Condo Prices May be a Useful Indicator of Housing Prices
Comparing condo prices may be the best way to gauge the direction of housing prices. Even if you’re more interested in single-family houses, the condo stats may tell you where prices are going in your town.
Why condo prices are so useful
Chief economist for the Mortgage Bankers Association, Doug Duncan, says there are several reasons why condo prices are more accurate.
“A smaller percentage of people who own condos occupy them; many are bought as second homes and for investment purposes,” he says. “There’s less friction in that market; it’s more liquid.”
More condo sellers react to market changes and act quicker than owners of single family homes, who tend to hang onto property in the face of lower prices.
Single-family house owners act like buy-and-hold value stock investors, riding out market peaks and valleys. They sell when they go through a life change – raising a family, retiring or moving for a new job, for example.
Condo owners act more like growth stock investors, who bet on the hottest companies and trade in and out of stocks much more often, reacting to what they perceive is happening in the market.
In looking back over the historical data of when the national housing market peaked, Duncan pinpointed July 2005 as the top. He also found it was the first month in four years that condo price appreciation was less than that of existing single-family houses.
Washington, DC market prices
DUPONT CIRCLE LARGE ONE BEDROOM CONDO:
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