates will jump 10 percent in 2003.

Despite the roof debacle, Crader can still see the benefits of condo living: "There's more community because you know your neighbors, you're right up against them. There's a lot more social activity that goes on than in a regular neighborhood of houses."

This year, the market prices for the differing sized units in the Parkview complex range from approximately $200,000 for a small studio-style unit (550 square feet) to $425,000 for a three-bedroom, two-bath home, with 1,300 square feet.
Because of their relative affordability, condominium prices aren't as volatile as other housing options. While they do mostly correspond with the market, the peaks and valleys aren't as extreme.

As association president, Crader has seen his share of politicking within Parkview's board. One of the worst came about last year when the proposed height of a pool fence caused a stir in the community. The resulting flap led to two of the complex's board members being voted out in the March election. "It was the first time in quite a while we had a contested election," Crader said, noting that the two newcomers who won ran on a pool-fence height platform -- and only a pool-fence height platform. One of those two new board members has since resigned.

"When you're dealing with a condominium association, you're dealing with, in our case, 180 different people who have 180 different opinions about the ways things need to be done. You need to find a middle ground so everything is pretty much done by consensus and compromise," Crader said.

"It's basically a little city," he added. "Being on the board is like being on the city council."

E-mail Bill D'Agostino at bdagostino@paweekly.com