For a few years now, I have been preaching at my seminars that single family home prices would fall, but insisted at the same time, that condo prices would hold rather firm. My reasoning was that all across different generations, many people were choosing easier condo living to maintaining a residence.
Seniors would downsize out of homes because they could not maintain them and move into retiree communities and condos. Boomers would tire of boring suburban living after the kids move out, and they would move back to the city for fun. GenX&Y consists of many who prefer not to maintain a home (lawn, cleaning, etc.) but prefer easy condo living. Besides, it was all many of them could afford.
This thesis was holding up nicely until news like this article from the Boston Globe came along:
Apparently, condo sales fell over 22% from last year. Does this mean anything? Yes- condos were getting too expensive and with credit tightening, and down payment requirements rising, so prices would have to come down. however, I still feel this is one of the more desired property types. And condos in the middle income areas, which didn’t cost as much as the downtown condos obviously, would still sell. Perhaps they are down in price by 10% or so -but the fancy downtown condos, which were way overpriced, are down much more and bring the averages down significantly.
No doubt everything will drop in price – it has to. But I don’t think condo demand will wane much. My thoughts on who is buying where, still hold in my mind.
Chris Grande
5.4.08
