As Supply Tightens, Condos Coming Back on the Market
Category: Retirement Real Estate
October 21, 2013 — In the depths of the 2008 real estate meltdown many developers decided to turn their new condos into rental units, rather than take a bath on prices and unsold inventory. That strategy, for those who could afford to wait, seems to worked out rather well. If you have held off selling your home until now, the return to a stronger market could be beneficial to you too, particularly if you are not planning on replacing it.
The Wall St. Journal recently reported in “Condos Going Back Up for Sale” that many luxury rental units in places like California and Florida are now coming on the market as condos. While the pace of conversions from rental apartments to condos is a fraction of the torrent that came in pre-bust years, the rate is the highest it’s been since 2008. In 2012, 2,080 apartments were converted to condos from rentals, compared to 152,206 conversions in 2005.
The trend in condo conversion confirms recent housing data which show that a decline in inventory has put pressure on sales (down) and prices (up). The National Association of Realtors (NAR) reports that existing-home sales (single-family homes, townhomes, condominiums and co-ops), declined 1.9 percent in September from August levels, although they are 10.7 percent above the pace in September 2012. Sales have remained above year-ago levels for the past 27 months as the housing recovery has continued.
Even though builders have responded to demand by building more new homes and condos, that has not made up for the decline in inventory. One report we saw recently showed that the supply of unsold condos and townhomes in some South Florida counties is down 66% from 2008 levels.
Prices up, Inventory and Time on the Market Downs
The national median existing-home price for all housing types was $199,200 in September, up 11.7 percent from September 2012. Total housing inventory is at 5.0 months supply, and the average time on the market is 50 days.
Bargain days over?
The tightening of inventory, rise in prices and interest rates, and decline in short sales and foreclosures all point to better times for builders and home sellers. As a potential home buyer that might be OK, assuming you have something to sell. First time buyers will undoubtedly be the hardest hit.
Comments? What do you think is going on today’s real estate market? Is this a good time to sell or buy? Are you holding on to a property in the hope it might bring a better price in the future, or not? Let us know in the Comments section below.
Comments on "As Supply Tightens, Condos Coming Back on the Market"
Dave C. says:
Wow....this story is going to receive a HUGE amount of speculation....that would be "guess-work" in the language of the common man!
Here is my guess.....the REASON to sell/buy should be the decision point....not the profit/loss expectation. The housing market will continue to improve by fits and starts....a little up, a little down, but slowly improving. Some speculators may find a way to make a buck in this market, but the vast majority of us just don't want to lose any money in this very fluid housing market.
Bottom line......if the reason to buy/sell and/or move is solid, just do it. Each case is different. If you are facing a large loss by selling, holding off might help. But if my reason for change is important enough I will eat a 10% loss. But waiting for the housing market to be perfect is like waiting for your next birthday....maybe or maybe not.
Julie says:
Dave,
I always take future profit/loss into consideration when I buy a place. I realize that most people approach buying a home emotionally, but IMO it is too big an investment not to take the end game into consideration.
That is one reason why we bought our future retirement home 2 years ago while it was on extreme sale, even though retirement is still at least two years away. There is a good possibility that our plans are changing, that we won't wind up living there full time or even possibly will sell it, but if we sell it will be at a profit. In the meantime, it continues to be a fabulous vacation home.
As to the question posed in the article about what is going on in today's real estate market, one can't approach that question on a national basis. All real estate is local, though subject to national influences such as availability and pricing of loans. There are some areas where inventory is tight and prices are rising, and others where the market continues to be flooded, with weary sellers finally realizing they must compromise on price if they wish to sell. Since the one thing we know is that we will not continue to live where we now work once work is not an issue, I monitor many housing markets from a distance. The best way I have found to get a feeling for a housing market is to go to Realtor.com and set up an account that tracks the type of house you are interested in. This way you can see how quickly the properties are sold, and what they eventually sell for, developing your own personal set of comps.
There are no crystal balls, but there is plenty of data out there to give you a clue if you just think about how to collect it and use it.
Pat R says:
I had also considered buying during the past year while prices remained low and then not retiring for another 2 to 3. But when I factor in the cost of insurance, maintenance, taxes, HOA fees, and lost interest, as well as base utilities, it seemed to make no sense to let something sit and be paying for it all this extra time. So many things to factor into the equation.
sunlovingal says:
LOVE MY BEACH CONDO!:cool: We bought after selling the 'big' house in Burb's! Moved to the beach and never looked back...Delaware's Gorgeous Beaches...so where it's at!
Fionna says:
Sunlovingal,
Glad you like Delaware. We had explored Sussex county but found that the traffic on Route 1 is awful! Long lines to get into restaurants, supermarkets that don't have a wide selection of items (I guess I'm spoiled with Whole Foods and Trader Joe's!) Subdivisions on tiny lots is another thing that turned us off. I'm glad it worked for you -- Enjoy!!