The condo and townhome markets, looked upon as the redeeming grace to single-family home ownership when pre-bubble housing prices were smoking hot, is beginning to come into its own again in Inland Southern California.
Condos had taken a back seat when Wall Street investors, squeezed-out buyers, second-home hunters and bargain shoppers looking to augment low-earning retirement portfolios snatched up a glut of houses in distress.
Now, with single-family home price appreciation in Riverside and San Bernardino counties marching into 2014 with year-to-year gains of 20 to 30 percent, Inland homebuyers are gravitating toward condo and townhouse sales in bigger numbers.
Condominium and townhouse sales in key multi-family markets - Fontana, Ontario, Rancho Cucamonga, San Bernardino, Moreno Valley, Murrieta, Perris, Temecula, Chino, Corona and Riverside - have risen 2.7 percent during the first six months of 2013, from a near standstill position in 2012.
The gain translates to an increase of only 31 sales to 1,178 units. But it comes at a time inventory is tightly crimped.
Condos had taken a back seat when Wall Street investors, squeezed-out buyers, second-home hunters and bargain shoppers looking to augment low-earning retirement portfolios snatched up a glut of houses in distress.
Now, with single-family home price appreciation in Riverside and San Bernardino counties marching into 2014 with year-to-year gains of 20 to 30 percent, Inland homebuyers are gravitating toward condo and townhouse sales in bigger numbers.
Condominium and townhouse sales in key multi-family markets - Fontana, Ontario, Rancho Cucamonga, San Bernardino, Moreno Valley, Murrieta, Perris, Temecula, Chino, Corona and Riverside - have risen 2.7 percent during the first six months of 2013, from a near standstill position in 2012.
The gain translates to an increase of only 31 sales to 1,178 units. But it comes at a time inventory is tightly crimped.
For Riverside and San Bernardino counties combined, existing condo sales are up 9.2 percent January through October, said Andrew LePage, analyst for San Diego-based DataQuick.
The 5,953 sales haven't hit that mark since 2005, when 8,762 sales were recorded over the same 10-month period.
The 5,953 sales haven't hit that mark since 2005, when 8,762 sales were recorded over the same 10-month period.
"We are at the very beginning of a new trend," Steve Johnson, regional director for real estate research firm Metrostudy, said. "There was so little attached product built in the last seven years, this is a logical next step."
TRENDING UP
TRENDING UP
Real estate watchers agree condo and town-home sales could begin to play a more prominent role in real estate in 2014.
"If we don't see another debacle in Washington, D.C., early in the year, the economic recovery stays on track and mortgage rates remain relatively low, it's likely single-family home prices will increase," LePage said. "With those prices on the rise, I think we'll see relatively healthy condo sales because some people will be priced out of the single-family home market."
October sales numbers point to a tipping point.
Across Southern California, condo sales in October were up 3.3 percent while all home sales took a 4.4 percent tumble.
"Condos are an attractive product for the Gen-X and Gen-Y generation, the between 20- to 34-year-olds who want to celebrate life, devote more time to recreation and education and not be tied down to their residence," Johnson said. "They want a lock-and-leave lifestyle."
The pent-up factor for families or young adults who have been cooped up in a parents' home or shared living with others also comes into play.
With employment rising in core cities, Johnson say he is already seeing movement in urbanized, densely populated areas and key commuter corridors.
KEY PROJECTS
October sales numbers point to a tipping point.
Across Southern California, condo sales in October were up 3.3 percent while all home sales took a 4.4 percent tumble.
"Condos are an attractive product for the Gen-X and Gen-Y generation, the between 20- to 34-year-olds who want to celebrate life, devote more time to recreation and education and not be tied down to their residence," Johnson said. "They want a lock-and-leave lifestyle."
The pent-up factor for families or young adults who have been cooped up in a parents' home or shared living with others also comes into play.
With employment rising in core cities, Johnson say he is already seeing movement in urbanized, densely populated areas and key commuter corridors.
KEY PROJECTS
DR Horton's Pacific Trails in Rancho Cucamonga, Lennar's project in the College Park area of Chino and a second project built by Standard Pacific have performed well, Johnson said. In Riverside County, the BelVista multi-family home development in Temecula has been described by senior sales manager Diane Rogers as the perfect storm.
