Karen, Home Buyer in Union City, NJ

Is it true that a house will appreciate better than a condo?

Asked by Karen, Union City, NJ Sun Jun 13, 2010

Looking at purchase history, it seems that Philly townhouses have appreciated much more than condos. I believe this is the case traditionally in other parts of the country too (perhaps with the exceptions of NY). Can anyone explain this to me? I'm debating house vs. condo for my first purchase...

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12
Robert A. Martini’s answer
Dear Karen-
If your question is simply do homes appreciate faster and more than condos?... the short answer is yes. With homes you own everything: the land, the home, the trees etc. But with a condo you only own the "air" space and the right to live there. With a condo you can not just simply change the exterior to your liking. Another reason for the increased value may be supply and demand. Usually 4 condos can be erected on a parcel of land that one single home may occupy. There are usually far more condos for sale than single homes in any given neighborhood, with few exceptions. But look at the bigger picture also. Homes require a lot of exterior maintenance and up keep, ask any home owner and they can speak on this subject for hours. Usually condo exteriors are maintained by the association. Also heating and cooling a home can be more expensive than a condo, which are traditionally smaller. Ask yourself...Do I want to handle cutting grass and shoveling snow? Could the time and money you save be reinvested in your career to off set the appreciation? Just a thinking point.
Some condo negatives include fees, which most of the time you can not control and do go up (like everything else). And yes they do not appreciate as well as homes do and sometimes even depreciate.
My advice when real estate shopping look past the new wood floors and fees and ask yourself is this me?
Do I want to live here? Bottom line........being happy where you live out ways investment and/or liability any day!
Good Luck

Robert A. Martini
REALTOR®, e-PRO®
Keller Williams Real Estate
Philadelphia PA
215.605.5497
1 vote Thank Flag Link Thu Jul 1, 2010
Hi Karen,

Very rarely will a condo work out to be a good investment. Condominium living is about lifestyle and you pay a premium for luxury and convenience. It is rare, especially in this market, that the market rent will cover a conventional mortgage plus monthly condo fees on most condos in Philadelphia.

That is not to say there are no exceptions. There may be some REOs, pre-foreclosure, short sale opportunities, etc. that may become available and sold very quickly to savvy investors. for the most part , those cases are very rare.

When you consider condos v. townhouses in the same neighborhood, I believe hands down, you will see much greater appreciation in a townhouse. Feel free to call me with any further questions. Have a great week.

All the best,
Larry 267-254-7994
1 vote Thank Flag Link Wed Jun 23, 2010
Hello Karen,

Mack is correct: no one knows what the future brings, our current economy is proof. This will be your home & since you should enjoy going home, which do you feel would make the best choice for you & your lifestyle?

I have found that younger clients (and other buyers that would rather spend their free time unwinding and having fun when they get home) enjoy the ease of ownership afforded by the hoa of condos, town homes & lofts and that it is easier to budget home ownership costs because the hoa is responsible for the exterior maintenance of a home including repairs and yard work. Many also find that they like having the amenities such as pools and club houses with out the hassle & extra expense.

Of course there are clients that even the mention of 'condo' or 'town home' makes them disgusted because they feel that it is like living in an apartment and/or they don't like even the idea of an hoa fee and the control an hoa has over the property.

Though single family homes are typically more desirable, they are usually more expensive so buyers priced out of those properties will then look at the condos (at which time condos will usually appreciate more than when home prices are low). (Because prices and interest rates are currently very low and the hoa fees on many condos can run several hundred dollars, you may be able to afford 'more' home for the money than when prices and rates were higher- so have your lender run several scenarios to give you a better idea).

Also, remember that adage 'Location, Location, Location'; properties in desirable areas, no matter what sort, usually do better with their values.

Best of luck no matter which you decide on!
Trevolyn
1 vote Thank Flag Link Mon Jun 14, 2010
Recently houses have done better in general, however there are still some condo buildings that people wait to have something come up for sale. While the new construction inventory in condos is slowly burning off, there is still an opportunity to make money "on the buy". One of the best ways to make money long term is to buy right. As an example, cash buyers are able to load up inn buildings where financing collapsed and can get "steals" and make real returns. The victory building is one of those. 2101 chestnut is another. One key in condos is location' location! Location. I know. Not a big shock but it's critical.
0 votes Thank Flag Link Sat Feb 5, 2011
Karen,

Condos will do better than townhouses in the long run. Look at two recent reports:

• The Center City District ( http://www.centercityphila.org ) reports Center City gains about 2,000 residents per year.
It's not just young, urban professionals driving this growth. Philadelphia is a haven for retirees because it does not tax retirement income and has relatively low real estate taxes. Both groups want low maintenance lifestyles.

