Sales of existing condominiums and cooperatives slipped from record levels during the second quarter of 2002 but remain exceptionally high, according to the National Association of Realtors.

The seasonally adjusted annual rate for existing condo and co-op sales was 831,000 units in the second quarter, down 0.7 percent from a record 837,000-unit rate in the first quarter. It remains 12.0 percent above the 742,000-unit level of sales activity in the second quarter of last year, and is the second highest pace since NAR began tracking condo sales in 1981.

David Lereah, NAR's chief economist, said there are some parallels with the single-family housing market. "We're seeing sales of condos and co-op come off of unprecedented activity, far above any previous records," he said. "Clearly, that can't be sustained indefinitely but sales will remain historically strong for the foreseeable future and we should set a new record for the condo market this year."

The median existing condo price was $139,300 in the second quarter, 14.7 percent higher than the same quarter in 2001. "Condo price appreciation is double the rate of single-family homes," Lereah said. The median is the midpoint, which is a typical market price where half of the units sold for more and half sold for less.

By comparison, the median-priced existing single-family home was $157,700 in the second quarter, up 7.4 percent from a year ago. The typical single-family home costs 13.2 percent more than the median-priced condominium.

NAR President Martin Edwards Jr. said strong sales of upper-end units are contributing to a higher median condo price. "A recent NAR survey shows 42.2 percent of all condos are purchased by people over 50 years of age," he said. "This group consists largely of baby boomers whose kids have left the house. These empty-nesters are choosing an easier housing lifestyle, but also are seeking well-appointed units which means luxury condos are now a bigger segment of the market." Edwards is a partner in Colliers Wilkinson & Snowden Inc., Memphis, Tenn.

"At the same time, first-time buyers also are drawn to condos by lifestyle considerations, but a bigger factor for them is the lower cost of more modest units," Edwards said.

In the South, condo/co-op resale activity rose 3.3 percent in the second quarter to a 376,000-unit pace and was 11.6 percent higher than the same quarter in 2001. The median price in the South was $111,600, which was 15.3 percent higher than a year ago.

In the West, the sales pace of condos and co-ops was unchanged from the first quarter with an annual rate of 225,000 units in the second quarter; it was 13.1 above the sales rate a year earlier. The median price in the West was $159,600, up 12.5 percent from the same quarter in 2001. In the Northeast, condo/co-op resales declined 6.8 percent between the first and second quarters to a 137,000-unit pace; however, they were 15.1 percent above the second quarter of 2001. The median price in the Northeast was $144,700, up 19.3 percent from a year ago.

Existing condo and co-op sales in the Midwest dropped 6.9 percent from the first quarter to a level of 94,000 units in the second quarter, but were 8.0 percent above the same period a year ago. The median resale condo price in the Midwest was $150,000, up 12.4 percent from the second quarter of 2001.

Published: August 6, 2002

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