In most parts of the country, the condominium market is no longer broken, but a long way from booming. Developers started construction on just 28,000 new condos in 2014—compared to 151,000 back in 2006.
“The condominium market has been performing reasonably well,” says Hale. “Prices are still rising.” The median price of a condominium rose 1.9 percent over the year ending May 2015, according to NAR. The median price of $204,000 is still below the peak price of $226,000 in 2007.
The condominiums business has been held back by some of the same difficulties that have held back single-family home sales … starting with financing. Financing is difficult for many potential home-buyers, who have not established the kind of credit ratings or gathered the down payment cash that many lenders now demand. That’s especially true for condos. “Financing for condos is a little more complicated than for a single-family home. The interest rates tend to be a little different,” says Hale. “That makes them less of an ideal starter home.”
Eventually, the market for for-sale housing is likely grow back towards its historically normal levels, including condominiums. The many condos now under construction in New York and San Francisco, will test how much the condo market is ready to grow in the most expensive markets.
Unlike hot spots such as New York, Miami and San Francisco the condominium market is no longer broken, but a long way from booming.
The condominium business has been held back by financing which is difficult for many potential home-buyers, who have not established the kind of credit ratings or gathered the down payment cash that many lenders now demand.
How long it takes for the market to get to levels where condo sales pick up is unclear, however, it could be several years down the road.