• The reknown Brookings Institute recently published a study on "bright flight" documenting the nationwide center city, low maintenance style living. ( http://www.huffingtonpost.com/2010/05/09/suburbs-losing-young-whit_… )

But if you're seriously interested, call me at 215.266.7227 and we'll talk about your case in particular. After, it's a home, not just an investment. There are options which combine the best of both worlds/

Joe White
Coldwell Banker Preferred • Avenue of the Arts
0 votes Thank Flag Link Wed Jun 16, 2010
All the answers below are great . Only thing you need to decide is do you want lawn maintence or condo fee?
Do you want a private yard or is a deck or patio better for you?
Do you want a bit more of privacy that a single family home can offer or it doesn't matter to you?
These are some to the questions we thought you'd need to ask yourself before going out to buy your Home.
All the Very Best
Dave & Lisa
Web Reference: http://www.urhomerealty.net
0 votes Thank Flag Link Mon Jun 14, 2010
Hi, Karen.

Not to be too general, but it honestly depends. As James stated below, there is currently an oversupply of condos in Philadelphia. The reason being is because when the market was doing well, condos offered buyers a less expensive option with lower maintenance. Plus, they were cheaper for developers to build due to the influx of high-rises in Center City.

I would not necessarily say that townhomes/rowhomes appreciate more than condos over time, but I will say that condos are easier to overbuild than THs/RHs because more are typically built at once. You might actually be better off purchasing a condo now because prices are typically lower than that of THs/RHs (high supply = low demand = low prices). Plus, if that condo is in a prime location with potential to appreciate, you might actually make out better.

Just one professional's opinion. Best of luck with your search!

Best,

Timothy M. Garrity | Brown McKinney Real Estate Co.
Real Estate Professional & Consultant

tgarrity@brownmckinney.com Email | http://www.brownmckinney.com/tim Website
215-825-2250 x 1007 Office | 267-879-2716 Mobile | 267-519-5490 Fax
0 votes Thank Flag Link Mon Jun 14, 2010
Please note that condo ownership is a form of home ownership where the land does not belong to you. The home can be on one floor ( flat) and there can be other homes on other floors or it can be a two storey home or townhouse.
If you buy a condo the monthly dues cover a lot more things than if you buy a home in a planned unit development (PUD) where the land belongs to you.Both forms of ownership have rules and regulations. You should get a copy to see if they suit your needs. eg some do not allow pets, some do not allow fences etc.
A good agent will help you and show you appreciation in the area that you are considering.
You can buy based on your budget and look at both types and see which homes have most items on your wish list.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Mon Jun 14, 2010
In Philadelphia the market for townhomes tends to be stronger in general than the market for condos. This is partly because there were so many condos built in the past few years - in economics terms supply outgrew demand in the condo market. Condo fees also make condos less affordable relative to a townhome for many first time buyers, and since first time buyers have been the biggest chunk of the market lately this has been a very important variable. So yes, historically townhomes in Philly have been a safer bet, however as with anything the past only goes so far in predicting the future and each real estate decision should be made on a careful case-by-case basis.

James
James Yoakum - Realtor, SFR
Brown McKinney Real Estate
1631 W. Cabot St.
Philadelphia, PA 19121
office: 215-825-2250 x.1002
cell: 267-496-7739
fax: 610-910-3046
jyoakum@brownmckinney.com
0 votes Thank Flag Link Mon Jun 14, 2010
Location is really more important than any general trend in real estate. Whatever is more popular in the hyper local area where you are looking will do better in terms of long term value. When you buy, you should consider your needs, and the long term costs of owning, in addition to potential appreciation.
0 votes Thank Flag Link Mon Jun 14, 2010
In general -

Detached single family homes will do better than attached homes (Townhomes)

Townhome will do better than condos

Condos will do better than Co-ops

I defer to Mac's answer below - he is right on the mark....

Good Luck!

Gerard Dunn
Associate Broker
Serving MD, DC and Northern Virginia
0 votes Thank Flag Link Mon Jun 14, 2010
Maybe.

The future is uncertain, and often out of our control.

A home is the stage setting for your life, and given that the chances are that the house will appreciate or depreciate as readily as the condo, a better decision point would be: which would you prefer to live in?
0 votes Thank Flag Link Sun Jun 13, 2010
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