First-time homebuyers are fueling the condominium market, with sales increasing nearly 8 percent during the first three quarters of 2002. A studio condo at 249 Chestnut Hill Ave. in Brighton featuring hardwood floors and a modern kitchen is currently offered for sale at $148,000.

The tide may be turning in residential real estate but one substantial segment of that market – condo sales – appears ready to weather the waves that are threatening to erode what has been one of the nation’s strongest industries in a struggling economy.

First-time homebuyers, spurred by low interest rates, low down-payment buyer programs and empty nesters seeking to transition into maintenance-light housing, are boosting condo sales, according to longtime Realtors.

“The condo market is as hot as any market is,” said David S. Drinkwater, president of the Massachusetts Association of Realtors and owner of Grand Gables Realty Group in Scituate.

Condo sales in the Bay State climbed nearly 9 percent during the first three quarters of 2002 compared to a year ago, according to MAR statistics, while the average selling price of condos sold during that time surged 12.9 percent to $243,172.

Drinkwater explained that condominiums tend to be an affordable alternative for first-time buyers who have no equity built up from prior home purchases. Three or four years ago, the average first-time buyer could afford to buy a detached single-family home, he said. Today, with prices increasing by double-digits in most regions of the state, that’s not the case, he said. Since real estate experts are not predicting steep price reductions in the next year, first-time buyers will continue to seek out condos, which generally are priced lower than single-family homes.

In addition, the large number of empty nesters, or couples with grown children, who are interested in selling larger family homes and moving into smaller condos – often in urban areas – will also help condo sales in the future.

Judy Moore, an agent with Re/Max Premier Properties in Lexington, said a lot of the condos she’s been selling lately are to empty nesters who “don’t want to deal with the hassles” associated with the upkeep of single-family homes with large backyards.

“They’re willing to pay condo fees to have more freedom (from home maintenance tasks),” said Moore, MAR’s incoming president-elect.

Moore said that condos, most of which have been built with the last two decades, are seen as an attractive alternative to the older single-family housing stock in many Bay State communities.

Lower-priced condos are selling faster than they did a year ago. It took fewer days to sell condos priced between $250,000 and $350,000 statewide during the first three quarters of the year than it did a year ago. Condos in that price range took about 47 days to sell this year compared to 52 days last year, according to statistics provided by Multiple Listing Service-Property Information Network.

The more expensive condos, as is the case with higher-end single-family homes, have lingered on the market days longer this year. Condos priced over $700,000, for example, have taken an average of about 25 more days to sell this year.

In recent months, the market has been greatly aided by low interest rates. That coupled with first-time buyer programs that require low down payments are a great force in the condo market, according to Bay State Realtors

“With rates this low it doesn’t make sense for a lot of people to rent,” said Sharren T. Marquis, owner of Marquis GMAC Real Estate with offices in Brighton, Duxbury, Plymouth and Wareham.

National Trend

Today, buyers searching in Boston neighborhoods also have more for-sale condos to choose from, according to Marquis. Marquis explained that the softening rental market may be one reason for the increased supply of for-sale condos. Condo owners who bought units and became accustomed to high demand and good rents in the past few years, are now dealing with vacancies. Some of them are telling real estate agents to sell or rent their units – whichever comes first.

In addition, many of the owners who purchased condos eight to 12 years ago and waited for the real estate market to recover are deciding to sell because of the vacancies and because selling prices are still strong, said Marquis. Still other condo owners who anticipated price increases in the future and held off on selling to get the highest price, are now deciding to sell because they see that prices are leveling off, but not falling, she said.

Nationwide, condo sales were 5.4 percent higher during the first three quarters of 2002, according to the National Association of Realtors. Sales were up to a seasonally adjusted annual rate of 814,742 units during the first three quarters of the year from the 773,000-unit level of the same period in 2001.

According to NAR President Martin Edwards Jr., condos remain an important market segment for first-time buyers living in high-cost markets because often they are the only homeownership option.

“Although there has been a trend over the last few years for higher sales of luxury condominiums, the majority of condo units are less costly than single-family homes,” Edwards was recently quoted as saying.

Cities like Boston, Newton and Brookline have experienced dramatic double-digit increases in condo sales so far this year.

In Boston neighborhoods like the Back Bay, Beacon Hill and South End, condo sales from January through July of this year spiked nearly 41 percent compared to the same months a year ago. There were 1,249 condo sales recorded through July in Boston compared to 887 the prior year, according to The Warren Group.

The Warren Group, parent company of Banker & Tradesman, collects home sales statistics from the registries of deeds across the state. July is the most recent month for which data for Boston and other communities in Suffolk County was available as of last week.

Brookline, another community with an active condo market, also has had a solid increase in sales this year. Some 669 condos were sold during the first three quarters of the year, a 16 percent increase from the 577 condos sold during the same time in 2001. Meanwhile, the median price of the condos sold in Brookline during that time rose 12 percent to $369,000 from $329,000.

Newton has also seen an impressive surge in condo sales this year. There were 288 condo sales in Newton through August of this year, up 24.6 percent from the 231 condos sold during the same months last year. The median price for condos sold in Newton during that time was $399,950, a 12.6 percent jump from last year’s $355,000 median price.

In Quincy, 456 condos were sold during the first three quarters of the year, a 14.8 percent increase from the 397 sales recorded a year ago. Even though Quincy’s condo prices were more modest than in Newton, Boston or Brookline, the city experienced a higher percentage price increase. The median price for condos sold through September in Quincy was $219,950, which is 22 percent higher than the $180,000 median price tag posted during the same period in 2001, according to The Warren Group.

Other Boston neighborhoods, like South Boston and Charlestown, also registered higher condo sales this year. In Charlestown, condo sales shot up 41.7 percent to 241 condos sold through July, compared to 170 that were sold a year ago. Prices also increased 9 percent to a median price of $389,900 from $357,500.

South Boston experienced a more modest increase in condo sales during this time, but a double-digit increase nonetheless. Some 281 condos were sold in South Boston through July 2002, a 16.6 percent hike from the 241 units sold a year ago. The median price escalated 13 percent to $269,000 from $237,500.

“The condo market has become the alternative that’s incredibly sought after and will be that way for many years to come,” said MAR’s Drinkwater.