“Broadly speaking, we are beginning to see people liking more closer-in developments,” said Lawrence Yun, chief economist for the Realtors. “The baby boomers who are looking to trade down, they are looking for condominiums. Many of the younger people, if they can qualify to buy, they are looking into the condominium style of living, compared to single family with backyards.”
During the last housing boom, builders ventured out beyond the suburbs into the so-called “exurbs,” seeking cheaper land on which to build ever bigger houses. The post-recession mentality, however, has more Americans looking to streamline their finances and their way of living.
Rental demand continues to surge despite still rising rents. Apartment occupancy increased to 94.8 percent in April, a 60-basis-point jump from the beginning of the year, according to Dallas-based Axiometrics, an apartment research firm.
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“These outstanding April numbers exceeded expectations,” said Jay Denton, Axiometrics’ vice president of research. “Whether performance continues to exceed expectations for the rest of the year will depend on numerous factors.”
Those factors include growing supply. More than 200,000 new units are slated for delivery during the rest of 2014, according to Axiometrics. There has also been some easing in the mortgage market, which could lead to more renters becoming buyers.
Multifamily housing starts (five housing units or more), which include both condominiums and rentals, rose 43 percent in April from March and were up 70 percent from a year ago. Developers, well aware of the housing recovery, continue to believe that rental demand and demand for condominiums will be strong for the foreseeable future.
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Stephen Paul, executive vice president of Mid-Atlantic Builders in Maryland, only builds single family homes, either in the suburbs or as infill in more urban parts of the D.C. area. He has been struggling through the recovery and has now decided to build multi-unit townhouses.
“It’s in the conforming mortgage limits, and people can get into those homes easier. I think we’re seeing people who thought they were going to buy a single-family home and realized. ‘You know I just can’t afford it, I’m going to end up settling for a town home, maybe it has a garage,'” said Paul.
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The median price nationally for a condominium has been lower than that of a single-family home, according to the Realtors, but in April it was slightly higher. That may be due to this new, stronger demand for condos.