Recent news has highlighted the severity of the renewed downturn in prices of single-family homes, but Capital Economics says although condominiums will not escape altogether, over the next year or so condo prices are likely to fall by less than their single-family counterparts.
According to a market analysis released recently by the research firm, demand for condos is currently stronger than demand for single-family homes.
Since January 2009, existing-condo sales as a share of all existing-home sales have risen from 10 percent to 13 percent due to cash buyers and investors, who currently drive the housing market. These buyers traditionally favor condos over single-family homes for rental income.
In addition, the lower delinquency rate in the condo market suggests that, in the coming years, fewer foreclosed properties will support the supply of condos.
During the housing boom, condo prices rose by 120 percent compared with the 105 percent rise in single-family home prices. During the housing bust, though, Capital Economics says while condo prices fell by 25 percent, house prices have plunged 32 percent.
According to the FDIC, in the fourth quarter of 2010, 1.1 percent of real estate loans secured against multi-family properties were three or more monthly payments behind compared with 2.4 percent for single-family homes.
Fewer Americans are having trouble paying their mortgages now compared to a year ago, according to a new Harris Interactive poll.
About 22% of those surveyed last month said they had difficulty making their mortgage payments, down from 29% a year earlier. Additionally, 21% of respondents believed they were “under water” on their mortgage, meaning the outstanding balance is higher than the home is worth, according to the report. That’s down three percentage points from last year.
The findings seem to reflect an improving job market, with more jobs and lower unemployment. March’s unemployment rate fell to 8.8% from 8.9% in February while the U.S. economy added 216,000 jobs, the U.S. Labor Department said recently. In March 2010, the unemployment rate was 9.7%.
But the news isn’t all good. Another reason for the decline in struggling homeowners is that some of those who had been having trouble keeping up their payments last year have since sold or lost their homes through foreclosure. Of those polled, 66% said they had a mortgage, down from 69% in Harris’s year-ago survey.
After all, the U.S. housing market is still in flux. The median home price is February was $156,100, down 5.2% from a year earlier, while so-called distressed homes — houses sold at a discount — accounted for 39% of February sales, according to the National Association of Realtors.
“These findings are consistent with other Harris Poll data on the economy that show a very modest, but, still painfully slow, recovery from the recession,” Harris Interactive said in a statement. “Many millions of people are still hurting badly even if the numbers are slightly better than they were last year.”