< Back to front page Text size – +

Some surprising condo numbers

E-mail|Link|Comments () Posted by Scott Van Voorhis October 28, 2009 09:50 AM

A rebound in home sales and prices clearly is picking up steam, helped in no small part by the home-buyer tax credit.

Still, what I find most intriguing about the latest batch of Bay State real estate numbers are signs the battered condo market may be finally starting to turn a corner as well.

Condo prices rose 1.7 percent in September, for the first year-over-year again since the financial crisis sent the world’s economy spiraling into a deep downturn last fall, according to the Massachusetts Association of Realtors.

In fact, it was really the first marked break from the seemingly endless spate of year over year price declines since October, 2007. (While condo prices rose last September, it was by a negligible .5 percent.)

The new median condo price, at $259,450 is also up 27 percent from the dark days of January, when it hit a low of $204,000.

Overall, sales were also up 12.2 percent, MAR reports.

The Warren Group offers a somewhat different take, reporting that condo sales were up 3.7 percent, the first year over year increase in two years. But prices were down 2.3 percent. (The Warren Group’s database also accounts for foreclosures, instead of just straight sales, accounting for the drop in price.)

So what’s driving the uptick? Two factors seem to be at work.

One, the first-time home buyer tax credit also appears to be also starting to buoy the condo market as well.

Whether it’s a boom time or a downturn like we are seeing now, the Boston area just does not produce much in the way of new single family homes, especially starter homes.

It’s some different for condos, which, given the relatively scarcity of new single family homes, have increasingly become starters for lots of first-time buyers.

And in contrast to single-family home construction, new condos continue to trickle on the market, even amid the downturn.

Inventory is also playing a role here. After ballooning a few years ago during the intial stages of the real estate downturn, the number of homes available for sale has been shrinking.

Homes on the market have fallen from more than 43,000 back in September of 2006 to 28,000 today, MAR reports.

We are now down to 7 months of supply, which, technically might be interpreted as a sellers market, though, given where things stand with the economy, would be somewhat of a stretch.

With the supply of bargain homes starting to dry up, just maybe we are starting to finally see some signs of life in the condo sector.