Condo/Co-op Prices Rise in April Due to Increased Sales of Foreclosed/Distressed Properties

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By Anuradha Kher, Online News EditorWashington, D.C.–Existing-home sales—including single-family, townhomes, condominiums and co-ops—increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, according to the National Association of Realtors (NAR). Despite the increase, the number is 3.5 percent below…

By Anuradha Kher, Online News EditorWashington, D.C.–Existing-home sales—including single-family, townhomes, condominiums and co-ops—increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, according to the National Association of Realtors (NAR). Despite the increase, the number is 3.5 percent below the 4.85 million-unit level in April 2008. Existing condominium and co-op sales increased 6.4 percent to a seasonally adjusted annual rate of 500,000 units in April from 470,000 in March, but are 9.4 percent lower than the 552,000-unit pace a year ago. The median existing condo price was $173,900 in April, down 18.5 percent from April 2008. “This increase is probably due to some market clearing of foreclosures,” Jed Smith managing director of quantitative research at NAR, tells MHN. “Based on anecdotal evidence there is a lot of buying of foreclosed properties going on and prices are in fact bid up.” Lawrence Yun, NAR chief economist, said first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers. “Most of the sales are taking place in lower price ranges and activity is beginning to pick up in the mid-price ranges, but high-end home sales remain sluggish,” he says. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.” This increase however, according to Smith, cannot be attributed to the first time homebuyer tax credit. “At the earliest, we will see the consequence of the tax credit in June. In other words, this modest recovery is independent of the tax credit incentive,” says Smith.“Because foreclosed properties will likely be released into the market over the rest of year, it is critical that distressed homes be quickly cleared from the market,” Yun says. “Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada and Florida—this will set the stage for healthy market conditions going forward.” The national median existing-home price for all housing types was $170,200 in April, which is 15.4 percent below 2008 while that for condos is 173,900, which is 18 percent less than last year. Distressed properties, which accounted for 45 percent of all sales in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

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