Condos an Affordable Alternative for Young Buyers
Younger and minority households who want to own a home at a more affordable price than detached single-family housing represent prime prospects for condominium developers seeking to boost their sales, according to a new research study by NAHB.
Using 2005 American Housing Survey data from the U.S. Census Bureau and the Department of Housing and Urban Development, the analysis was conducted to help association members better identify potential buyers at a time when condo sales are slow in most markets.
Condominium sales declined from a cyclical peak of 896,000 in 2005 to 801,000 in 2006, according to the National Association of Realtors®, with a continued decline last year.
A look at the characteristics of households that bought condos in multifamily buildings with at least five units during the two-year period prior to the survey found that the typical buyer was single, a non-Hispanic white, age 25 to 34 with a college undergraduate degree.
More specific characteristics of buyers include:
- More than 30% of the buyers were one-person, female-headed households, and about 21% were single males. Another 19% were married couples without children.
- About 31.5% had a bachelor’s degree and about 27% had some college education.
- Condo buyers represented a broad economic spectrum. About 22% had incomes between $20,000 and $39,999; and 20% had incomes between $40,000 and $59,999. High-end buyers with incomes exceeding $80,000 accounted for a quarter of the market.
- The value of the condos they purchased also varied. About a quarter of the condos sold for between $150,000 and $250,000. More than 40% were priced below that range and almost one-third were more expensive. At the high end, 5% sold for more than $600,000.
- The share of Hispanic condo buyers increased from 7.8% of the market in 1997 to 10.5% in 2005. The share of non-Hispanic blacks also increased, surging from 3.1% in the recessionary year of 2001 to 8.7% in 2003.
- The share of condo buyers who are under age 25 has also been on the rise, with their share climbing from 4.9% in 1997 to 11.7% in 2005.
- By contrast, the share of condo buyers aged 65 and older has been declining — from a 22.6% market share in 1997 to 14.3% in 2005.
“The trends show that minority buyers and buyers younger than age 25 are becoming a larger share of the market for condos,” the study says.
“Multifamily condominiums generally are smaller in size and can be sold at lower prices than single-family detached homes in the same area. This can provide an opportunity to homeownership that would otherwise be difficult to obtain for minority households and younger households, who often have relatively low incomes and accumulated wealth.”
For more information on multifamily resources available from NAHB, e-mail Ann Marie Moriarty, or call her at 800-368-5242 x8350.