3/30/2010

Condos vs. Houses: How's it Going?

Bluff Park Historic District There it is, all in one picture: a condo building and two large homes, side-by-side, each property owner choosing where to live for individual reasons. And among those reasons would most certainly be affordability, but then even if a condo buyer could include the market value of either of the two houses in his price consideration, would he or she, looking down from a condo window, still want to buy the house with the large lot, square footage, maintenance, and property taxes? (The former owner of the house on the right once told me that he did make such a choice will standing in an upper floor condo next door.) These particular properties happen to be at two extremes of size and value (the condos are in the $500,000 range and the houses are double and triple that), but many people will ultimately prefer a house over a condo if they can also choose other adjustments in their criteria.

Nationally, condo inventories are higher than houses, but according to the National Association of Realtors, "the condo market has actually outperformed the single family market recently. In February, condo sales were up 30.3 percent YOY in comparison to 4.3 percent for single family homes. Starting in July of 2009 condo sales have been running at rates higher than the total for either 2008 or 2009."

In Long Beach, the months supply of inventory ending in February 2010 for single family homes is 3 months (down 44% from last year: 1045 vs. 1290 in 2/09), while the months supply of inventory for condos and lofts is 3.75 months (down 46% from last year: 449 condos on the market vs. 592 in 2/09).

Long Beach condos in escrow were up by 42% from 2/09; the number of houses in escrow were up by 30% from 2/09. The median sold price for houses in Long Beach, however, has increased from $310,000 to $350,000, while the median price for condos has decreased from $237,000 to $203,000. (These trends may vary somewhat by specific areas.) Days on market has decreased for both, but overall condos are spending less time than houses on the market.

Historically, in the local market, condos are the first time buyer's most likely choice due to price, and yet because of the distressed market many of those borrowers are having trouble, and condos are the likely choice of many investors and all cash buyers as prices make them more and more attractive.

Although March's figures are not available yet, more inventory in both categories has been coming on the market locally, and the California tax credit as well as what's left of the federal tax credit are helping to spur more action.

Stay tuned.

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