You Think The Housing Market's Bad? Condo Market's Even Worse

If you think buyers are still squeamish about the housing market, you should talk to real estate agents about the condo market. A look at listings shows that the Montclair condo market is down 15 percent to 25 percent from its June 2005 peak, according to Julie Corbo at Keller Williams Realty.

Year after year, the picture stays gloomy, according to figures from the Garden State MLS. In 2008, for example, 65 condo units were sold in Montclair. The average listing price was $474,000 and the average sales price was $460,000 with units generally on the market for about 113 days.

So far this year, 36 units have sold. The average listing price was $387,000 and the average sales price was $367,000 with units generally on the market for about 98 days.

"There are more units selling in the first half of 2010 ... prices are lower but steady," Corbo said.

Indeed, there are some good deals to be found these days, real estate agents say.

One lovely unit at 415 Claremont Avenue has been on the market for eight months and dropped in price by $25,000 to $225,900.

Corbo said that, in 2009, 64 units were sold. In the first half of the year the average listing price was $307,342 and the average sales price was $289,585. That climbed up to $398,700 and $383,322 by the second half of 2009.

"There was a little uptick in the second half of 2009, but still significant over-pricing and longer [110] days on the market," she said.

Today's scenario is a far cry from that in the 1990s, when the condo market was on a tear amid rapid urbanization across the country. Condo buildings went up in city after city, offering amenities akin to five-star hotel perks.

But then supply began outstripping demand and the condo market crashed, especially in Florida, where in some places condos dropped in value by 30 percent from one year to the next.

In Montclair, Roberta Baldwin at Keller Williams Towne Square cited a laundry list of reasons for the troubled condo market.

Baldwin said that potential first-time buyers have no money, job worries, or no jobs at all. In addition, condo prices have eroded and then eroded even more so that newcomers to the condo market now see just how weak a condo purchase may be in the long run and are loath, even at rock-bottom prices, to jump in.

 
"And Montclair's old-fashioned condo inventory of pre-war/1960s high-rise buildings or garden apartment complexes competes with much more sophisticated community-living options in neighboring towns such as West Orange - Essex County's go-to town for more modern townhouses with high-end amenities - and Clifton in Passaic County - where there's a veritable glut of newer townhouse options at reduced prices," she said.

Chris Lane of RE/MAX Village Square said that, historically, when home prices drop, condos become a harder sell because more people can now afford to buy a house.

"We are seeing that today," she said. "For a lot of buyers in the hotter market, they were not buying the 'condo lifestyle' per se, but instead were buying what they could afford."

Carol Tangorra of Prominent Properties Sotheby's International Realty agreed that the condo market has definitely slowed down.

"In a vibrant market, condos do well. More affordability, less upkeep, etc. because the value of single-family homes usually skyrockets in a boom market, making the condo more affordable," she said. "In a less vibrant market, condos are the first to show a decline. Single-family homes become more affordable and usually represent better value."rs market that remains strong.

But although recovery may be slow there are at least some experts who say that the condo market finally may be stabilizing and that, in the near future, foreign buyers and younger buyers will again give a boost to the market.

Pauline Panza of RE/MAX Village Square also has found the condo market a difficult one this year, particularly after the expiration of the April 30th tax credit deadline.

"However, there is reason to believe the market has stabilized," she said. "The market action index [which illustrates the balance between supply and demand] is not falling significantly despite a drop in median price."