Experts say the market for condominiums and townhouses should fare better than single-family homes in the coming year, potentially signaling an impending upward trend in the real estate market as a whole. Despite a fundamental lack of research into the condo market due to its relatively small slice of the national housing market—condos make up only six percent of all homes in America—experts agree that as the year continues on, the prices of condos will fare better than those of single-family homes, declining at a slower rate on average.
While the fallout from the recession affected condo prices more negatively than single-family homes in the past few years, some are optimistic that the year 2011 could witness a turnaround in this regard. The predicted decline in single-family home prices this year is 5% and is expected to be somewhat lower for condos.
Already in the past three months, Chicago has witnessed a marked year-over-year improvement in the condominium market, providing a glimmer of hope to buyers and sellers in the current real estate market. According to research done by the Illinois Association of Realtors, in May the median price for a condo in Chicago rose to $299,000 (a 10.3% gain from a year ago). In the subsequent months, the Chicago condo market enjoyed significant year-over-year increases as well, raising the overall median price for the city by 3.7 percent.
There are likely several reasons for this predicted favorability of condos over single-family homes. The recent shift in demand toward smaller properties (including condos) may be partially responsible, as well as the lower mortgage delinquency rate for condos over single-family homes, as reported by the Federal Deposit Insurance Corp., resulting in a lower rate of foreclosure for condos.
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