Last year, for the first time since the National Association of Realtors started tracking the data, the national median price of a condo was higher than that of a single-family home. In June, the median price of a condo was $223,500, compared with $218,600 for a traditional house. Between 2001 and 2004, condo values appreciated 57%, while those of single-family homes rose 25%. And the condo market is booming even in second-tier cities such as Minneapolis, Charlotte, N.C., and Omaha, Neb.

Demographic changes in the middle class can explain some of this. The ideal of the two-parent family with 2.2 children living in a suburban house is being supplanted by an array of arrangements, including single professionals, divorcees, active retirees and single parents. For many of these people, an urban condo is both more luxurious and convenient than a house with a yard.

"Today's middle class looks more like the cast of 'Friends' than 'Ozzie and Harriet,' " says Jason Schenker, an economist at Wachovia Corp. in Charlotte. "They're younger, they're urban and they live in high-cost areas of real estate -- these sorts of things are all conducive to the growth in condominiums."

But economists and housing experts are increasingly concerned that too many people, trying to cash in on the phenomenon, are buying speculatively, causing prices to rise faster than economic fundamentals can support.

Developers started construction on about 802,000 condo units in the past five years, according to the Census Bureau. More are on the way. About 270,000 condos will be started in 2005 and a further 255,000 in 2006, estimates Michael Carliner, an economist with the National Association of Home Builders, a Washington-based trade association. That doesn't include the sizable but hard-to-quantify number of new buildings that start life as rentals and switch before completion, or the existing offices, hotels and rental properties being converted into condo developments.

"In the past, the highest and best uses of land were commercial, but now with condo prices and single-family homes getting such high prices, the demand for land that would have been used for commercial is being shifted to residential," says Anthony Downs, a senior fellow at the Brookings Institution and a real-estate specialist. Median prices for condos may be skewed because many of the newer properties tend to be located in pricey coastal cities or in parts of town where land prices are higher.

Buyers like Keith Battaglia embody both the hot money flowing into the condo market and the changing face of the middle class. Last summer, when the single, 36-year-old hotel executive relocated to Minneapolis, he quickly decided to ditch the suburbs and embrace the city. He waited all night outside the sales office of an unbuilt, luxury-condominium development called the Carlyle.

"I'm so excited to actually be moving to a place that offers Central Park-style living without having to fly to New York to get it," says Mr. Battaglia.

Instead of buying one apartment, he bought two: a fifth-floor unit for $305,000 and a 19th-floor unit for $439,000. When the building opens early next year, he plans to live in one and rent out the other.

It's a new era for the condo, once viewed as the stepchild of the housing market. Condominium owners buy the walls and interior of their apartment and a percentage of the building's common areas, which are typically managed by a condo association. Condos leapt to prominence after the 1961 Housing Act enabled the Federal Housing Administration to insure mortgages on the units. In those days, the properties were simple and affordable, a starter home for first-time buyers whose dream was to own a more substantial home in the suburbs.

Because the condo market is liquid and prone to speculation, these apartments -- or sometimes townhouses -- typically lost value more rapidly during recessions, compared with other types of residential property. Beginning in the late 1980s, condo prices in Boston fell by as much as 50% in some areas over several years due to overbuilding and rapid conversions, says Karl Case, professor of economics at Wellesley College. He adds that single-family-home prices fell less than half that amount during that time. It took nearly 10 years for condo prices to return to their 1980s peak.

But now, families that can easily afford to buy a home are choosing to live in condos, and that says a lot about Americans' changing lifestyles. Between 1970 and 2000, the percentage of nuclear families among U.S. households declined to 24% from 40%, according to the Census Bureau. Some studies show that the number of households without children will increase in the next 10 years, while those with children will fall slightly.

Home builders say the rise of the condo also reflects a desire among buyers to live downtown, with easy access to restaurants and entertainment, and no tough daily commute or time-consuming domestic upkeep.

Pat Crosby, 38, who owns a Minneapolis company selling products for commercial architects, lives with his girlfriend, Marti Zacher, in Grant Park, a high-end condominium development in town. The divorced father of two young girls lived in the suburbs just a few years ago, gritting his teeth through a 45-minute commute to work.

Aside from offering massages and a 24-hour concierge, Grant Park has guest suites and full-service business facilities. That allows Mr. Crosby to conduct business meetings while his daughters splash in the pool next door. "You can't get back time, so I like to spend my free time doing what I like doing, not shoveling snow or taking care of a lawn," says Mr. Crosby. "I would much rather prefer a great sushi dinner and drinks with friends."

Gourmet Kitchens

Unlike the drab structures of yesteryear, many newly constructed condos are plush abodes, containing the kinds of amenities found only in the most upscale suburban developments, such as marble bathrooms, gourmet kitchens, tennis courts, swimming pools and health clubs. High-end features such as broadband access are also becoming standard. Many new units are larger than those of the past.

Spanish View Tower Homes, a luxury development five miles from the Las Vegas strip, sports a $6.3 million penthouse. The four-bedroom apartment includes a Jacuzzi and warming drawers for towels and robes, plus a 5,800-square-foot roof garden with spa and barbecue area, a media room with a 100-inch television, maid's quarters with separate entrance, wine-storage room and a wine-tasting room.

