REALTORS® in markets across the country are seeing increased interest in condo living
By Andrew Conner
Although it took longer for condo sales to rebound after the recession when compared to sales of single-family homes (SFH), in the past few years many markets across the country have seen sales improve. According to the National Association of REALTORS®, condo sales have been increasing year over year since 2015, and the latest data shows the increase in condo sales for 2017 outpacing SFH sales by about 0.7 percent.
Looking beyond the national trends, in some markets condo sales are booming. REALTORS® in these markets point to a number of factors that are causing this turnaround, some of which are unique to their markets and others are common across all markets.
Millennials on the move?
In many markets, particularly metropolitan areas, condos may seem like a sure bet for millennials: They offer proximity to entertainment, dining and even workplaces, and they’re often more affordably priced than SFHs. And while this is the case in some areas, it’s not a ubiquitous trend.
“We just sold a condo to a 23-year-old, but she’s unusual,” says Jody Dimitruk, CRS, sales associate at Berkshire Hathaway Home Services Fox & Roach REALTORS® in Center City Philadelphia, Pennsylvania. “I think [millennials] are delaying buying. Many still have student debt and the mindset is different in that they’re not setting down roots. They feel like they can get a brand-new rental with all the bells and whistles, and still have cash to spend on traveling and going out with friends rather than spending it on a down payment.”
Johanna Loke, CRS, sales associate and Dimitruk’s partner at Berkshire Hathaway Home Services Fox and Roach REALTORS®, adds that she used to see a significant number of condo buyers in their mid-to-late 20s, but in the past five years or so, that has changed and now first-time condo buyers are usually in their mid-30s.
Tamara O’Connor, CRS, REALTOR® with Premier Living Properties in the Tri-City area of Illinois, has seen a similar trend. “I think for younger people the biggest issue is affordability,” she says, so they gravitate toward condos. “We would see more sales if we had more affordable inventory. We are seeing a lot of people in their late 30s and early 40s—a lot of them first-time buyers—who love the area, the walkability and the price. Some have kids who are 7 or 8 years old or older, and everything is about driving to a soccer game or baseball practice, so there’s not as much demand for those acre [SFH] parcels.”
Boom across the board
However, Al Floda, CRS, REALTOR® with Keller Williams Realty Peachtree Road in Atlanta, and Stephanie Crawford, CRS, a broker/owner at Brokers Cooperative in Nashville, Tennessee, have both found increased interest in condos from buyers of all ages—from millennials to baby boomers and everyone in between.
“In Atlanta, every demographic is adding to the interest in condo living,” Floda says. “It’s really across all ages and walks of life. Land prices have exploded and that has resulted in a dramatic increase in home prices. For most people, the only entry point into homeownership is via a condo.”
To explain how the popularity of condos is exploding in Atlanta, Floda notes that since the 2009 meltdown, sales have more than tripled, the number of distressed sales has dropped from 30 percent to less than 2 percent, and supply has decreased from two years to two months.
In Nashville, Crawford saw a similar trend, as the condo market rebounded in line with the overall housing market after the recession. Additionally, demand in Nashville hasn’t been limited to one type of buyer.
“I think millennials are interested in condos, but lots of other segments are also interested,” says Crawford. “Seniors who are downsizing often want condos, and in Nashville we have higher education, so there are parents or graduate students who buy condos for school. Condos make up about 15 percent of our market, but here you’re not really saving money by buying a condo. If you want that urban, walkable lifestyle, that’s what you get.”
Empty nesters leaving the roost
So in markets where millennials are delaying buying—whether a condo or a SFH—who is creating this demand? As Crawford mentions, in many cases, it’s empty nesters, or parents who have seen their children go off to college and start lives of their own and are now looking to downsize. Often the reasons for these moves mirror the reasons millennials and other segments of buyers are interested in condos: less space to clean and maintain, no lawn to mow, and proximity to dining and entertainment.
“We have a couple we’re selling to who already live in Center City [Philadelphia], but they were in a four-story home and wanted to downsize to one floor so they could shut the door and go away when they go out of town,” says Dimitruk. “In general, a lot of the buyers tell us they’re [in the city] all the time anyway, going to a restaurant or a show, so they might as well live here.”
Regardless of the age of the buyer, condos are becoming more attractive, particularly to buyers in metropolitan markets where space is at a premium. Many REALTORS® expect this trend to continue because more buyers are looking for the conveniences and advantages of living in a smaller space that’s closer to a city.
“Pricing is the only reason this trend will end,” O’Connor says. “I talk to people constantly and this is what they want. We start looking at what’s closest to downtown and only if they can’t find what they want—either due to high prices or lack of inventory—do we start looking further out.” 
Play By the Rules
Even though Stephanie Crawford, CRS, broker/owner at Brokers Cooperative in Nashville, Tennessee, describes condos as a “vibrant and lively” segment of her market, she has seen sales fall through. When this happens, it’s often due to the ever-changing rules and guidelines surrounding condo financing, including owner-occupancy ratio, investor concentrations, reserve requirements, commercial space guidelines and others.
So what should you do? Crawford recommends staying abreast of these rules by having lender resources readily available when assisting a condo buyer or seller. She acknowledges it’s challenging to keep on top of all the rules, but at least having an awareness of the rules and how they could affect your clients will make you a better agent.
Another great resource that Crawford suggests agents become familiar with is the Department of Housing and Urban Development’s Federal Housing Administration (FHA)-approved condominiums web search tool. This tool is especially useful if your buyer is using an FHA loan.
Want up-to-the minute information about how condo sales are changing? Go to CRS.com/resources and check in with the Inman Select feed. You can also search condos on CRS.com to find more.
