By Chris McQueen and Matt Robinson US condo prices have hit record highs and are likely to continue to climb for a second straight year, the New York State Department of Financial Services said on Wednesday.
The market’s value rose 1.4% to $1.731bn in September, marking the biggest increase since April of last year.
The rise in the market’s valuation reflects a strong start to the year, when prices rose at a 12.7% annual rate, the highest annual pace in nearly a decade, according to data from RealtyTrac.
The average price for a home in New York City was $2.738m in September.
A surge in demand for condos and single-family homes is also driving up sales in the state, with new listings rising more than 25% year-on-year to 9,095 units, according the National Association of Realtors (NAR).
“Demand is on a strong pace in New Yorkers’ homes, with more than 3,600 units sold in September compared to 1,800 in August,” NAR president Andrew LeBaron said in a statement.
“There is a growing appetite for home ownership in the region and it’s creating more demand for the new construction sector, which is helping to drive overall housing supply growth.”
New York’s housing affordability crisis is a real problem that must be addressed.”
The NAR’s report comes after the Federal Reserve raised its benchmark interest rate by a quarter point to 1.25%, which will bring the US central bank’s benchmark lending rate to near zero for the first time in four years.
The central bank has been cautious about lowering interest rates in the face of low economic growth and rising unemployment.
US President Donald Trump has said he is considering raising interest rates, but his administration has said it would be too soon to discuss a hike in rates.
In the second quarter, US home sales rose to an annual rate of 4,038, according data from CoreLogic, which tracks home sales. “
The housing market continues to benefit from strong price appreciation across the country and the continued strength of demand,” he said.
In the second quarter, US home sales rose to an annual rate of 4,038, according data from CoreLogic, which tracks home sales.
But demand for single-Family homes was also strong, with prices climbing at a 16.4%, the highest rate in almost a decade.
While the US condo market is still growing at a rate of 12.3% year on year, demand is falling to levels that are only half that of last summer.
For the first six months of 2017, the NAR reported that the average price of a single- Family home in the US was $1,878,000, down from $2,639,000 a year earlier.
Despite the strong demand for homes, the number of new condos and homes under construction has been limited to a relatively low 1,818 units, down nearly 10% year over year.
According to the Nars, more than 2.5 million US homes were sold in 2017, up from 2.3 million in 2016.
Overall, the US market is expected to continue its expansion, with construction expected to pick up to 2.6 million units in 2019.
This is the first quarter since the financial crisis that US condominium sales have been increasing at a higher rate than the total housing market.
In the first nine months of this year, condominium building rose 5.9%, and home sales increased by 9.9%.
According the NARS, a single family home is an 8- or 9-bedroom, four- or five-bathroom dwelling built in the past 30 years.
New York state has one of the lowest condo tax burdens in the country.
In 2020, condo owners paid about 5.5% of their gross income on the tax, compared to 17.1% in California, 15.5%, 17.9% in Washington DC and 17.8% in Rhode Island.
Read more: US housing boom accelerating as supply surges