This week I got back to basics by making pies. I took a look at the bedroom mix of sales during two periods: the period when listings inventory was at a recent low (4Q 04) and the most recent completed quarter (1Q 07). There may be some seasonal variations in the types of units sold during a particular quarter (I'll try to present something with that idea in mind for a future chart).
The most significant difference in the co-op market between the periods was the drop in studios and increase in 2-bedrooms as a percentage of market share. Studios dropped from 22% to 17% which is likely reflective of the rise in short term mortgage rates over this period. Entry-level co-op apartments were one of the largest entry points for first time purchasers coming from the rental market. Two-bedroom co-ops are usually the largest market segment and showed an increase of 34% to 41%. The drop in entry-level co-op sales doesn't mean fewer studio were actually sold in the recent quarter since the total number of sales between these two periods increased 45.5%.
In the condo market, just the opposite pattern occurred between studio and 2-bedroom apartments than we saw in co-ops. While the total number of sales increased 80.4% between the two periods, the market share of 2-bedrooms dropped while studio market share increased. The market share of 2-bedrooms slipped from 53% in 4Q 04 to 48% in 1Q 07. At the same time, studios jumped 6% from 8% in 4Q 04 to 14% in 1Q 07. The unit mix of new developments have given more emphasis to 2-bedrooms over the past two years as the market for larger units became saturated (I'll bet developers are now wishing they had more large units available these days).
Although 3-bedrooms are a small segment, a drop of 1% market share is large. I suspect the drop was due to lack of availability, rather than lack of demand. However, what's especially curious to me is the increase in the market share of studio units. While developers have added studios to their unit mix to some extent, I can only speculate that rising prices have pushed demand from 1-bedrooms to studios in re-sales as well. Beyond that, I am not sure.
· Co-ops/Condos Market Share by Number of Bedrooms [Miller Samuel]