How condos rise in value compared to single family homes and why

If you are tired of renting and want to finally own your living space, congratulations are in order! You’re about to enter the proud tradition of American homeownership.

One of the important decisions you need to make is choosing the type of home you will buy, and two of the most common options are condos and single-family homes. An important factor when deciding between the two is the rate of appreciation, or how much value the residence will gain over time.

The truth is, condos will not likely gain in market value as rapidly as a traditional home. Condos can still be an excellent investment, but the appreciation factor should be well understood before you buy.

Why condos do not appreciate as quickly

There are many reasons why a condo will not appreciate in value as fast as a house, but the biggest factor is land. When you own a condo, you don’t actually own a piece of land that can be modified, landscaped, or used in a specific way. You don’t have a section of the property where someone could (if they really wanted to) tear the structure down and rebuild their own house. And besides interior decorating, there generally isn’t much a condo owner can do to remodel or modify the area, so a single condo unit could likely never be purchased for development purposes.

Besides the physical land factor, there is also demand. The classic American dream includes a happy family, two cars, a dog, a grill, and a large home. It rarely involves a fifth-floor condominium, except for individuals with specific needs or in certain stages of life. This lower demand compared to family homes is a major reason that condos do not appreciate in value as fast as a house.

When are condos a better investment than family homes?

There are actually a few situations when condos can be a better long-term investment than family homes. While nothing is guaranteed, you may be able to find specific condos that provide superior appreciation.

First, if you can find condos that are selling for less than their assessed value, then you’ll likely be able to get a stronger return when selling. This usually occurs when a buyer is highly motivated because they are moving or changing jobs. Packaged deals for multiple units or purchasing an entire condo building can also bring better returns, but this is obviously limited to serious developers and real estate investors.

Perks to buying a condo

Despite potentially lower financial gains, many people choose to purchase condos for their own personal use or for investments. One of the most common motivations is convenience. Condos are easier to maintain, as you won’t have to worry about yard work or general upkeep. They are also usually cheaper to purchase upfront.

While it is certainly possible to find specific condos that are more expensive than typical family homes, in general, the cost of a condo will be much lower. Just remember that the price of the condo also includes fees, association dues, and many other expenses that could drive up the real-world costs.

The right team for all your real estate needs

Contact Dante Disabato and we’ll help you make an informed decision on your next home. Whether you choose a traditional house or one of Southwest Florida’s high-class condos, we’ll be with you through the entire process!

This material is based upon information which we consider reliable, but because it has been supplied by third parties, we cannot represent that it is accurate or complete, and it should not be relied upon as such. These offerings are subject to errors, omissions, prior sales, changes, including but not restricted to, price or withdrawal without notice. A buyer should be represented by legal counsel and have a professional inspection and a survey of the property certified to the buyer to verify information contained herein and all other information upon which a buyer may intend to rely. William Raveis Real Estate.