David Lereah, the association's chief economist, said the correlation between strong condo sales and low interest rates is pretty obvious. "Mortgage interest rates were at the second lowest level on record in the first quarter, so it should come as no surprise that we see condo sales within a fraction of a percentage point of a record," he said. "Couple this with a demographic push at both ends of the market, along with an improving economy, and you have a powerful combination for an exceptional condo market."

According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was 5.60 percent in the first quarter, down from 5.92 percent in the fourth quarter; the rate was 5.84 percent in the first quarter of 2003. The lowest quarterly average was 5.51 percent in the second quarter of 2003; the series began in 1971.

National Association of Realtors President Walt McDonald said about half of all condos are purchased by first-time buyers. "At the same time, many empty nesters are buying upper-end units to accommodate lifestyle changes—42 percent of all condos are purchased by buyers who are at least 45 years old. Condos are proving to be a good investment choice for both ends of the housing market, with double-digit appreciation during each of the last three years."

Nationally, the median existing condo/co-op price during the first quarter was $173,300, which is 14.5 percent higher than the same quarter in 2003. The median is a typical market price where half of the units sold for more and half sold for less. By comparison, the median price of an existing single-family home was $170,800 in the first quarter, up 6.5 percent from a year earlier.

Lereah said the national median condo price is skewed relative to the national median single-family home price. "Because there is a higher concentration of condos in more expensive housing markets, the price becomes a little distorted," he said. "This causes the national median condo price to be higher than the national single-family home price, but within a given area, condos typically remain more affordable than houses."

In the West, existing condo and co-op sales declined 2.5 percent to an annual rate of 238,000 units in the first quarter, but were 13.3 percent above the sales rate during the first quarter of 2003. The median condo price in the West was $221,100 in the first quarter, up 19.8 percent from a year ago.

Locally, the median existing condo price for Los Gatos was $565,000, up by a slight percentage from the previous year's third quarter. In Saratoga, the median price for existing condos was $495,000, up over 19 percent from the same period the year before.

The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative resale pace for that quarter were maintained for four consecutive quarters.

Seasonally adjusted sales rates are used in reporting quarterly data to factor out seasonal variations in resale activity to account for differences in weather and household-buying patterns.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.