There is a new economic elite quietly moing into homes across the United States.
The members have plenty of money in the bank and in their pockets -far more than many real estate analysis imagined.
They have their family budgets under control, spending less of their monthly income on housing than the majority of American homeowners.
They don't take up much space. They don't buy real estate with high price tags. And until their personal finances were opened to public view through a national study that's just been completed, they were probably misperceived.
They are condominium buyers.
Stacked up against purchasers of detached single-family homes last year, condominium buyers emerge as a startlingly potent economic group, with far higher net worths, higher earnings and stronger personal balance sheets than other purchasers.
The study that offers these provocative conclusions was done by the U.S. League of Savings Associations, based on 14,000 home-sales transactions at 250 S&Ls across the country during 1981. The sample 14,000 transactions were designed to be a statistically reliable guide to home-purchasing patterns -both single-family detached and condominium units--during the 12 months surveyed.
What makes the study so revealing, though, is that it used data from actual loan documents in all these purchases including detailed personl-financial disclosures made at the time of the loan application (Names of individual purchasers or property addresses were not disclosed by lenders, according to the League, so that no one's personal privacy was compromised.)
The image of the typical condominium buyer that jumps out of the national survey is very different from the sterotype attatched to condominiums in many markets.
Take personal wealth, for starters. Although condominium purchasers bought units with a median price of just $67,000, the median household net worth ofthose purchasers was $103,000. That compares with a net worth of $62,900 for the typical singl-family home buyer, whose house last year cost $73,000. (Net worth is your financial balance sheet; It's what's left over when you subtract your liabilities from your assets, including real estate equity, savings, pensions, personal property and the like.)
As eye-opening 42 percent of American condo buyers last year had net worths of $150,000 and up, nearly twice the ratio of high-roller buyers of single-family homes in that category. Fifty percent of all condo buyers were worth $100,000 or more.
Condominium purchasers' annual incomes were also well above those of other home buyers. Above 28 percent of all condo purchasers made $65,000 or more last year; nearly half of them earned $45,000 and up. That compares with a median income of $38,000 for purchasers of new and resale single-family homes.
Condominium buyers bought smaller units (roughly 1,070 square feet apiece versus 1,620 square feet for detached houses), but they paid more per square foot ($62 versus $45). Condo buyers put less of their available cash into their purchases in the way of down payments ($13,600 versus $17,000), and thus ended up with proportionally higher mortgage debt.
Nationally according to the U.S. League's study, typical single-family home buyers and condo buyers had about the same monthly housing costs in dollar terms ($820 a month). But condo buyers' higher incomes made their debt burden easier to handle. Roughly half of all detached single-family home buyers in 1981 had to spend 25 percent of their monthy income to pay mortgage, property tax and insurance bills, whereas nearlytwo out of three condo buyers devoted less than 25 percent.
The apparent key to condo buyers' affluent personal economics, according to James Christian, one of the principal authors of the study can be found in their demographics.
Condominium purchasers tend to be slightly greyer than single-family home buyers (37 years median are versus 33), and have fewer mouths to feed. One out of every two condo buyers is unmarried, either a single living alone or a "mingle" living with someone; and three out of four have no more than two people living in their household, including themselves. By contrast, only 22 percent of single-family home buyers in 1981 were unmarried; half had families with three or more members.
The big disparity in net worhts, according to Christian, is in part a product of the large number of highearning pre-retirees, "empty nesters" and retired persons "who are selling their longtime homes at big profits and moving to condominiums. "One out of every four condo buyers last year nationwide was 50 years or older; one out of every 12 was 60 or older.
But it's also the result of important, long-term life style changes under way in the American population. The divorced, highincome professionals living downtown, aad the increasing number of high-earning singles who never plan to get married, are turning the condominium into the home of a new economic elite.