New and existing condos are a hot commodity this year. In the first nine months of the year, sales of condos have increased almost 13 percent, according to the National Association of Home Builders. And the trend is expected to last through the year.

Existing condo and co-op sales rose an unprecedented 12.9 percent to a seasonally adjusted annual rate of 971,000 units sold during the third quarter (July to September), up from the previous record of 860,000 during the April to June quarter.

"The benefits of low mortgage rates have encouraged buyers for condos in the same way as for single-family homes, but condo supply hasn't kept pace with demand," said NAHB Chief Economist Seiders. "This lag has continued to add upward pressure to condo prices in many markets."

Median condo resale prices rose ten percent in 2001 to $123,200, and 15 percent in 2002 to $142,200, and have been climbing throughout 2003, averaging $161,000 through the first nine months of the year.

"That's an increase of 15.2 percent compared to the same period in 2002," adds Seiders. "Year-to-date resale prices for single family homes increased by only eight percent. And the year's not over yet."

The trend follows last year's precedent -- the National Association of Realtors reported that sales in 2002 rose 10.5 percent above what had been the record in 2001 when there were 824,000 sales of existing condos and co-ops.

Meanwhile, in Fort Pierce, Florida, a few thousand showed up for a lottery in hopes of purchasing a condo in a 864-unit project that hasn't been built yet, the TCPalm reported Nov. 25.

Potential buyers had to provide a $5,000 deposit; 10 percent of the purchase price would soon follow. The paper reports the prices of the condos ranged from $169,000 to $329,000.

Original plans called for selling 240 units in the lottery.

"We registered about 1,500 people to have a drawing for a place in line," developer Mason Simpson told the TCPalm, "We decided to put the entire project on the market because we had such a strong demand."

Liberta Scotto, a Fort Pierce native and biologist, registered six months in advance, but every condo in her price range was sold when her name was called.

"By the time I got there at 8 a.m., the street was filled with cars," she told the TCPalm. "They had a policeman directing traffic."

In Hawaii more condos than houses were sold in October, the Pacific Business News reported Nov. 4.

In October, condominium resales jumped 27.7 percent while single-family home resales went down 0.3 percent from September.

"It has a little bit to do with affordability, but it also has to do with availability," said Mary Begier, president of the Honolulu Board of Realtors. "Single-family homes are more desirable, but we have a real shortage of inventory in single family homes whereas there's still some really good values to be had in condominiums."

NAR President Cathy Whatley said there is a common denominator behind both price and sales increases.

"The rising tide that is floating all boats in the housing market is the historically affordable level of mortgage interest rates," she said. "In addition, the condo market is flourishing because both ends of the housing market -- first-time buyers and retirees -- are drawn by a combination of lifestyle and affordability considerations."

Although the nationwide sales figures and appreciation rates for condos are on the rise, regional numbers don't necessarily follow.

"While national statistics are informative, they must be evaluated with this truth in mind: There is no such thing as a national housing market," Larry Murphy, president of SalesTraq, a Las Vegas housing research firm, told the Las Vegas Review Journal in an Oct. 19 article.

Detached homes experienced a 13.1 percent appreciation increase while condos and townhouses experienced a 9.5 percent rise.

"So while townhomes and condominiums may be appreciating faster than detached single-family homes nationally, that is definitely not the case in Las Vegas," he said.

There are a couple of issues that factor into condominium appreciation rates, said Marta Borsanyi, a real estate consultant and principal of Laguna Beach, Calif.-based Concord Group, said in the Journal article.

One is that attached housing is playing catch-up after lagging behind the detached market for so long. The other factor is whether it's an investment or lifestyle choice.

Condominiums were a tougher sale in Las Vegas five years ago because people could buy a new home in Summerlin and Green Valley for about $100,000, Bill Hoover, president of Las Vegas-based Pageantry Homes, told the Journal.

"I think it's simply a matter of math, if you will. It's real difficult to get appreciation with condominiums and townhomes when the (price) ceiling is low on single-family residences," he said.

Published: December 1, 2003

Use of this article without permission is a violation of federal copyright laws.