CONDO MARKET REPORT
<BR>While most of our commentaries involve the analysis of past sales statistics, in this issue we would like to look forward and make some predictions about the market in general and the Condo market in particular. While the so-called experts, those ivory tower economists, can massage published statistics, they lack the street level experience. They never get down to the micro level to look at individual properties and to talk to buyers and sellers!! So here are TEN things we know (or think we know) about 2004!<BR>
1) 2003 was a record year for all sales. 2004 will match those volumes. However the first 6 months of 2004 will outperform those of 2003 and the back half will under perform the 2003 results.<BR>
2) Low Mortgage Rates will influence real estate activity. Expect rates to be slightly lower in the first half of 2004 and then watch them climb by year-end.<BR>
3) We are not experiencing a 'real estate bubble' and prices are not about to crash as we saw in '89. At that time, housing costs (mortgage and taxes) on the average sold property were 59% of average individual income. Today that number is only 35%, even after the price gains of the last few years.<BR>
4) The current market has been fueled by 'first time' buyers. For 2004, the 'move up' market will be the primary force. <BR>
5) In the condo market, 2003 was a record year for sales and for listings! In 2004 there will be another 15,000 new condo units reaching the market. Most of these units were pre-sold over the last couple of years. The real question is what will these owners do with their units? Some will move in. Some will rent them out, and some will attempt to sell them into the market. To date the market has absorbed all the new construction. The problem is that most of this new product is 600-700 sq.ft. In 2004, prices for small condo units (studios and one bedrooms) will be soft (read slightly lower than 2003). Prices for bigger units (two bedrooms and more) will be firm (read level to slightly higher for premium units). Average prices are deceiving. Even in a flat market, there are always units that are rising and other that are falling in price. That?s where a real estate expert earns their keep.<BR>
6) The vacancy rate for condo apartments has risen from .1% in 2001 to 2% today. On the other hand, the pool of rental condo apartments has dropped from 36,000 in 1998 to about 33,000 today. That means that with all this condo construction, investors have been selling their units into the market. Rental rates have bottomed, and with the economy picking up in 2004 we will experience some small rental increases - not in the small units but in the bigger and more expensive ones.
HERE?S WHAT WE WOULD RECOMMEND FOR THE CONDO MARKET IN 2004:
<BR>1) If you own and want to buy bigger, then do it now. The price differential will only get bigger. <BR>
2) If you want to buy (and don't already own), then buy as big as you can afford. Choose a location where there is no new construction close by - this can limit your appreciation in the short term.<BR>
3) If you want to sell (and get out of the market), then sell now or wait 3-5 years. Holding on for another year makes no sense. Real estate appreciates over a long period of time. We have experienced good gains, now we are entering a period where prices will consolidate at these levels for most units.
<BR>And remember owning a condo is not just about investment, its also about a lifestyle.
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