Home shoppers are taking advantage of some discounts occurring in the condo market, fueling the sector’s recovery since the start of the COVID-19 pandemic.
Many home buyers have been drawn to upsizing during the pandemic, heading to the suburbs in favor of larger single-family homes with greater privacy. But as single-family home prices soar, some buyers are being priced out and drawn back to condos for their affordability. The average single-family home sold in the U.S. cost 17.3%—or $58,000—more than the average condo, according to a recent analysis of the condo market from the real estate brokerage Redfin.
Condos are lingering on the market longer, averaging 36 days in October compared to single-family homes’ 27-day average. Nearly 23% of condos sold for more than their list price compared to about 37% of single-family homes.
But after a 50% sales plunge this spring, condo sales have recovered. In October, condo sales increased 22.7% compared to a year earlier on a seasonally adjusted basis, Redfin’s data shows.
“Condo sales are rebounding because buyers are finding great deals,” says Daryl Fairweather, Redfin’s chief economist. “Families are fleeing cities in search of more space in the suburbs, which has presented an opportunity for millennials who are looking to become homeowners but don’t need extra bedrooms or a backyard.”
Indeed, home buyers are turning to condos for the sake of affordability when up against the high prices of single-family homes.
“Before the pandemic, it was challenging to find a condo in Seattle for less than $500,000, but now there are plenty selling for under $400,000,” says Forrest Moody, a real estate professional with Redfin. “The people who are buying condos now are the people who couldn’t afford to buy one a couple of years ago because prices were so high. I recently sold a condo that was within walking distance of Amazon’s headquarters for $510,000. Condos in that building normally go for $550,000 and up.”
Source: “Condos Are Selling for a Record 17% Discount to Single-Family Homes as the Coronavirus Fuels Demand for Space,” Redfin (Nov. 25, 2020)