Condo market fights to recover as prices remain down

— -- Paul Herstein is in a good spot.

The Seattle oncologist has shopped condominiums in eight cities — including San Diego, Miami and Chicago— for the past year. He wants a top floor on a building with a water view. He can pay cash. And he's in no rush to buy.

"Time is probably on my side," he says. "Sellers will have to become more realistic over the next year or so."

The most recent housing figures indicate Herstein may be right, at least in some markets and in some price ranges.

While evidence mounts that the single-family-home market is stabilizing, the condominium market remains "substantially weaker," says Lawrence Yun, chief economist for the National Association of Realtors.

In April, resale condo and co-op sales nationwide were down 9.4% from a year ago vs. a 2.8% drop for single-family homes, the association said Wednesday. Median prices fared worse, too, with condo prices down 18.5% year-over-year vs. 15% for single-family homes.

More distress is likely for the condo market, says Bradley Hunter, chief economist for market researcher Metrostudy. He says some markets could see condo prices drop 60% from their peak in 2005 or 2006. While some single-family-home markets will hit bottom next year, Hunter doesn't see that for the condo market until 2011. That's because it typically takes years to construct condo projects so new units have continued to come on line despite the real estate downturn.

"It is absolutely a buyer's market," says Paul Berg, 73, a forensic psychologist who, with his wife, recently paid $1.4 million for a new, 2,000-square-foot condo in downtown San Diego. A year ago, the price was twice as high, Berg says.

For those on the selling side of the market, the downturn has been intense.

•Prices for condos in South Florida have plunged 40% to 50%, or more in some buildings, from original prices in 2004, 2005 and 2006, Metrostudy says. Recovery is far off. In Miami-Dade County, which includes downtown Miami, condo inventories are at a 41.5-month supply at the current sales rate, Hunter says. "That's a mammoth number."