Condo Sales Are Rebounding

April 28, 2007

The building of new condominiums is on the rebound. Condo builders and developers are reporting improved market conditions, according to a report from the National Association of Home Builders.

"The condo market is coming back toward balance following a period when the pendulum swung from red-hot to seriously cold," said David Seiders, NAHB’s chief economist. "What we are looking for, and likely to find this year, is a healthy and sustainable level of condo production that will fall short of the unsustainable levels during the earlier boom period. But that will meet our current market demands."

Condos have long been the preferred residential property type for many young married couples, singles, and retirees. An increasing number of upper-end condos have been offered in downtown areas of metro districts, close to points of employment. These luxury units, either new construction or converted from rental apartments, have been particularly popular with business executives.

One special problem facing today’s condo builders and developers is the rising cost of insurance. More than 70 percent of those surveyed report a significant increase in property insurance premiums. Just over half of builders reported up to 24 percent increases in premiums. About 18 percent said their increases were between 25 and 49 percent, 3 percent reported premium increases between 50 and 99 percent, and 8 percent said they received increases of 100 percent or more. Such increases can have a serious impact on affordability, Seiders noted.

source: Jim Woodard

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