Data relating to sales of existing homes data are published by the National Association of Realtors (NAR) and combine figures on single-family homes, condominiums, townhouses and co-ops. This data is divided geographically into four regions: West, Midwest, South and Northeast. Lawrence Yun, NAR’s chief economist, noted in its September 22 report that August sales, though down a bit, followed four months of increases.
“There was a marked decline in all-cash sales from investors. On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country … As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
This assessment closely matches statistics on sales at Park Tower collected by Tim Patricio, property manager. It also runs parallel with analyses by Margaret Dralyuk, whose reality office is a long-time fixture at Park Tower. Dralyuk reports 39 units sold, September 1, 2013 through September 30, 2014. She notes that the percentage of foreclosures is down — five in the same 12-month period — and that of the 39 units sold during that time, only two were short sales.
Dralyuk notes that improvement has been slow, but she expects to see a rise in momentum in the spring market, starting in January. She observes that prices this past September were 30 to 40% higher than September, the year prior.
Rentals, she says, are going for “sky high” prices, and those units are mostly owned by long-time unit owners, not new owners who bought them on speculation. She believes that in sales, Park Tower is ahead of other Edgewater condos because of our amenities, because indoor parking is immediately available, and because a lot of items are covered in our assessments.
Patricio has a similar take on the data. He observes that sale prices are slowly climbing, with a couple of really good sales recently. But he notes that sales of foreclosures, especially studio and one bedroom units, are holding us back. As the inventory of foreclosures disappears, he expects prices to climb significantly. At present, many of the foreclosures are sold to banks at sheriff’s sales, then resold. This reselling, usually at much higher prices, helps to raise overall sale prices.
The cash sales mentioned in the NAR report greatly affect overall prices. Most sellers settle for lower prices when offered cash. It is thought, however, that if a seller can hold out and even refinance when necessary, he or she will be able to sell later at an a higher price.
It is interesting to look at sales statistics at Park Tower over the past few years. In 2010, seven studios sold for the entire year, while in 2014 eight studios have already sold as of October 1. In 2010 the average price for a studio was $77,500; in 2014 the average, to date, is $86,900.
Similarly, for two bedroom units in 2010, there were two sales, with an average price of $201,500. This compares with seven sales so far in 2014, with an average price of $237,000. In all of 2013 only nine two bedroom units sold while seven have already sold in the first 3 quarters of 2014 – and at an average price of $211,000, compared with $193,000 in 2012.
In 2012, a lot of foreclosed one bedroom units sold. But in 2013 sale prices for these units started to rise, and an ’02 unit – a medium-sized one bedroom — recently sold for $175,000. Comparable increases are expected for the entire spectrum of units at Park Tower.
Since 2012, when PTCA sale prices were the lowest in recent memory, the average sale price in each size category has seen a significant rise.
Studios (up 18.6%)
from $73,136.36 to $86,900.00
One bedrooms (up 25.5%)
from $96,922.50 to $121,609.50
Two bedrooms (up 22.6%)
from $193,385.57 to $237,128.57
For Park Tower rentals (2010 vs 2014 as of 09/30/14):
from 41 to 67 (up 63%)
from $830.24 to 968.34 (up 16.6%)
from 65 to 84 (up 29%) and from $1,037.09 to 1,161.86 (up 12%)
Two bedrooms (which peaked in 2013 but are still higher than in 2010)
from 11 to 16 (up 45.5%) and from $1,538.18 to $1,965 (up 27.7%)
Again, PTCA experience roughly tracks recent NAR report:
“Distressed homes – foreclosures and short sales – represented 8 percent of August sales, remaining in the single-digits for the second straight month and down from 12 percent a year ago. Six percent of August sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 14 percent below market value in August (20 percent in July), while short sales were discounted 10 percent (14 percent in July). Existing condominium and co-op sales declined 1.7 percent to a seasonally adjusted annual rate of 590,000 units in August from 600,000 in July, and are now 7.8 percent below the 640,000 unit pace a year ago. The median existing condo price was $213,900 in August, which is 2.1 percent higher than a year ago.”
Park Tower Condominium Association is weathering the economic storm mostly on par with the nation and has every reason to expect further improvement in its numbers with the start of the 2015 spring market and beyond.
(With thanks to Margaret Dralyuk of Dralyuk Realty and Tim Patricio, property manager, for help with this story)