Condos May Not Be Selling, But They Aren’t Losing Value
- Aug 15, 2007
Yesterday’s ruminations on condohotels inspired a new question: How are condo sales in general doing?
Interestingly enough, research on some major cities and areas showed that condo sales are indeed down — but in many locations, condo prices are actually stable, or rising.
- Condo sales for the second quarter in Illinois were down 13.9 percent; however, median condo prices for the state were up 5 percent, to $223,000.
- Florida existing condo sales declined 25 percent in the second quarter of 2007, although the price of condos remained fairly stable at $208,400, according to the Florida Association of Realtors.
- Condo sales dropped 3.6
percent in Massachusetts but the median price increased 4.4 percent to $296,000, the Massachusetts Association of Realtors reported in June.
New York was one exception. The number of Manhattan apartment sales are currently at record levels, although listing inventory has fallen sharply, real estate appraiser and
consultant Miller Samuel reports, due in part to continued demand and
mortgage rates that remain low despite recent increases.
So why, if supply seems to be increasing, is demand increasing as well? (It challenges everything we remember from Economy 101!).
As a result of increased demand, condo price inflation since 2000 had by 2005 reached 57.9 percent — exceeding conventional single-family home gains by almost three to one, according to "The State of the Nation’s Housing: 2005" report by the Joint Center for Housing Studies at Harvard University.
Yet in many areas, condo sales may have fared better than
single-family home sales because condos appeal to a different market. Condo seekers can include
first-time buyers, urban dwellers who desire a home close to public
transportation and other attractions, retirees looking to downsize and
In 2006, the number of married households –typically the largest homeowner group — fell below the 50 percent
level to 48 percent, according to the U.S. Census, which means more singles are making up the majority of housing consumers. Single female homebuyers increased from 14% in 1995 to 21% in 2005 alone, the National Association of Realtors reported.
For seniors, condos can offer easy maintenance and extra amenities like pools and gym that are expensive to add to a single-family home. The Joint Center for Housing Studies report said that condominium buyers tend to be older singles or empty-nesters with slightly higher incomes (although it noted that may reflect the fact nearly a quarter of all condominiums are located in the 20 highest-cost metropolitan areas of the country).
And, in non-metropolitan areas, it should be noted that condos are also traditionally less expensive than houses, giving
them an extra push in the downtrodden economy.
Even with all these possibilities, the meteoric rise of the condo is still somewhat of a mystery. Have a theory on why? MHN Out and About wants to hear it: So post away.