The condo market is on the rise and the condo share of total existing home sales resembles pre-recession numbers. However, the absolute number of sales is still below 30% of the pre-recession peak. The condo market is more stable than perceived because of lingering effects from the recession. Today’s renters are still feeling the effects of the financial crisis and rising interest rates and home prices are keeping renters in the condo market as opposed to transitioning to home ownership. Which leads us to believe that while we are not seeing it yet, the multifamily market may be on its way towards a downturn as the condo and single family market continues to gain traction.
Excerpts from the Article:
The condo market seems to get stronger every day. The trend, which often raises concerns about a potential weakening of the apartment renter pool, was first anticipated back in the 2012 and confirmed last year.
There is no question: The for-sale housing market is recovering, and with it, the condo market. But although the improving housing market gives renters a reason to think about homeownership, 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.
Citation and Link:
Costar Staff (2014) A Look at the Growing Condo Market, Costar, pg. 1