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| June 25, 2004 |
By: Charles Kimball |
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emand for used condominiums was strong in 2003 and promises to stay that way through 2004.
Sales of previously owned condo units rose 5.5 percent last year, to 56,552 from 53,613 in 2002, according to the Keyes Co. The latest figure is nearly double that of a decade earlier.
The key change in the market was the increase in total value of the sales. Dollar volume jumped 22.3 percent to nearly $8.69 billion in 2003 from $7.11 billion in 2002. Buyers in 1993 spent about one-fourth the latest total.
Last year, buyers acted with abandon. In Miami-Dade County, they paid an average $195,185 for a used condo, accounting for 35.8 percent of all South Florida deals.
In Palm Beach County, they paid $142,892 on average in 26.9 percent of deals.
And in Broward County, they paid the lowest prices — $121,901 — and generated the most sales, 37.3 percent of the total.
In past cycles, rapidly rising prices slowed the market. But these are abnormal times and low mortgage rates have upset the normal rules of supply and demand.
It appears the first half of 2004 continued the trend, but the dynamics may change in the second half. With the economy showing signs of picking up, the Federal Reserve may raise rates, although just how a one-quarter or one-half a percentage point increase will affect demand remains to be seen.
Price-conscious buyers choosing between pre-owned homes and condos find that condos are cheaper on average. Just how much depends on the county.
In Miami-Dade last year, a used condo cost $35,962 less than a used home.
In Broward, the spread was larger, at $63,284.
The difference was most pronounced in Palm Beach, where new home construction is still brisk and the used-home market is much smaller. There, the gap last year was $124,128.
Those lower prices currently have a limited impact on the total market for used housing because single-family homes still dominate the market. Last year, pre-owned condos accounted for one in three sales of existing residences in Broward and Palm Beach Counties.
The figure was slightly higher, 36.4 percent, in Miami-Dade and should increase rapidly as more units are resold. It may be a matter of only a few years before there are more condo than single-family home purchases.
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