Apartment, Condo Demand Jump
Demand for U.S. apartments and condominiums jumped in June, analysts said.
“With apartment shortages seen across much of the country, rents are climbing at the fastest pace seen in decades,” said Greg Willett, Chief Economist with RealPage, Richardson, Texas. He noted apartment effective asking rents jumped 2 percent in June alone, driving rent prices up 6.3 percent year-over-year. “That annual rent growth is the biggest 12-month hike recorded since early 2001,” he said.
The number of occupied apartments in the nation’s 150 largest metros climbed by nearly 220,000 units during the first quarter, the biggest quarterly increase since at least the early 1990s, RealPage said.
Willett noted the apartment sector has seen drastic change over the past year. He said demand for apartments in second-quarter 2020 was limited to roughly 33,000 units because most households were in lockdown mode at that time.
“Boosting apartment demand over the past few months, employment growth has accelerated once again, helping to spur household formation and housing absorption.” He noted the Bureau of Labor Statistics showed 850,000 job additions during June.
Condominiums are also red-hot. Redfin, Seattle, said the typical condo sold above its asking price in June for just the second time since at least 2012. The first time this happened: in May, which Redfin called a signal of renewed competition for condos after a pandemic-fueled slump.
Nationwide, the typical condo sold for 0.7 percent above its asking price in June, building on a 0.4 percent premium in May. In dollar terms, the typical condo listed for $301,872 in June and sold for $304,000.
Redfin Chief Economist Daryl Fairweather noted many potential buyers have been priced out of the market for single-family houses and turned to condos instead. “Earlier in the pandemic, many buyers shunned small condos in favor of large, detached homes with space for offices and homeschooling,” she said. “But now that many Americans are vaccinated and some are returning to the workplace, extra space isn’t as necessary and the benefits of shared amenities like a gym or a pool are more attractive. And the biggest benefit of condo living is the more affordable price.”
Redfin reported nearly 42 percent of condos sold above asking price in June, another record and more than double the 18.6 percent share in June 2020.
Condos sold at their fastest pace on record in June, with the typical condo that sold during the month going under contract in 22 days, down from 43 days a year earlier and 36 days in June 2019, before the pandemic affected the condo market.
On a seasonally adjusted basis, condo sales rose significantly in June, up nearly 60 percent year over year. Pending sales were up 38.2 percent year over year, Redfin reported.
