Condominiums: Here to Stay

Experts say that the condo boom sweeping the country will only get stronger as baby boomers age.

December 1, 2005

Home buyers from all walks of life have flooded the condominium market in recent years. In fact, more than 1 million condominiums were sold in 2004—about one for every seven single-family home sale, according to the U.S. Census Bureau’s annual housing survey.

At the same time, average condominium prices have shot above those of single-family homes; from September 2004 to September 2005, condo prices rose 9 percent to $213,600, an American Demographics report says.

Coldwell Banker Real Estate Corp. gathered average condominium prices from various markets during the third quarter of 2005 and found that prices are hefty indeed. These are the average prices for condominiums that are 1,400 square feet, have two bedrooms and two-and-a-half bathrooms, and are in buildings with at least 10 stories and a doorman:

  • New York: $1,448,000
  • Boston: $981,250
  • San Francisco: $975,500
  • Seattle: $712,000
  • Los Angeles: $674,000
  • Atlanta: $589,750
  • Philadelphia: $582,500
  • Washington: $569,475
  • Chicago: $467,375
  • Miami: $443,750

So it’s clear that people aren't buying condos because they are cheaper. Rather, it's a low-maintenance lifestyle choice that will only become more popular—particularly as baby boomers age, experts say.

A recent survey by adult community developer Del Webb reveals that 45 percent of "active adults" aged 59 to 70 plan to move upon retirement. The top reason? They want "a home with less maintenance."

Other reasons for the increase in condo sales include their use as vacation homes, investments, a substitute for college dorms or apartments, or a second home in the city, says Pam O'Connor, CEO of Leading Real Estate Companies of the World (formerly RELO). Condos also are becoming an integral part of urban mixed-use developments, in which residents can work, shop, dine, and find recreational activities within a short distance of their home.

Responding to the condo demand, the nation's largest builders are changing their business models to create more multifamily housing for purchase.

For example, home builder D.R. Horton Inc. built only single-family detached homes until 1996, but today condos and townhouses make up more than 17 percent of the company's business.

According to the National Association of Home Builders’ housing projection for 2010, condo buyers can expect to see many more amenities over the next five years, including: energy-efficient heating and cooling systems; more steel, concrete, engineered wood, and recycled products; convertible interior designs to appeal to a variety of home buyers; high-speed data access, modular wiring and controls, multiple phone lines; and more mixed-use communities.

(c) Copyright 2005 Realty Times. Reprinted with permission.

Blanche Evans is a writer/editor and CEO of evansEmedia. Formerly, she was a senior editor with Realty Times, where she was named by REALTOR® Magazine as one of the most influential people in the real estate industry.

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