In the housing crash of 2007, sales of luxury condos took an especially hard hit. However, as the economy has recovered, so too has the vitality of the condominium market–especially in urban environments. Contrary to historic trends, young homebuyers have been returning to the cities, trading the tranquility of the suburbs for the bustle of the city living. Urban luxury condos have become an appealing housing option for first-time homebuyers, eager to own property within city limits.

New condo development has reached its highest level since before the 2007 market crash. Low interest rates have encouraged developers to build new condominiums from the ground up, often listing them at lower asking prices than one-owner dwellings. As a result, young homebuyers are finding newly constructed luxury condos developments to be an alluring housing option. Currently a buyer’s market, luxury condo values are still lower than they were at their peak in 2006, but their growing popularity has begun to drive up prices.

From Housing Boom to Bust

Prior to the 2007 housing bubble that affected real estate markets across the board, luxury condo development was growing at an unsustainable rate. After a 51 percent increase in construction rates between 2003 until its peak in 2006, when the housing bust hit, the rate of luxury condo development plummeted 41 percent. With the housing market at rock bottom, absorption rates for new condo developments were as low as 36 percent. However, as was discovered during the economic recovery, property values were at an unsubstantiated high level and had to come down, which is exactly what they did.

The Road to Recovery

At the height of the pre-recession housing market, condos made up an astounding 45 percent of the multifamily developments constructed each year. That number dropped dramatically to a 9.3 percent low by 2012. Economists speculate, however, that this is a necessary step toward supply normalization.

In 2014, new condo completion rates had increased by 11 percent, the largest sign of growth since the early 2000s. More promising, however, is the rise in absorption rates, which rose to 82 percent by 2013–almost a fifty-point increase since bottoming out at 36 percent in 2007. Many economists agree that these are signs of a normalizing condominium market. Following the unsustainable condominium construction rate of 45 percent in 2006, came the 9.3 percent low in 2012; now, new condo constructions are rising again toward their normalized rate of around 25 percent.

A New Generation of Homebuyers

Developers are learning that, despite recent economic volatility, luxury dwellings remain a stable commodity. Real estate markets in cities around the world have embraced the trend of affordable luxury development in an effort to draw young families back into urban areas. As condo prices normalize across the country, they have become a comparatively affordable single-family housing option for young families wanting to center their lives within the city.

Low interest rates and high land value have made newly constructed luxury condominiums a desirable commodity. With land value on the rise, luxury housing has become–marginally speaking–a wiser investment for first-time homebuyers looking to grow their equity.

Becoming a Luxury Homeowner

Securing a mortgage in the post-recession housing market has become more difficult in recent years due to more extensive underwriting procedures. As a result, homebuyers are turning toward less expensive, investment-ready luxury developments. Homes with no previous owners tend to get lower appraisals from lenders, since their calculations are based on less concrete consumer information. This reduces up front costs for homebuyers while increasing the potential for equity growth.

Before making any type of long term investment, you should always consult with a broker who can work with lenders to get you a competitive loan.

Taking Advantage of a Buyer’s Market

Developers have been responding to the demands of consumers by offering multi-tiered pricing on luxury units. As commercial and residential developer, and restaurateur, Louis Ceruzzi points out, new condo construction is being developed for all price points, especially in urban regions. As the housing market recovers, developers are looking to fill in all demand gaps. This has given homebuyers a slight edge in bargaining, as new developments increase their supply to reach a broader range of consumers. Until construction rates and housing prices normalize to their pre-recession levels again, housing will remain a buyer’s market.

While the rise of the luxury condo development has been relatively slow, it has nonetheless remained a steady and stable force in the housing market, which economists suggest is a positive trend toward normalization. This healthier rate of new condo construction is on par with consumer demand, which creates more sustainable market that resists the creation of housing bubbles, like the one that burst in 2007. With a new generation of first-time homebuyers moving toward urban centers, it is likely the value of new luxury condos will increase in time. However, for now, it is a buyer’s market.