An unanswered question is whether developers are flooding the market. "The froth in several of these markets is approaching Cisco-stock-price levels circa 2000," says Hans G. Nordby, an analyst with Property & Portfolio Research, a Boston-based firm. Miami, for example, has so many investors, "it's going to implode," he says, adding that he's not convinced there's enough job growth there to support all the condos being built.

Mr. Nordby says Miami's market is dependent on speculators buying condos before they're built and flipping them in what is known as the preconstruction market. Developers building high-end condominiums often sell individual units long before construction is scheduled to begin, in part because banks won't provide financing until a large percentage of the units are reserved. In many cases, buyers can obtain a purchase contract by putting down just 10% of the sale price.

Miami-based Zilbert Realty Group, one of the city's largest brokers of preconstruction condos, has launched a Web site, Condoflip.com, catering to these speculators. Mark Zilbert, president of Zilbert Realty and creator of the site, says he's received thousands of emails from condo owners who want to gauge the market, but he doesn't yet see many interested buyers.

"Right now, people can just go ahead and buy a new unit, so they aren't interested in going through the hassle of buying a flip," says Mr. Zilbert.

Economists and real-estate investors say the ratio of real buyers to investors will ultimately determine the strength of the condo market. In Chicago, for instance, the large number of condo constructions and conversions -- including plans for what would be the nation's tallest building -- has created a supply glut. Several luxury projects have suffered slower-than-expected sales and some high-profile projects have narrowly averted foreclosure after banks came to the rescue.

"In the past there wasn't a whole lot out there, but you have a whole bunch of condos all over the place," complains Serge Masyra, a 32-year-old ad-sales executive who put his two-bedroom, two-bath condo on the market last month. He's asking $399,000 for the property, located just five blocks north of Chicago's Wrigley Field, about $50,000 more than he paid for the brand-new unit in early 2004. A year ago, it would have been snapped up in days. Mr. Masyra, so far, has no takers. Still, Chicago has over 8,000 more condo units in the construction pipeline.

Condo fever is also hitting unlikely cities, like Minneapolis, driven by young professionals who want to re-create a big-city lifestyle. "High rises are such a notable change to the landscape here," says Tom O'Neil, director of market research at DSU Research, a unit of Minneapolis planning consultants Dahlgren, Shardlow & Uban Inc. "There's some prestige to being in a tall building, so people are getting excited about it."

Karen Van Dongen, a 34-year-old sales manager for a consumer-products company, moved to Minneapolis from the suburban town of Lodi, N.J., late last year to work on her company's Target Corp. account. Target is based in Minneapolis. She initially considered buying a loft in an old industrial building that needed some work -- "something that would mirror a Manhattan, cosmopolitan life" -- but ditched that plan after checking out the amenity-jammed condos in Grant Park.

'Doing Nothing'

Ms. Van Dongen said she was making "a lifestyle choice." Since she likes to spend her free time "doing nothing," she wanted the extras offered at the condo without maintenance work.

In Omaha, out-of-town developers have proposed a slew of condominium projects hoping to capitalize on the city's relatively sparse market. A steady stream of companies has either relocated to the city or expanded their local operations in recent years, including Union Pacific Corp. and Gallup Organization. Developers are betting on an influx of white-collar professionals from cities such as Denver, St. Louis and Houston.

Omaha real-estate agents say the new residents have brought along their tastes for city living. Most of the first phase of condos and townhouses at the Riverfront Place development have sold out at prices ranging from $250,000 to $1.65 million since going on sale last November. Greg Deman, 50, who owns a warehouse-distribution company in Sioux City, Iowa, earlier this year purchased three condos in one Omaha building as an investment. They cost between $250,000 and $350,000. He's looking for more.

"I might be guessing right or I might be guessing wrong, but I think this area's going to continue to grow," says Mr. Deman, who visits Omaha about six times a year. He's also interested in investing in Phoenix and Las Vegas.

Developers along Alabama's Gulf Coast are currently replacing beachfront property damaged by last year's Hurricane Ivan with high-rise condo buildings. The area has 11,850 condominium units and 12,600 more are in the pipeline, according to the Alabama Gulf Coast Convention and Visitors Bureau.

The market is drawing baby boomers and investors, some of whom are using letters of credit instead of cash down payments to reserve preconstruction units. A letter of credit is a promise backed by a bank to make a future payment, sometimes secured by personal assets. Local real-estate agents say these buyers are requesting larger-than-average units, such as condos that take up the whole floor of a building.

At the Admiral's Quarters condominium resort in Orange Beach, Ala., a 1,500-square-foot two-bedroom condo sold for $860,000 a few months ago, compared with $483,000 in 2003. The units come with Jacuzzis, wet bars, walk-in closets and oversize balconies with views of the Gulf of Mexico. Residents have access to a heated indoor swimming pool, sauna and boardwalk to a private beach.

Over the past few years, these condos have appreciated in value more than 70% each year. "The market down here is extraordinary," says Elizabeth Helton Walls, an Orange Beach, Ala., real-estate agent. "Since Ivan, people were worried that properties were going to drop, but they've gone up every month."