Designed to accommodate 210 total units, Rogers said 144 are already sold. The units that she says appeals to workers in San Diego, including military or civilian workers at Camp Pendleton, as well as the empty nesters.
"We are three-quarters sold out," she said of BelVista by Woodside Homes, which opened at prices beginning at $187,990 in April 2011. Today, prices begin in the range of $245,000 to $297,000, she said.
With Woodside proposing a second condo development in Temecula, she said: "We see the rental and condo component as the next wave in California."
With continued population growth, and household growth, along with a group of people today who do not trust the single-family, detached housing market as an investment tool, this is the alternative.
Rising rent has also been altering the landscape.
Designed to accommodate 210 total units, Rogers said 144 are already sold. The units that she says appeals to workers in San Diego, including military or civilian workers at Camp Pendleton, as well as the empty nesters.
"We are three-quarters sold out," she said of BelVista by Woodside Homes, which opened at prices beginning at $187,990 in April 2011. Today, prices begin in the range of $245,000 to $297,000, she said.
With Woodside proposing a second condo development in Temecula, she said: "We see the rental and condo component as the next wave in California."
With continued population growth, and household growth, along with a group of people today who do not trust the single-family, detached housing market as an investment tool, this is the alternative.
Rising rent has also been altering the landscape.
Beacon Economics, in a recent report, said buyers of existing single-family homes would pay $983 per month for housing costs in San Bernardino County, while a homebuyer in Riverside County would pay $1,260 per month.
ASSOCIATION VIEW
Leslie Appleton-Young, chief economist with California Association of Realtors, said in a recent 2014 forecast the move to multi-family makes sense when it begins to cost $3,500 a month to rent a 2-bedroom unit in Los Angeles. "With a 900-square foot apartment costing that much money, you begin to look at housing in a very different way."
For decades, condos have been the first foothold in the market for first-time buyers, LePage said.
Johnson says the sparse detached housing inventory has driven investment in existing condos, too. "There's demand for it, especially with vacancy rates running at about 6 percent," he said.
For decades, condos have been the first foothold in the market for first-time buyers, LePage said.
Johnson says the sparse detached housing inventory has driven investment in existing condos, too. "There's demand for it, especially with vacancy rates running at about 6 percent," he said.
With some forecasters projecting a repeat performance on single-family price gains in 2014, the move to a product that remains affordable may already be pushing up condo prices.
The median sale price in October for existing condos grew 13.6 percent in Riverside County and 22 percent in San Bernardino County in the second quarter of 2013 from the same quarter in 2012.
"People could be very disappointed at how much prices go up over the next year for detached houses," Rogers said. "Builders aren't going to deliver homes because they are running out of land in close-in locations."
Lot sizes are shrinking. With the cost of materials and labor going up, Johnson foresees double digit price gains for condos and town homes in 2014.
"In the Inland region, attached housing comes into play when detached housing becomes very expensive."
RISING PRICES
Price growth has been highest in multifamily communities with a large population of retires, students and low-income wage earners.
Prices on condos in Rancho Cucamonga, Corona, Murrieta, Ontario and Riverside ranged from $137,000 to $218,000 over the first six months of 2013.
With metro areas beginning to report traction in the job market, Rogers said she thinks this will be a market that grows over the next several years.
LePage generally sees an upward trend on both price and sales in 2014
LePage said rhetorically, before adding the view that housing prices appreciated so dramatically, a repeat may not come in 2014. Inventory is rising, too, and fewer homes are underwater. That might soften condo sales, too.
For now, LePage said 2014 could be another year of surprises. "I could be easily wrong if the economy is building more steam than we realize now."
Written by Debra Gruszecki
Prices on condos in Rancho Cucamonga, Corona, Murrieta, Ontario and Riverside ranged from $137,000 to $218,000 over the first six months of 2013.
With metro areas beginning to report traction in the job market, Rogers said she thinks this will be a market that grows over the next several years.
LePage generally sees an upward trend on both price and sales in 2014
LePage said rhetorically, before adding the view that housing prices appreciated so dramatically, a repeat may not come in 2014. Inventory is rising, too, and fewer homes are underwater. That might soften condo sales, too.
For now, LePage said 2014 could be another year of surprises. "I could be easily wrong if the economy is building more steam than we realize now."
Written by Debra Gruszecki
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