Condos an overlooked step to homeownership
New study finds condos cheaper than homes in most major cities, on par or more expensive in others.
Key points:
- Condos can serve as a good transition for buyers looking to move into a first home without all the responsibilities.
- Prospective homeowners in 21 large US cities can find homes cheaper or the same price as condos.
- A solid condo association can make resale easier down the road.
As first-time buyers struggle to get their foot in the door of the homeownership club, condos can be an overlooked first step toward a fenced-yard, no shared-walls goal.
It's an option agents can offer that many would-be buyers might not consider.
And in some cities, prices make the leap from condo to single-family homes, not just attainable, but a breeze — something many work-from-home condo owners may not even realize, according to a new report from Point2.
Study on condo and home prices
Point2 analysts looked at the median price for sold condo and single-family home units in the nation's 200 largest cities. They wanted to see if it's a reasonable goal for condo owners to make the move.
Surprisingly, it's not just reasonable but easy In 21 of the 200 largest U.S. cities, including Boston, Chicago and Cleveland. There, single-family homes are cheaper or equally priced to condos.
In other cities like Providence, median single-family home prices are higher than condos — but not by much. In Providence, it takes $3,000 to cover the difference.
In some cities, upsizing is a lot more expensive. Honolulu takes the prize with a $744,000 price difference between a condo and a house — the equivalent of 10 years' income in The Big Pineapple.
Prices higher outside city limits
One of the cities where single-family homes cost less than condos is Pittsburgh.
Pittsburgh-area Realtor Joanne Watterson says that might be true in Pittsburgh's city limits. "But across the board that does not ring true," she says.
Buyers may find homes priced higher than condos when they go into surrounding towns that make up the greater metropolitan area, Watterson says.
Condos 'great for first-time buyers'
Watterson says condos are often an overlooked great first step into homeownership, even if prices aren't a lot lower than single-family homes.
"It's great for first-time home buyers who are making the transition from apartment living or even mom and dad's house," she says.
Condos remain a good buy in many cases. "In a condo situation, they don't have to worry about a lot of home maintenance, lawn mowing, cleaning gutters," Watterson says, adding "it removes a lot of the liability and maintenance responsibilities."
And they don't always look like what people think of when they hear the word "condominium." "We're seeing more and more single-family homes deeded condo," she says, in part because that designation reduces builder requirements for lot lines and depths.
As long as the condominium association is strong, resale shouldn't be a problem when owners want to take on the responsibilities of a single-family home. But she cautions buyers to make sure they buy into a strong association.
"If the association does not maintain its standing with Fannie and Freddie, the condo can be dubbed as non-warrantable. So, then lending is difficult," she says.
But with a solid association in place, condos can be a way to help people get started, especially in a market with low inventory.
"I think that it's a great way to have homeownership," says Watterson.