Condo/Co-Op Market Reaches Milestone in Second Quarter, NAR Reports
WASHINGTON--(BUSINESS WIRE)--Aug. 4, 2004--Sales of existing condominium and cooperative sales set a record in the second quarter, marking the first time this market segment has ever approached the 1-million sales level, according to the National Association of Realtors(R).
The seasonally adjusted annual rate (note) for existing condo and co-op sales jumped 6.6 percent to 996,000 units in the second quarter from a 934,000-unit rate in the first quarter. Sales activity in the second quarter was 15.4 percent above the 863,000- unit sales level during the same period in 2003.
David Lereah, NAR's chief economist, said there's strong demand from both ends of the housing market. "First-time buyers and baby boomers, the 'bookends' of the housing market, are driving condo sales," he said. "While affordability is a factor for entry level buyers, changing lifestyles are a major reason that condos are a bigger market share today than in years past."
In 1993, condo and co-op sales accounted for 9.6 percent of the total of all existing-home sales. Last year, condos commanded a 12.8 percent market share -- a 33.3 percent rise in the portion of sales over the last decade.
According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was 6.13 percent in the second quarter, up from 5.60 percent in the first quarter; the rate was 5.51 percent in the second quarter of 2003 -- the lowest quarterly average since the series began in 1971.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said the rise in interest rates may have sparked some buyers into making purchase decisions. "Even if there was some fence-jumping, mortgage interest rates and the costs of servicing a loan are so low in historic terms that the rate increase may not be as big of a factor as in years past," he said. "The demand for housing from growing and aging population segments, and improvements in the economy, are bigger factors in record condo sales. The rise in market share also shows condos are a good investment."
The median existing condo/co-op price during the second quarter was $189,400, which is 12.1 percent higher than the same quarter in 2003. The median is a typical market price where half of the units sold for more and half sold for less. By comparison, the median price of an existing single-family home was $183,800 in the second quarter, up 9.1 percent from a year earlier.
Because there is a higher concentration of condos in more expensive housing markets, the national median condo price is higher than the national single-family home price. Within a given area, condos typically cost less than houses.
Regionally, existing condo and co-op sales in the Northeast jumped 13.8 percent in the second quarter to a record 173,000-unit pace and were 21.8 percent above the second quarter of 2003. The median price in the Northeast was $211,100, up 10.1 from the same period a year earlier.
In the West, existing condo and co-op sales rose 6.8 percent to a record annual rate of 253,000 units in the second quarter and were 10.5 percent above the sales rate during the same quarter in 2003. The median condo price in the West was $226,200 in the second quarter, up 8.6 percent from a year ago.
Condo and co-op resale activity in the Midwest increased 5.5 percent to a record seasonally adjusted annual pace of 116,000 units in the second quarter and was 13.7 percent above the same period last year. The median condo price in the Midwest was $178,300, up 6.4 percent from the second quarter of 2003.
In the South, existing condo and co-op sales rose 4.4 percent in the second quarter to a record 454,000-unit pace and was 16.1 percent higher than the same quarter in 2003. The median price in the South was $163,300, which was 24.6 percent higher than a year ago.
The National Association of Realtors(R), "The Voice for Real Estate," is America's largest trade association, representing 1 million Realtors(R) involved in all aspects of the residential and commercial real estate industries.
Note: The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative resale pace for that quarter were maintained for four consecutive quarters.
Seasonally adjusted sales rates are used in reporting quarterly data to factor out seasonal variations in resale activity to account for difference in weather and household buying patterns.
NAR began tracking the condo/co-op market in 1981; prior to the late 1970s, condos were not an important segment of the nation's housing market.
Information about NAR is available at realtor.org . This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center. Statistical data, charts and surveys also may be found in the NAR Media Center by clicking on Economic & Housing Statistics.
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