December 3, 2013, 4:56 p.m.
Southern California home buyers have pulled back, purchasing fewer single-family homes in October as they struggled to afford houses that have jumped in price this year.
They didn’t, however, lose their appetite for condos.
Changing cultural attitudes and skyrocketing home prices have boosted demand for condominiums this year, experts say. For many, condos are the only affordable path to homeownership in urban areas near jobs, cafes and boutiques.
“People who a year ago could afford houses can’t,” said Richard Green, director of USC’s Lusk Center for Real Estate. “But they can afford condos.”
In October, sales of previously owned condos and other attached units increased 3.3% over a year earlier, according to research firm DataQuick. Existing single-family home sales went the other direction, falling 7.2%. In the first 10 months of this year, existing condo sales accounted for 22% of all Southern California home sales, the highest percentage in more than a decade.
Condos have averaged 18% of sales since 1988, when DataQuick starting tracking housing statistics.
Dan Oxman and his fiancee would have preferred a spacious house with a lawn, but they’ve been priced out of the Westside, their ideal neighborhood. So instead, the soon-to-be newlyweds are searching for a town house.
“A single-family house with a backyard is just a beautiful thing,” said Oxman, a 34-year-old financial analyst. “But that is a luxury.”
But the shift toward condos may be more than a budget decision. Today’s young adults are embracing urban living more than their parents did, many of whom gravitated toward the suburbs, experts say. Young adults are more likely to take public transportation or use a ride-sharing service they can summon through their smartphones.
Downtown Los Angeles has become a hot destination.
“The majority of home buyers want a single-family detached home, but I do think there is a change,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors. “There are a lot of people moving downtown and choosing a condo.”
The median-priced existing single-family home in October sold for $399,000 across Los Angeles, Orange, San Bernardino, San Diego, Riverside and Ventura counties. A resale condo: $326,500.
That disparity, however, masks a larger difference, said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate.
“The median-priced condo is significantly better located than the median single-family home,” Gabriel said. “It’s probably closer in, with less of a commute, and it’s closer to entertainment.”
Tunisha Collure recently debated leaving her downtown L.A. apartment for a single-family house when she looked to become a homeowner. But the 31-year-old banker couldn’t part with the city center. She scooped up a South Park condo last month for $575,000.
“To be able to get out of a condo and walk one step and there is wine bar, or walk two steps, a Starbucks, and three more steps, you are at Staples Center — I think that’s why I didn’t purchase a single-family home,” she said.
New condominium construction, however, has been remarkably weak across Southern California since boom turned to bust. Although condo prices have risen sharply during the recovery, few developers are taking the new construction plunge, said Alan Mark of Mark Co., a San Francisco marketing firm that tracks California condo sales.
“Once prices go up further, then it will start to pencil,” he said.
Although it remains unclear whether young adults will retain their desire for urban living as they age, attached homes are likely to become increasingly familiar to Southern Californians. There’s simply little space left for row upon row of single-family houses — especially in the coastal counties.
“It’s almost an iron law,” Gerd-Ulf Krueger, chief economist with KruegerEconomics, said of the coming denser development. “It’s set in stone.”