Pending Sales of Condos, Co-ops Show Modest Increase in December
- Feb 03, 2009
By Anuradha Kher, Online News EditorWashington, D.C.–While the performance forecast for the rental multifamily market in 2009 is bleak, sales of condos and co-ops seem to be looking upward.The Pending Home Sales Index, a forward-looking indicator based on contracts signed for condos and co-ops as well as single-family homes, in December rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9. “Now is the time to buy,” Jed Smith, managing director of quantitative research, tells MHN. “When the prices are down it is a good time for people to leave their rentals and buy.”He says the market is trending upward a little but he is only cautiously optimistic about it. “Condos and co-ops saw a 2.1 percent increase in sales nationally in December. The buyers seem to be coming back into the market because the prices have dropped and mortgage interest rates are low. The biggest gains seem to be in areas with the biggest improvements in affordability.” Due to financing issues, starts for condos and co-ops have been falling since 2007 and are expected to be down 23 percent in 2009. “They will be up about 8.6 percent in 2010 when the recession is expected to be over,” says Smith. Lawrence Yun, NAR chief economist, says, “NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record. The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970. “Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun adds. The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007. Even with this little good news, Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” says Yun.