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Daily Real Estate News | May 6, 2002 |
NAR: Condo Market Surges to Record
Sales of existing condominiums and cooperatives surged in the first quarter as buyers ventured into the market in response to unusually mild weather, according to the National Association of REALTORS.
The seasonally adjusted annual rate for existing condo and co-op sales was 838,000 units in the first quarter of 2002, up 16.6 percent from a 719,000-unit rate in fourth quarter. Sales activity in the first quarter was 12.3 percent above the 746,000-unit sales level during the same period 2001. The previous record was an annual rate of 773,000 units in the third quarter of last year.
NAR President Martin Edwards Jr. said the numbers are astounding. “After setting an annual record for condo sales last year, the jump during the first quarter – even with a boost from unseasonably mild weather – is really incredible. It shows we have exceptionally strong market fundamentals,” he said.
“However, if it weren’t for low mortgage interest rates, we’d have fewer first-time buyers and it’d be a much different story,” Edwards said. “This is why it’s important now to expand programs for lower-income buyers so there will be less of a shock to the market in the future when interest rates eventually rise.” Edwards is a partner in Colliers Wilkinson & Snowden Inc., Memphis, Tenn.
According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was 6.97 percent in the first quarter, up slightly from 6.90 percent in the fourth quarter; it was 7.01 percent in the first quarter of 2001.
David Lereah, NAR’s chief economist, said a strong price performance is now a clear trend in the condo/co-op market. “For the last couple years, condo prices have been rising faster than single-family home prices and that trend is even more evident in this report.” he said. “What we have here are two market extremes – the lower price ranges attractive to first-time buyers and luxury units that appeal to families seeking a simpler lifestyle after their children have left the home. It’s the latter, in combination with strong demand, that is causing a very sharp rise in median condo prices.”
The median existing condo price during the first quarter was $135,300, which is 15.3 percent higher than the same quarter in 2001. 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 price of an existing single-family home was $150,900 in the first quarter, up 8.0 percent from a year earlier. The typical single-family home costs 11.5 percent more than the median-priced condo.
Every region set new sales records in the first quarter. In the West, condo/co-op resale activity rose 24.9 percent from the fourth quarter to an annual rate of 226,000 units in the first quarter, and was 13.0 percent higher than the sales rate during the first quarter of 2001. The median condo price in the West was $155,700 in the first quarter, up 10.8 percent from a year earlier.
In the Northeast, condo/co-op resale activity rose 22.7 percent in the first quarter to a 146,000-unit pace and was 16.8 percent above the first quarter of 2001. The median price in the Northeast was $138,000 in the first quarter, up 19.8 percent from a year ago.
Existing condo and co-op sales in the Midwest were at a seasonally adjusted annual pace of 101,000 units, up 16.1 percent from the fourth quarter, and were 16.1 percent above the same period in 2001. The first quarter median resale condo price in the Midwest was $144,100, up 10.7 percent from a year ago.
In the South, the existing condo and co-op sales pace rose 9.9 percent in the first quarter to a 365,000-unit pace; this was 9.3 percent higher than the same quarter in 2001. The first-quarter median price in the South was $108,100, which was 17.8 percent higher than a year ago.
Source: NAR
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