Real estate trends revealed by declining condo prices

The main question on most people’s minds is when will the real estate market turn around? What is a good indicator to keep your eyes on? The National Association of Realtors (NAR) tracks the sales of single family homes and condos. As a general rule, condos will usually give you an early indicator of which way a market is going. There are a couple of reasons for this.

Condos are subject to less change and variation through improvements (no added rooms or different lot sizes etc) and as a result the ability for exact comparable matches is plentiful. In a slower market there is significantly more inventory….of an exact match…and the result is a competitive market for sellers and a decline in values that is very evident.

On the other hand, homes can have very different lot sizes, added on rooms, major landscaping, pools, and many other variables that make exact matches less frequent and therefore less obvious. These trends take longer to develop.

In addition, condos are an investment in far more cases than a single family residence. This is probably the biggest reason for keeping an eye on condos to determine pricing trends. It will be the earliest sign. As an investment they are treated differently in consumers portfolios. Many will sell at the first suggestion of a turning market…to be able to get max value before the slide begins. Conversely, our primary residence is usually held as a long term position and again would take longer to see that trend develop.

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