Condo sales: bumping along the bottom?
Unlike the SFH market, sales of condos remain well below the levels of the early years of this century, as the following table shows:
Note that in the 12 years from 1994 to 2005, sales averaged 70 each year and dropped below 60 only twice. Since 2006 sales have reached 50 only once and have averaged just 43, which is about where 2012 will end up.
Why the difference between trends in condo sales and SFH sales, which have returned to the levels of the early 2000s?
Nationally, the condo market bore the brunt of the sub-prime fiasco and the subsequent wave of foreclosures. There was a dramatic reduction in mortgage availability and a severe tightening in terms. This had a knock-on effect on the local market, with buyers in small condo buildings in particular having difficulty in getting financing.
The drop in prices of SFHs also made the lower end of this market more competitive with condos and much easier to finance.
Other local factors are:
1. The condo market here is much smaller than that for SFHs. Overall in Marblehead there are roughly 1,000 condos and more than 6,000 SFHs.
2. Since the beginning of 2009 some 720 SFHs have sold as against 152 condos.
3. Foreclosures (FC) and short sales (SS) have been more of a factor: 13% of condo sales since 2009, but fewer than 5% of SFH sales.
4. 13 of the 19 FC/SS sales since 2009 have occurred in buildings with 4 or fewer units, and 18 of the 19 took place at prices below $300,000.
Condo financing has eased since the darkest days and sales seem to have bottomed. It is hard, however, to see the appetite returning for the type of condo conversions of apartment buildings seen in the past, where often very little was done to improve an old building. The recent development of 82-84 Front Street, which was basically rebuilt into high quality condos by a professional developer, may well indicate the sort of development that is needed to attract condo buyers today.