Condominiums are selling for an average 16% lower than single-family homes, and that could make them more attractive for millennials and first-time home buyers, according to a new report by CoreLogic.
The report says millennials could be pushed “toward buying condos because they tend to be more affordable than single-family homes and because condos typically come with a lower maintenance burden and are mostly located in urban cores”.
Around 40% of all condo-related mortgage applications in the last year were from first-time buyers, compared to just 33% of regular home mortgage applications, CoreLogic said. In addition, 47% of all condo purchase mortgage applications in 2019 were from millennials, up 2% from 2018.
Baby boomers who’re downsizing are also being drawn to condos, CoreLogic said.
Hawaii was the state with the largest share of condo sales at 46%, followed by Washington D.C. (42%), Massachusetts (20%), Florida (18%) and Illinois (17%).
At the metro level, Austin, Texas saw the largest annual increase in condo sales at 12%.
“Given worsening affordability challenges in many markets, condos could be a viable option for many,” CoreLogic said. “In the coming years, younger millennials (age 30 or below) are likely to drive much of the condo demand as they are a very large group. Still, there will be more condo demand than supply as young millennials approach peak household formation and home buying age.”
However, condo supply remains tight. The inventory for condos plunged to four months in December 2019, which was the lowest level since 2006.