CoreLogic believes younger Millennials WILL drive much of the demand for condominiums in the coming years. Why? Condos are typically more affordable than single-family homes, have lower maintenance costs than single-family homes and condominiums are mostly located in urban areas where Millennials prefer to live.
Let’s look at the data substantiating CoreLogic’s analysis.
According to CoreLogic’s most recent Loan Application data, first-time homebuyers submitted 43% of all condo home-purchase mortgage applications. In Q1 2019, young buyers ages 18-30 submitted 21% of condo purchase mortgage applications compared with 17% in the same group in Q1 2018.
Empty nesters also stepped up to the plate for condominium purchase applications as well. Boomers ages 55-80 submitted 23% condo purchase mortgage applications in Q1 2019 whereas this same group submitted 18% in Q1 2018.
The five states with the highest share of condominium sales in 2018 included…
- Hawaii – +42%
- Washington DC – +37%
- Massachusetts – +19%
- Illinois – +18%’
- New Hampshire – +17%
The top condominium markets experiencing the biggest increases in condominium sales during 2018 included…
- Houston – +7%
- North Point FL – +6%
- Miami – +6%
- Minneapolis-St. Paul – +5%
The top condo markets experiencing the biggest decreases in condo sales during 2018 included…
- Honolulu – -29%
- Los Angeles – -16%
- New York City – -16%
Obviously, the most expensive condominium markets showed annual declines in 2018 condo sales.
A major problem with the condominium market is that inventory is VERY tight. CoreLogic’s MLS data indicates that supply is the lowest it’s been since 2000 with only a 2.6-month buffer in December 2018. The overall average of condominium supply in 2018 stood at 3.3 months.
In terms of the number of potential buyers by age wanting to purchase a condominium indicates that the largest cohort of buyers are 25 (4.7M), 26 (4.8M) and 27 years old (4.78M).
A spokesperson for CoreLogic said, “There appears to be a need for expanding condominium production given the large demographic demand, the continuing strong economy and the continuing challenge of homebuyer affordability.”