Condo Conversion in Roy? Whoa?!

There was an interesting article in the Standard today about a condo conversion going on in Roy. This caught my attention because usually you see condo conversions in a seller's market. We are definitely in a buyer's market right now. Also, in order to make the conversion, the owners are spending significant funds on capital improvements. They are adding covered porches, landscaping, ect. That is a major investment in a soft marketplace.

I wanted to see what the condo market was like in Roy so I ran the numbers on the MLS. Here is a photo of what the place looks like now versus the MLS photo of a complete project.


You have got to love the computer generated renditions complete with white puffy clouds.

So here is how the numbers shakeout. Comparable sales in Roy are between $75 and $110 per square foot. The ones for $75 are average in condition. The ones for $110 are brand new and architecturally appealing. With a list price of $124,900 for 875 Square Feet the condo conversions are for sale at $142 per square foot!! They must have gold-plated toilet seats in there.

I sense some disappointment coming soon to the investors in this project. It sounds like the expectations may be a lot higher than what reality will afford. These units will likely sell for around $90/sqft due to the awkward nature of it being an older floorplan with a new facade.

I wish these guys luck with the conversion but my gut check tells me they are not going to make any money doing it.