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The California condominium market typically receives less attention than the single-family home market, but its performance has been every bit as impressive as that of the detached-home market in recent years, according to a recent report published by the California Association of Realtors.
Price appreciation has been driven in part by the more affordable nature of this market segment, with the median price for condos generally at 75 to 80 percent of the median price for detached homes. The lack of inventory for condominiums as well as single-family homes has driven up the appreciation for both markets.
"The condominium market segment appeals more to a slightly different customer base compared with the detached-home market, with single-person households accounting for 44 percent of all condominium buyers, compared with 24 percent of all detached-home buyers," said California Association of Realtors President Jim Hamilton.
According to the association's research, married households accounted for 64 percent of all detached-home buyers but only 42 percent of all condominium purchases.
Condominiums represented 16 percent of sales in 2004, about the same share as in recent years. As with detached homes, condominium sales have trended upwards in recent years, with annual sales of condominiums 20 percent higher in 2004 compared to a 32 percent increase in detached-home sales over the same period. Moreover, annual price appreciation of condominiums surpassed that of detached homes in all but one of the past five years.
"With their lower acquisition costs, condominiums appealed more to first-time buyers, who accounted for 37 percent of all condominium buyers in 2004, compared with 26 percent of all detached-home buyers," Hamilton said.
"Condominiums also were more appealing as second homes. Nine percent of all condominiums were purchased as vacation or second homes in 2004, compared with just 4 percent of all detached homes."
The median price of a condominium in Los Gatos in February was $722,500, up from $545,000 in February 2004. Saratoga showed a 70 percent increase from February 2004 with a median price of $450,000 to February 2005 with a median price of $765,000. Cupertino's condominium prices increased slightly from $450,000 in February of 2004 to $536,000 in February of 2005.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to gmeissner@silvar.org.
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