But Holding High on Flats

While the market for houses is slumping, sales of condominiums and cooperative apartments are holding up better. They account for only 2.3% of all U.S. housing, but in recent years they have become the hottest properties in residential real estate, and supertight money seems unlikely to put more than a temporary brake on demand.

The attraction of co-ops and condos is simple: they offer the tax and investment advantages of home ownership, but usually for less money. Their appeal is strong among retired people squeezed by rising rents, young married couples and middle-income suburbanites stunned by fuel costs. "Going condo or coop" has become a buzz phrase in real estate, as San Francisco apartment buildings, Florida motels, and even a renovated Brooklyn church and a convent have become condominium or co-op flats.

In the case of coops, a buyer acquires stock in the corporation that owns the building in which he occupies an apartment. A condo dweller holds legal title to the apartment itself. All mortgage interest payments are fully tax deductible, as are local real estate taxes on the property.

Money to buy condos or co-ops is becoming costlier and harder to find, of course, but the impact of the squeeze has so far been modest. In Chicago, the Baird & Warner real estate firm reckons that October condo sales were 6% ahead of the same month last year, but prices have eased from an average of $93,000 in 1978 to about $85,000 today. In New York City, both demand and prices remain high, and luxury four-room apartments are selling for an average of $ 160,000, vs. $ 100,000 a year ago.

One reason for New York's continuing co-op strength is the presence of moneyed buyers, including many foreigners, who do not need or care to bare their finances to banks; nearly two-thirds of the city's co-op purchases are all-cash deals. Elsewhere, bankers and brokers are devising ways to ease the credit pinch on buyers. Some California brokers arrange deals whereby the seller acts as his own bank; he agrees to turn over his condo to a buyer in return for a so-called trust deed, which requires monthly payments directly from the buyer.

The first signs of a "wait and see" attitude are appearing among some buyers who think that mortgage rates may soon ease back. Michigan Entrepreneur Warren Avis, founder of the Avis Rent A Car system, was quickly filling a 120-unit condo conversion in Detroit last month, but saw many of his customers vanish as mortgages rocketed. Says he: "All of a sudden we got slugged in the guts. The last four weeks have broken the back of buying.

Ninety percent of those who dropped out did so because they can no longer afford or even qualify for mortgages."

For all that, most shoppers still echo Estelle Wollman, 70, who plans to close a deal on a Sunrise, Fla., condo not far from Fort Lauderdale: "I can't worry about interest rates now. Where am I going to go? I don't want to live in a rental any more, with its $50-a-month increase every year." Over the long term, it seems that demand--and prices--for condos and co-ops will be stronger than for housing in general.

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