First, the Market

Condominium sales have had their ups and downs in the recent past. Sales of existing condos increased from 820,000 units in 2004 to 896,000 in 2005, then declined to 801,000 in 2006, according to the National Association of Realtors. And the available 2007 data indicate continued decline.

Construction of new condos showed a similar trend. Census Bureau statistics show that multifamily for-sale starts increased from 120,000 in 2004 to 150,000 in 2005, and then edged up to 151,000 in 2006. With only 96,000 started through the first three quarters, it appears that this number will be down substantially in 2007.

Characteristics of Recent Condo Buyers

Figures 1 to 4 and Table 1 show characteristics of households who bought condominiums in large multifamily buildings (at least five units) during the two-year period prior to the survey. Although these condos serve a variety of residents, the typical condo buyer is single, white, non-Hispanic, age 25 to 34, with a bachelor’s degree. ¹

More than 30% of the condo buyers are one-person households headed by females (Figure 1), and about 21% are one-person households headed by males. Another 19% are married couples without children. Among all condo buyers, about 31.5% have bachelors’ degrees — the education level that represents the largest share among those shown in Figure 2. About 27% of the condo buyers have some college education. 

Figure 3 shows that condo buyers exist across a broad income spectrum. About 22% of them have incomes between $20,000 and $39,999, and 20% have incomes between $40,000 and $59,999. High-end buyers (with incomes over $80,000) account for a quarter of the market.

Given the range of buyer incomes, it’s not surprising that value of the condos they purchase also varies (Figure 4). About a quarter of the condos sold are valued between $150,000 and $250,000, but many are substantially either below or above this price range. At the high end, 5% of the condos are sold at prices greater than $600,000.

Table 1 shows the average household size, average age of the householder, average income and market value of the unit by different geographic status and by the number of units in a building. Among the four principal Census Regions, the largest share of condo buyers is in the South region (34.8%).  A relatively small share (8%) is outside of metropolitan areas. 

For the U.S. as a whole, the average household size among condo buyers is 1.7 people. It’s a little larger among those buying condos in the Northeast (1.9), and in buildings with 5 to 8 units (2.0 people, on average). There also is some regional variation in the age of condo buyers; on average, they tend to be older in non-metro areas.

The average income of condo buyers is highest in Northeast region (where much of the condo market is in the high-priced and high-income East-coast metro areas), and in central cities. Buildings with 9 to 12 units attracted condo buyers with a relatively high average income of $85,685.

As one would expect, condo values are higher in the categories where the incomes of the buyers are higher. For example, average values are higher in the West, Northeast, and inside metro areas. The correlation is not perfect, however, since condo values tend to be highest in buildings with at least 25 units, while the average income of condo buyers in these buildings is relatively modest. Many of the larger residential buildings are in central cities and the Northeast, where land tends to be expensive, and affordability often poses a problem. 

Trends in Minority Status and Age of Buyers

There have been some recent trends in the age and ethnic distribution of condo buyers. For example, the data show that the share of condo buyers who are Hispanic increased from 7.8% of the market in 1997 to 10.5% in 2005 (Figure 5). The share of non-Hispanic blacks also increased — especially after the economic downturn of 2001 — surging from 3.1% in that year up to 8.7% in 2003.

During that period, the share of non-Hispanic blacks in the total U.S. population remained relatively constant, while the share of Hispanics increased from 13.1% of the population in 2001 to 14.5% in 2005, according to the Census Bureau’s American Community Survey.

The share of condo buyers who are young (under age 25) also has increased recently. In 1997, about 4.9% of condo buyers were younger than 25, and this share increased to 11.7% in 2005 (Figure 6). Most of the increase occurred since 2001, a period when home prices increased substantially.

Therefore, one possible explanation is that younger households, who often have lower income and wealth, tend to buy condominiums instead of single family homes as the latter become less affordable.

In contrast, the share of condo buyers aged 65 and older decreased in recent years. In 1997, 22.6% of the condo buyers were at age 65 or older. In 2005, this number dropped to 14.3% (Figure 6). 

The trends show that minority buyers and buyers younger than age 25 are becoming a larger share of the market for condos. Multifamily condominiums generally are smaller in size and can be sold at lower prices than single-family detached homes in the same area. This can provide an opportunity to homeownership that would otherwise be difficult to obtain for minority households and younger households, who often have relatively low incomes and accumulated wealth.

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¹ At the time when this article is written, 2007 AHS data haven’t been released yet, so 2005 data is the most recent data available. [ return to top ]