Desire for an easier lifestyle boosts appreciation and sales of townhomes and condos

Pricing for townhouses and condos continue to climb for the third consecutive month as customers seek an enjoyable lifestyle over the responsibilities that come with owning a single-family home. The median sales price was up 13.9 percent to $145,000 from October 2014 and the average price per-square-foot gained 8.2 percent to $141.03 during that same time period. Distressed re-sales condo properties have been particularly strong in price, reflecting the low supply at price points below $200,000 according to the latest housing market report released from the W. P. Carey School of Business at Arizona State University.

"The increase in prices for townhouses and condos is certainly part of a general trend of individuals, particularly millennials, interested in pursuing a more urban lifestyle which focuses on great experiences instead of building up a larger inventory of personal assets, which generally come with more responsibilities as a by-product,” said Michael Orr, director of the Center for Real Estate Theory and Practice and author of the report.

Although single-family sales counts were 6 percent higher than in October 2014, they are weaker than numbers for September 2015 whereas townhouse and condo sales maintained more momentum and were up 8 percent from October 2014.

“Of course, purchasing an townhouse or condo is not an option everywhere. There are several locations such as Pinal County that offer few options other than mobile homes or single-family homes,” said Orr. “However, the continued interest and increasing prices are "causing some builders to consider attached products for the first time."

Additional highlights from the October 2015 report:

• Pricing for single-family homes moved higher once again during October. Compared with 12 months earlier in October 2014 we saw median sales prices rise 8.2 percent from $208,000 to $225,000, a rise which was partly caused by lack of supply of inexpensive homes. The average price per-square-foot gained 3.6 percent from $128.06 to $132.72
• Single-family homes sales increased year over year in three sectors including normal re-sales (8 percent), new homes (9 percent) and investor flips (23 percent).
• Single-family home sales decreased year-over-year across four sectors: bank-owned homes (26 percent), short sales and pre-foreclosures (12 percent), third-party purchases at trustee sale (1 percent) and GSE-owned homes (63 percent).
• Single family HUD sales were flat.
• Active listing counts (excluding homes under contract) rose 9 percent during October but as of November 1, 2015 we still had 14 percent fewer active listings than a year ago. This shortfall was all at the affordable end of the market and at the higher end we have more supply than last year. Distressed supply was down 36 percent from a year earlier but 3 percent higher than last month.
• Foreclosure starts on single family and condo homes fell 3% between September and October, and were down 23% from October 2014. Completed foreclosures) on single family and condo homes were up 1% from the prior month but down 29% from a year earlier. The numbers are a tiny fraction of those we saw a few years ago and, although volatile from month to month, continue to reflect a low level of distress. 

Additional information on demand, supply, pricing, foreclosure starts and completions, home sales, permits, purchasers and the rental market can be found on the complete report at wpcarey.asu.edu/realtyreports. The premium site includes statistics, charts, graphs and the ability to focus in on specific aspects of the market. For more about Orr’s work, see research.wpcarey.asu.edu.