The average condominium sold for above its price tag for the second month in a row in June, signaling renewed demand following a slump in sales fueled by the COVID-19 pandemic.
Redfin reported this week that the typical condo sold for 0.7% more than its asking price last month. The month before, condos sold at a 0.4% premium. In all, 42% of condos sold in June went for more than their list price. And the prices are rising too, with the median condo sale fetching $304,000 in June, a massive 20.3% gain from the same month one year ago.
Daryl Fairweather, chief economist at Redfin, said the current trend is quite a contrast from back in 2012, when the average condo was selling for 4% less than the asking price.
As to why buyers are increasingly targeting condos, Fairweather said the most likely reason is that they’re being snapped up by those who have been priced out of the market for single-family homes, which have been in huge demand for over a year now. She noted the median sales price for a single-family home was $405,000 in June, a record high.
“Earlier in the pandemic many buyers shunned small condos in favor of large detached homes that have space for offices and homeschooling,” she explained. That trend accelerated due to stay at home orders in many parts of the U.S. People didn’t want to confined to a small box, and that prompted many to look for larger traditional homes.
“But now that many Americans are vaccinated and some are returning to the workplace, extra space isn’t as necessary and the benefits of shared amenities like a gym or a pool are more attractive,” Fairweather said. “And the biggest benefit of condo living is the more affordable price.”
Redfin offered more evidence of the growing demand for condos. In June condos sold at their fastest-ever pace, with the average unit going under contract in just 22 days. That’s almost less than half the 43-days the average condo spent on the market a year ago. It’s also way faster than the 39-day period condos spent on the market in June 2019. Redfin says that’s a better comparison because it was before the market was impacted by the COVID-19 pandemic.
Just about every metric shows that condos are a prime target for buyers. Seasonally adjusted condo sales jumped 59.7% in June compared to the year before, while pending sales were up 38.2%, Redfin found. The overall number of condos for sale at the end of June was down more than 18% from a year ago, while total new listings rose by 7.6%.
Fairweather said the fact that new listings are up while overall supply is much lower shows that demand for condos is incredibly high. “Condos are selling quickly,” she said.
The best place to sell a condo in June was Austin, Texas, with the average unit there selling for 5.6% more than the asking price, Redfin’s data shows. That was the biggest premium out of all 85 U.S. metropolitan areas the company tracks. Condos in Rochester, New York and San Francisco sold for an average premium of 4.9% and 4.8%, respectively.
The biggest condo price increase was however in Oklahoma City. There, condo prices shot up 78.5% year over year to $116,000, Redfin said. Bakersfield, Calif.; and New Orleans saw price gains of 47.1% to $177,000 and 44.8% to $239,000, respectively.
Just two metros saw condo prices fall. They were St. Louis, where prices dropped 2.5% to $161,000, and Philadelphia, with prices down 4.8% to $315,000.
Condos sold faster in Indianapolis, going under contract in an average of just four days, followed by Denver and Elgin, Illinois, with five days.