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Realty Viewpoint: Condos Contradict Current Sales Conundrum

Written by on Tuesday, 19 February 2008 6:00 pm
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Whatever you think you know about condominiums, you're probably wrong. Don't be rattled by the overbuilding of condos in certain areas, there's plenty of market for them across most of the U.S.

For one thing, density is a certainty. The U.S. Census projects 450,000,000 U.S. residents by 2050. We have a little over 300,000,000 now.

Since 2006, single heads of households have outnumbered marrieds, and only 40 percent of homebuyers today have children under the age of 18.

Condos are a lifestyle choice where residents can skip the yardwork and use the fitness center without carrying the overhead. It's the perfect step between apartment rentals and detached single-family homes. Condos serve workers -- they tend to be built near jobs, amenities and attractions.

That's why condos continue to defy the housing downturn. According to the National Association of Realtors, condominium and cooperative prices in 59 key metros -- show the national median existing-condo price hasn't dipped. It was $221,100 in the fourth quarter just like it was for Q-4 in 2006.

In addition, thirty-three metros showed increases in the median condo price, including four areas with double-digit gains, while 26 areas had price declines including four with double-digit drops.

Chicago is one of the metros celebrating density and the condo lifestyle. Figures from the Multiple Listing Service of Northern Illinois (MLSNI) found that sales of condos and townhouses (classified as attached homes by the MLSNI) were equal to or higher than 2006 levels in 55 suburban communities and 29 city neighborhoods in 2007.

That's pretty good considering that total sales for all types of housing declined over 21 (21.3) percent for sales, with sales of detached units (primarily single-family homes) posting a 23.8 percent decrease for the year.

The N.A.R. says the strongest condo price increases were in Bismarck, N.D., where the fourth quarter price of $125,000 rose 20.8 percent from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $173,300, up 17.8 percent, and Knoxville, Tenn., where the median condo price of $160,800 rose 10.6 percent from the fourth quarter of 2006.

Metro area median existing-condo prices in the fourth quarter ranged from $109,900 in Wichita, Kan., to $595,700 in the San Francisco-Oakland-Fremont area.

The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $363,100, followed by the San Diego-Carlsbad-San Marcos area at $327,000.

Affordable condo markets include both Indianapolis and Greensboro-High Point, N.C., at $116,700 in the fourth quarter, and the Cleveland-Elyria-Mentor area of Ohio at $120,000.

Thanks to a number of incentives and tax benefits, homeownership is still appealing to many, as long as there is some reasonable certainty that homeowners can sell their homes when they need to.

Condo owners move approximately every four years, while detached homebuyers tend to sell after 6 years, says the N.A.R.

Why would any practitioner not want that business?

Think of condominiums as what they really are -- neighborhoods, and you should have no problem recommending them to any buyer.

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  About the author, Blanche Evans

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