Zillow: Condos Outpacing Single-Family Homes in Appreciation
Increasing rents, limited inventory of low-value homes and the popularity of urban life have prompted runaway condo-value appreciation in many housing markets, said Zillow, Seattle.
The company’s September Real Estate Market Report said condo values were hit harder than single-family homes during the recession and lagged in the recovery, but now they are appreciating more quickly than houses. While the median U.S. single-family home lost 20 percent of its value; from peak to bottom, the typical U.S. condo lost 33.2 percent of its value.
The report said condos are appreciating at 5.1 percent annually, outpacing the 3.7 percent rate of single-family homes in the U.S. In particular markets, such as Denver, San Jose and other hot tech markets, condo values have been rising rapidly “exceptionally fast,” appreciating faster than single-family homes in nearly two-thirds of the top 35 most populated housing markets. Condo values outpaced house values the most in the New York City metro area, in Dallas and Houston, and in Boston and Denver.
“The housing bust hit condo values hard, and over the past few years, buying a condo wasn’t always considered a good investment compared to a single-family home,” said Zillow Chief Economist Svenja Gudell. “But that’s changing, and condos increasingly represent a strong-performing, often affordable choice, particularly for first-time buyers interested both in homeownership and in keeping a lower-maintenance, city lifestyle. However, as younger buyers compete for homes in urban neighborhoods, it’s important to consider some of the additional costs of condo life, especially homeowner association fees, when weighing options.”
Zillow said in Denver, one of the country’s fastest-growing housing markets, condo values are growing in value at an annual rate of just under 20 percent, while single-family home values are rising at 15.9 percent. In Philadelphia, a market where many renters say they want to buy, single-family homes dropped slightly in value year-over-year, but condos are growing at 2.3 percent. But in Miami, where luxury condos have spread across the skyline and condos make up 63 percent of the housing stock, condo values are not rising quite as fast as single-family homes.
In a corresponding report, Pro Tech Valuation Services, Waltham, Mass., said lack of inventory is contributing in part to hot market conditions in a number of U.S. metro areas.
The company’s October Home Value Forecast said 29 metro areas have less than four months of remaining inventory and have seen double-digit percent decreases in active listings. Twenty-one of the 29 are west of the Rockies.
“While new housing units are on the upswing, the numbers are still at historical lows,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “That, combined with approximately 2.5 million single family homes becoming rental units since the crash has left the U.S. with a limited housing supply.”
