Condos And The Slowing Market
(The housing market is undoubtedly coming to a slowdown, and the focus seems to be on single-family residential units. But what about the condos?)
Condominiums make up an important chunk of the housing market, so it is important to look at how the slowing market will affect this sector of the housing industry.
Condos tend to be relatively less expensive than a traditional single-family home, and they have gained a lot of popularity in recent years.
A September 5, 2006 article by Diane Wedner of The Los Angeles Times, "Anxiety Complex?" looks at the condos situation in the slowing housing market.
"The crop of condominiums has increased as the once-soaring housing market tries to find a soft place to land. But bargains are few -- for now. THE shift in the real estate market has raised that age-old question: If prices crash, will condos slip and fall before single-family homes, and will they stay in the gutter longer? First, here's where we are: Buyers seeking condos have scads to choose from, but if it's bargains they want, they should probably hang tight a bit longer."
In fact, things are not even on the verge of being a bargain for that matter; especially if you are looking for a condo in California. Median prices for a condo in the Los Angeles/Orange County Area are higher than ever. These places are home to the second-most-expensive condo market in the U.S., right behind San Francisco.
These high prices, are part of the reason why there is such a surplus of condos on the market - people are waiting for prices to drop and are not in a hurry to make any decisions.
"Condos and single-family homes are sitting on the market longer than last year in part because sellers are holding out for top dollar and buyers aren't jumping into purchases, waiting to see if prices will fall. The time it would take to sell the current supply of condos in Los Angeles County increased to 6.9 months in July from 2.7 months a year ago, according to the California Assn. of Realtors. Interest rates that have climbed to 6.48% from 5.82% a year ago also have contributed to the slowdown."
Before, when the condo market was "on fire" people did not have time to linger around and slowly make a decision. They had to act fast, or there hopes of condo-ownership would be snatched by another potential buyer.
Now, people have all the time in the world to look at a variety of different places, while hoping for prices to start dropping.
Although there is a surplus of condos on the market and they are not appreciating nearly as well as they were a year ago, things may not be that bad.
"Despite some of the doom-and-gloom worries about the market, many experts say it is in better shape than it was 15 years ago during the recession. Today, supply and demand are more balanced, and there is the best mix of condo, mid-size and prestige homes since the dramatic price run-up began in 2001. Aware of the bulging baby-boomer demographic and its much-touted desire for stylish downsizing, builders won't be packing up their cranes."
Builders will be slowing down construction, or possibly delaying projects that were planned for later in the year, but we will not see a complete stop of condo building.