Sales of existing condominiums and cooperatives hit a ninth consecutive annual record in 2004, and median existing condo prices were up 17 percent, the National Association of Realtors reported this week. The pace of sales activity in the fourth quarter eased but remained the third highest quarter on record.
There were 970,000 existing condo and co-op sales last year, up 8 percent from the previous record of 898,000 units in 2003. The sales pace slipped 3 percent in the fourth quarter to a seasonally adjusted annual rate of 972,000 units from a 1 million-unit pace in the third quarter. The seasonally adjusted annual rate projects a monthly sales total over a 12-month period.
Sales were 3.4 percent above the 940,000-unit rate of sales activity in the fourth quarter of 2003; quarterly records were set in the second and third quarters of 2004.
David Lereah, chief economist for the association, said, “The condo market has clearly matured over the last decade, accounting for a market share almost as big as the new-home market, and has been appreciating faster than single-family homes.”
The association will now include condo sales in its monthly tracking of overall existing-home sales, beginning with the January report.
In the fourth quarter, the median existing condo/co-op price was $203,200, which is 16.7 percent higher than a year ago. The median is a typical market price where half of the units sold for more and half sold for less. By comparison, the typical single-family home cost $187,500 in the fourth quarter, 8.8 percent higher than a year earlier.
Al Mansell, association president and CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said, “In much of the 1980s and early ’90s, condos earned a reputation for slow price growth, in many cases because there was an oversupply on the market. With the maturation of this market segment, condos have been appreciating faster than single-family homes for the last four years. In the past, affordability was a bigger factor in condo sales – now, lifestyle choices have emerged as a driving force in their growing popularity.”
For all of 2004, the median existing condo price was $193,600, up 17 percent from a median of $164,100 in 2003. At the same time, the typical single-family resale home price rose 8.3 percent to $184,100.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 5.73 percent in the fourth quarter, down from 5.89 percent in the third quarter; it was 5.92 percent in the fourth quarter of 2003.
In the Northeast, condo/co-op resales rose 1.2 percent between the third and fourth quarters to a 168,000-unit pace, and were 9.1 percent above the fourth quarter of 2003. The median price in the Northeast was $234,800, up 23 percent from a year ago.
Existing condo and co-op sales in the Midwest held steady in the fourth quarter at a level of 121,000 units, unchanged from the third quarter, and were 8 percent higher than a year earlier. The median resale condo price in the Midwest was $185,700, up 7.6 percent from the fourth quarter of 2003.
In the South, condo/co-op resale activity slipped 2.9 percent in the fourth quarter to a 442,000-unit pace; however, this was 2.8 percent higher than the same quarter in 2003. The median price in the South was $172,000, which was 23 percent higher than a year ago.
In the West, the sales pace of condos and co-ops fell 7.3 percent from the third quarter to an annual rate of 241,000 units in the fourth quarter, and was 1.2 percent below the sales rate during the same period in 2003. The median price in the West was $246,100, up 14.5 percent from a year earlier.
“Condo sales in the West suffered from an unusual shortage of units available for sale,” Lereah noted. “Without this inventory problem, national sales may have held up in the fourth quarter.”
The association began tracking the condo/co-op market in 1981; prior to the late 1970s, the association did not consider condos to be an important segment of the nation’s housing market. Beginning with data for 2005, NAR will combine the track of condo sales with the monthly series on existing-home sales.
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