Condo Market Trailing the Single Family Home Market

I read an article on the USA Today Web site recently (http://tinyurl.com/oxgoe6) that talked about the fact that the condo market is trailing the residential, single family home market nationally, in terms of any signs of recovery. That certainly seems to be true in our area, too.

Condos, like single family homes went through (and are still going through) a massive wave of foreclosures. And like the single-family market, the foreclosures brought out the vultures – people interested in scooping up units for investment purposes or maybe just first-time buyers. Condo prices lost in the same 20-30% range as single-family homes, over the last two years, with some older complexes losing even more (up to 50%). The extent of the condo market collapse was masked to a certain extent by the propensity of investors to lease them out rather than try to sell units. However, a number of investors got caught short, too, so the distressed condo market has been climbing steadily in our area.

What does this all mean for local condo buyers and sellers? Well for buyers, as in the single-family dwelling market, this is a great time to buy. You can find units that are foreclosed and haven’t been trashed or severely damaged by the previous owners. I’m not sure why condo owners were less angry or maybe just less oriented towards stripping the places, but that seems to be the case. So very good deals on units that need little more than paint and maybe appliances are out there.

For sellers this market demands aggressive pricing, just as the single-family market does. Most owners who bought in the last 4-5 years will find themselves underwater – the unit worth less than the paid for it and less than what they owe. That’s just a fact of life these days. If you are selling because you have to or really need to, you’ll take a hit on the condo, but hopefully you’ll make it up on whatever you end up buying elsewhere. One thing to be aware of is that the condo market has stretched out time wise, again just like the rest of the real estate market. It is taking 18-24 months to sell a condo that is not at a foreclosure price. In my market the average Days On Market (DOM) for what I would consider the “sweet spot” in the condo market $150 – 250,000 is 350 days (and that’s the AVERAGE). The lower end of the market $50-150K units are moving faster at an average DOM of 143 and the upper end or luxury condos are slow but I guess doing OK at average DOM of 248.

The current state of the market makes it more important than ever to have a Realtor working for you whether you are buying or selling. Sellers in particular have a tougher time in condo complexes due to the signage rules. You absolutely need to be on the MLS and have the best Web presence that you can get to sell a unit today. For buyers, you need to shop smart and buy smart. Having an agent who can do the searching on the MLS for you can save you a lot of time, plus having an advocate to negotiate for you will help you get the best deal.

What’s the condo market like where you are? Is it lagging the single family market, too?