Recently released data for condos in the US reveals that demand for this type of property has surged. The increase has been particularly high among millennials and first-time buyers. Prices for apartments have risen across the country and in some states, condos are now in short supply.
Attractions of condos in the US
Condo properties appeal to certain demographics more than single-family homes. The latest report from Corelogic using data from 2019 reveals three key population sectors: millennials (particularly those under 30), first-time buyers and downsizing baby boomers. All showed a strong preference for condos in the US last year.
This type of property appeals for three main reasons. Condos are generally cheaper than single-family homes – according to Corelogic, prices were 16% lower on average across the US last year. They’re also easier to maintain, a key consideration for many buyers. And they usually have an urban location.
Millennials and FTHBs dominate market
Of the three population sectors, millennials and first-time homebuyers (FTHB) are the most likely to buy a condo rather than a single-family home. Data shows that in 2019, 40% of mortgages for FTHBs were for condo properties. Among millennials, the figure is even higher – last year, condo purchases made up 47% of loans in this generation, up 2% on 2018.
Short supply in some markets
Higher demand for condos in the US means that some markets are seeing a shortage. At the end of last year, supply stood at 4 months, its lowest since 2006.
Hawaii had the highest demand for this type of property – apartment sales accounted for 46% of market activity. In Washington, they represented 42% while Florida had the fourth highest level with 18% of the total.
Strong market for condos in Florida
In the Sunshine State, condos represent one of the most attractive sectors of the market for FTHBs and millennials. They are also popular as rentals and as such, offer excellent investment potential.
The latest figures (July 2020) from Florida Realtors show that the market for apartments in Florida remains strong. Sales rose by 6.3% in the year to July with pending sales at 18.1%, indicating pent-up demand among buyers.
In common with all condo properties in the US, prices for this type of property in Florida saw yet another increase. In July, they rose by 11.7% in the year to reach a median of US$210,000. So far in 2020, apartment prices have gone up by 8.4%.
Supply levels in condos in Florida are generally better than in other US states. In July, they stood at 5.6 months, although this remains below the 6 month-level that represents a balanced market.
BRIC Group offers investors the chance to purchase buy-to-let condo properties in Florida in key locations. Prices start at just US$102,000 for prime condos in Orlando, Tampa and Jacksonville. Investors benefit from 2-year rental guarantees in many cases as well as full property management.
(Source: Corelogic)
