NEW YORK (TheStreet) — Though its best days are still behind it, the condo market is returning to normal. And since condos are a kind of canary in the coal mine, that's good news for real estate in general.
CoreLogic, the real estate analysis firm, reports that in the fourth quarter last year completions of new condos reached 2,100 buildings, up 11% over the year-earlier quarter and 90% from the worst of the real estate doldrums in the second quarter of 2012.
That's still a far cry from the peak of 20,000 completions in the first quarter of 2008, when builders were finishing projects started in the housing bubble, but the condo market is now clearly headed in the right direction.
"The strengthening is also evident in the market's ability to more quickly absorb new condos, indicating an increase in demand to match the increase in new condo supply," CoreLogic deputy chief economist Sam Khater says. "In 2013, condo absorption rates [purchase of available units] reached 82%, over twice the 36% low at the height of the financial crisis in mid-2008."
Compared with single-family homes, condo prices and sales are particularly volatile because many are bought by groups that are among the first to stop buying when times get tough: first-time buyers, retirees who are downsizing, young people and those looking for second homes. So a rebound in condo construction and sales means buyers sensitive to prices, interest rates or job security are returning to the market.