The condominiums market in the United States is moving up, according to a report from the National Assocation of Realtors. The market gains were concentrated in the South, which has over 40% of the condo market, but gains were also seen in the Midwest, Northeast and West.
Sales for condos and co-ops, which are similar properties, increased by 1.7% from September to October 2017 to 610,000 units (seasonally adjusted). Sales from the previous year were unchanged nationwide, according to the report.
Regions in the South saw the biggest uptick in sales. In the Myrtle Beach region, condo sales increased by 35% between March 2016 and March 2017.
Condominium prices rose 6.9% from 2016, hitting $236,800 in October 2017. The West saw the biggest increase, 11%, with prices hitting $361,800. The Midwest saw just a slight increase, with prices hitting $172,900.
While the condo market is growing, it remains as just a small part of the housing market in the United States. By comparison, the single-family home market hit 5.48 million, about 10-times the volume in the condo market.
The median cost of a condominium, as of April 2017, was $10,000 less than a single-family home. However, condo owners can expect to pay between $200 and $400 every month on HOA fees.
Whether buyers love or hate condos, they offer an alternative to single-family homes, which are still scarce at the start of 2018. The housing market in the U.S. will start the year with tight supply.
Experts expect inventories to remain tight throughout the year.
Still, existing home sales in November reached their strongest pace in more than a decade, with a 5.6% month-over-month increase. The consensus forecasts called for a 0.9% increase. Sales in the single-family segment increased by 4.5%, but the condo segment saw the biggest increase, with a 14.3% rise in sales.
With limited inventory, more potential buyers are choosing to build instead of waiting for their dream home to pop up on the market. Housing starts surpassed expectations in November, and new home sales rose 17.5% to a rate of 733,000 units (seasonally adjusted).
Economic growth and a tight labor market are keeping inventory levels low on the housing market. While many feared that the Fed’s rate hikes would negatively impact the housing market, rates for 30-year mortgages have actually declined. Rates were at 3.9% at the end of the year, still hovering near historic lows.
Despite tight inventory, homebuilder confidence has reached its highest level since 1999, rising five points to 74.
The National Association of Home Builders expects to see more growth in the single-family construction sector throughout 2018. Low unemployment rates, low inventory and favorable demographics are fueling the growth. Rising labor and material costs remain a concern, but home builders are still optimistic.
It remains to be seen where the housing market will go in 2018, but the condo sector will likely continue to see growth as buyers look for alternatives to single-family homes. December’s housing starts and building permits data is slated for release on January 18. Existing home sales figures will be released on January 24, and new home sales will be released the next day.
