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Condo Market Deterioration Shows Signs of Slowing, Says NAR
Published: November 18, 2008
By Anuradha Kher, Online News Editor
Washington, D.C.--Existing home sales increased 2.6 percent in from the second to the third quarter, according to the National Association of Realtors (NAR).
Nationwide, sales of existing homes, including condos and single-family, were at a seasonally adjusted annual rate of 5.04 million units in the third quarter, up from 4.91 million units in the second quarter, according to NAR. This number, however, is lower year-over-year by 7.7 percent compared to the 5.46 million-unit pace in the third quarter of 2007.
Lawrence Yun, NAR chief economist, says conditions continue to range widely. “A pattern of sharply higher sales in areas with large price declines is well established,” Yun says.
“Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it’s important for government to keep that in the forefront of stimulus decisions,” he says.
In the condo sector, metro area condominium and co-operative prices—covering changes in 57 metro areas—showed the national median existing-condo price was $210,800 in the third quarter, down 7.1 percent from $227,000 in the third quarter of 2007. Sixteen metros showed annual increases in the median condo price and 41 areas had price declines.
“These price changes are similar to what is happening in the single-family sector,” Jed Smith, managing director of quantitative research at NAR, tells MHN. “Where prices have come down, buyers have gone back to those markets. With regards to sales volume, we are skidding along nationally for quite some time but inventory is going down.”
Smith adds, “It is widely perceived that prices of condos will go up in the middle of 2009. The only wild card is the recession. But from what I am hearing and find from my research, things will start looking up in July 2009.”
The strongest condo price increases were in the Dallas-Fort Worth-Arlington area, where the third quarter price of $149,900 rose 11.1 percent from a year earlier, followed by Bismarck, N.D., at $148,000, up 11.0 percent, and the Houston-Baytown-Sugar Land area, where the median condo price of $134,100 rose 8.1 percent from the third quarter of 2007.
“These increases are caused by the economies in this areas. For example, the Texas economy is very strong with oil, defense contracts and agricultural production,” says Smith.
Metro area median existing-condo prices in the third quarter ranged from $112,600 in the Greensboro-High Point, N.C., area to $456,300 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was the New York-Wayne-White Plains area of New York and New Jersey at $324,000, followed by Honolulu at $322,000.
Other affordable condo markets include the Indianapolis area at $113,500 and the Cincinnati-Middletown area of Ohio, Kentucky and Indiana, at $117,300 in the third quarter.
“Though all real estate is local and it varies considerably from region to region, we can say that the decline in the condo market has declined,” says Smith.
