Condo Market on the Mend?
April 10, 2014
The condo market, which has been mostly stagnant in recent years, is showing signs of revival nationwide.
“While still well below historical construction levels, the new interest in condos is attracting interest from high-level investors who are keeping an eye on the growing condo construction and conversion market, both to see if the trend may produce opportunities in more markets and to gauge its effect on apartment property pricing,” CoStar Group reports.
The condo share of total home sales is nearing pre-recession levels. However, sales are still more than 30 percent shy of the sector’s previous peak, according to CoStar data.
Still, “there is no question the for-sale housing market is recovering, and with it, the condo market,” says Luis Mejia, director of U.S. multifamily research for CoStar forecasting and analytics company Property and Portfolio Research (PPR). “[But] today’s rent-to-own transition is taking longer and is not likely to accelerate while interest rates and home prices rise, even if it involves a more affordable condo option.”
More developers are testing condo demand by resuming construction in some major markets, such as in Boston; Washington, D.C.; Chicago; Phoenix; South Florida; and New York City, among others, CoStar Group reports. The projects mostly target those who take mass transit and are prompted by the revitalization of urban core areas for young people who are seeking to live closer to where they work, according to CoStar Group.
Source: “Although Still Just a Ripple, Condo Development Continues with Big Urban Projects Across the U.S.,” CoStar Group (April 7, 2014)
Updated: June 18, 2018