Where have all the Condo sellers gone?

I have noticed for some time that the number of condos for sale in Marblehead has been low compared with the days of my old Marblehead Reporter articles (2008-11) when my memory said there always seemed to be 50 or more for sale.

I checked the numbers for today and compared them over the last 10 years. The questions that came to mind were: was this just a Marblehead phenomenon? Was it maybe because of the time of the year? And if not, what was the reason for the decline?

Read on to find the answers to these questions:

First,  the numbers for Marblehead as of October 31 for the last 10 years.

Source: MLS, Oliver Reports

OK so my memory may not be perfect but the basic thesis is valid.

Now let’s look at  Essex County as a whole:

Source: MLS, Oliver Reports

While I understand that in a small, non-traditional condo market like Marblehead there could be a large change in supply, I was frankly astonished to see the same trend in the whole of Essex County. The number of available condos for sale is down roughly 70% from the peak, both in Marblehead and throughout the 34 cities and towns of Essex County.

Um.

My next thought was that maybe this was a seasonality issue for some reason – not that I could think of one. But anyway, as a good researcher, I decided to pick an earlier date in the year: June 1.

This is what I found. First, again, Marblehead:

Source: MLS, Oliver Reports

and then Essex County:

Source: MLS, Oliver Reports

And you know what? The answer is still roughly a 70% decline from the peak.

At this point I decided to stop searching and to ask the question: why has the number of condos for sale declined so dramatically?

I cannot come up with a single, simple answer but here are some thoughts:
1. The HGTV driven boom of  “condo conversions” – when 2-4 unit apartment buildings were sold as condos – is dead as in Chrome’s “he’s dead Jim”.
2. Buyers – thanks HGTV again – expect all the bells and whistles in even the lower- priced condos.
3. 2 means that 1 type condos are hard to sell.
4. Financing for condo buyers became much harder after The Great Recession.
5. Lower priced SFHs competed with condos from roughly 2009-2012/13.
6. With the increase in prices of lower priced SFHs in the last couple of years condo owners are less able to afford to move up to a SFH and so are staying in their condos.
7. The requirement for higher down payments and higher credit scores affected condo buyers more than SFH buyers, as condo buyers tend to be younger and have lower savings.

It does not seem to be a question of price, except possibly for the old condo conversions which cannot compete on price with newer conversions. But overall, as reported in both my Marblehead Third Quarter Review and Essex County Third Quarter Review, condo prices for 2014 seem likely to set new record highs.

Whatever the reasons, it is clear that the supply of condos has dropped sharply in recent years and there is no obvious reason to expect that to change any time soon.

The next obvious questions is: has there been a similar trend in SFHs? Check back next week to find out.

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
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