Condo, co-op sales are on the rise

Real Estate Weekly, Nov 17, 1993

Sales of existing condominiums and co-operatives jumped notably during the third quarter of this year, as more purchasers - particularly first-time buyers - took advantage of extremely low mortgage rates, according to the National Association of Realtors.

The association recorded a national seasonally adjusted annual side rate* of 409,000 previously owned apartment condominiums and co-operatives for July, August and September. The third quarter resale rate was 19.6 percent higher than that for the third quarter of 1992, and was 9.7 percent higher than that for the second quarter of 1993.

Continued low mortgage rates during the third quarter broadened home ownership opportunities for many budget-conscious, entry-level buyers, said NAR President William S. Chee. "A condo or co-op is an excellent starter home," Chee said. "It's a smart way to accumulate equity that can be applied to a second home. "

Buying conditions currently are very favorable for people buying their first homes. Chee noted that many singles who were previously priced out of the market now are finding that purchases can be made with one income.

According to the Federal Home Loan Mortgage Corp., the national average commitment rate for 30-year, conventional, fixed-rate mortgages declined from 7.21 percent in July to 6.91 percent in September. On the whole, mortgage rates hit their lowest point in more than 20 years, and remained more than one percentage point below the level of one year ago.

The national median price for existing condominiums and cooperatives was $84,100 during the third quarter, down 1.2 percent from the third quarter of 1992. The decline reflects heavy activity by first-time buyers, most of which presumably purchase in the lower price range. In general, condominiums and co-operatives tend to be less expensive than single-family homes. The condo price was 22.4 percent below the third quarter national price for existing single-family homes, which was $108,400.

Because condominiums tend to have lower maintenance requirements than single-family homes, the units are a wise choice for buyers whose busy lifestyles often keep them away from home, Chee noted.

The Northeast, which has the largest share of condominiums as a percentage of total housing, experienced a remarkable increase in activity, posting the largest increase in condo and co-op resales on a regional basis. There, units were sold at a rate of 99,000 units during the third quarter, rising 28.6 percent from the third quarter of 1992 and 32.0 percent from the second quarter of 1993.

The second-quarter median price for condominiums in the Northeast was $102,700, 1.6 percent lower than that for one year earlier. The Northeast price was 26.9 percent less than the median price of $140,400 for single-family homes in the region during the third quarter.

In the South, condominiums and cooperatives were sold at a rate of 129,000 units during the third quarter, which was 24 percent above the rate for the third quarter of 1992 and 5.7 percent above the rate for the second quarter of 1993.

Much of the South's condo market is in Florida, where many sales are made to retirees. The median condo price in the South was $69,500, 0.3 percent above that for the third quarter of 1992. The condo price was 28.6 percent below the third-quarter price of $97,400 for single-family homes.

The Midweat also posted a healthy increase in the resale pace of condos and co-ops. The rate in that region was 71,000 units in the third quarter, up 12.7 percent from the third quarter of 1992 and up 4.4 percent above the rate for the second quarter of 1993.

The median condo price for the second quarter was $75,600, 0.3 percent above that for one year ago. Condominium prices are closer to single-family home prices in the Midwest than in any other region. There, the third-quarter condo price was 11.6 percent below the single-family home price, which was $85,700.

The condo and co-op market in the West also was active. That region posted a third-quarter resale pace of 110,000 units for condos and co-ops, which was 12.2 percent above the rate recorded one year earlier and 1.9 percent above the rate for the second quarter of 1993.

The second-quarter median price for condos in the West was $105,200, 4.5 percent below that for the third quarter of 1992. The condominium price was 26.5 percent below the third-quarter price for single-family homes, which was $143, 100.