Condo, Co-op Market Shows Some Signs of Improvement, Not Enough to Call It Trend

By Anuradha Kher, Online News EditorWashington, D.C.–Overall existing-home sales rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September, from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007, according to the National Association of Realtors (NAR).However, while the existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 560,000 units in September, they are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago. “We have had one month of favorable performance in the housing market, but it is too early to say it’s a trend,” Jed Smith, managing director of quantitative research,” tells MHN. “The for-sale multi-housing market is starting to turn around, but not as much as the single-family market.”Lawrence Yun, NAR chief economist, says more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island. The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike,” he says.Smith adds, “Buyers are returning to the market and taking advantage of the low prices. But for the increasing numbers of buyers to have any impact on the prices, the inventory will have to go down considerably. Right now, the supply of condos and co-ops is fine.”NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., says low home prices and low interest rates have been attracting buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” he says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future,” says Gaylord.According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007. Yun says there may be market disruptions. “The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac. Inventory remains high, and price declines are pressuring owners,” he says. “Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory.”The national median existing-home price for all housing types was $191,600 in September, down 9.0 percent from a year ago when the median was $210,500. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices,” Yun explains. “The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”