Condos Surge as an Affordable Alternative

HOUSTON – (By Dale King, Realty News Report) – If you can’t afford a single-family home, and the idea of renting is a financial and aesthetic turnoff, there isan alternative.

Buy a condo.

But do it soon. The typical condominium in the U.S sold for a record $319,000 in February, says a recent report from Redfin, the tech-powered real estate brokerage. That’s up 14.6 percent from a year earlier and 22.7 percent from two years ago, just before the pandemic began.

Condos are in high demand, says Redfin, partly because they’re a comparatively affordable option amid skyrocketing home prices and rising mortgage rates. Single-family home prices hit a record $406,000 in February, up 15.9 percent year over year and up 34.9 percent from two years earlier.

“The condo market has bounced back,” said Chance Glover, a Redfin manager in Boston. “People are no longer afraid to live downtown, close to the crowds—and they often prefer it, because they’re close to the office and all the amenities of the city. Rising prices are pushing single-family homes out of reach for a lot of buyers, so condos are affordable in comparison.”

HAR offers a peek at Houston

The Redfin report offered condo data for 67 communities across the nation but presented no information for Texas.

For information on the local condo market, RealtyNewsReport.com turned to the Houston Association of Realtors (HAR).

The association said: “Townhouses and condominiums [in Houston] had another strong month of sales in February with volume surging 35.9 percent with 659 closed sales versus 485 a year earlier. With that figure likely distorted because of last year’s freeze, a comparison to February 2020 shows an increase of 40.5 percent. The average price jumped 22.4 percent to $266,366 and the median price shot up 26.8 percent to $225,000. Both are record highs.”

A number of high-end condo towers are under development in Houston.

Houston’s inventory of condos fell from a 3.1-month supply to 1.4 months.

Condo supply is down, pushing up prices

Across the nation, condo prices have jumped skyward, partly because of the severe inventory shortage and ensuing competition, Redfin said. The supply of condos was just shy of a record low in February and new condo listings were down 6.1 percent.

Condominiums are experiencing an even bigger inventory decline than single-family homes, Redfin notes. The supply shortage held back condo sales, which were down 5.3 percent year over year, in line with the decline for single-family homes. But condo sales were up 13 percent from February 2020, while sales of single-family homes were essentially flat over that same period.

The fact that condos are nearly as hot as single-family homes marks a big shift from the beginning of the pandemic, Redfin says, when remote work and nerves about crowded spaces caused condo sales to plummet a record 48% and prices to drop the most since 2012. Now, with coronavirus cases declining and some Americans returning to the office, condos are an attractive option once again.

National Condo Facts: Redfin

The median price for condominiums nationally was $319,000 compared to $406,000 for single family homes.
Condo prices rose in 61 of the 67 communities flagged in the Redfin report, which excluded Texas.
Highest priced condos were reported in Nashville, $426,000, up 49.3 percent year-over-year. Second highest priced units were in Charleston, S.C., $319,000, up 41.1 percent year-over-year. Third highest price was reported in Las Vegas, $237,000, up 33.3 percent year over year.
Condos sold fastest in Seattle and Denver, with units going to contract five days after listing. Next came Indianapolis and Salt Lake City, 6 days from listing to contract.