It’s estimated that the current average price of a single-family home in the United States is north of $343,000. That’s a nearly 12 percent increase from what the average home cost just one year ago. It’s evidence of a seller’s market, where quality inventory is low and buyers are getting into bidding wars for the most attractive homes that are on the market.
Condos, on the other hand, are kind of going in the opposite direction. According to Redfin, the average price of a condominium in the United States is $266,000. And while this price point represents a 5.4 percent increase from one year ago, the price gap between homes and condos is increasing. If the gap continues to become wider between condominiums and single-family homes, it’s likely to trend in the favor of condominiums as a preferred living option.
‘Not Much Competition’
According to real estate experts, there are a few reasons why condominiums are trending upwards for Americans as a living option. One is simple availability, especially compared to the bidding war that many Americans find themselves in as it pertains to single-family homes. In other words, it’s much easier to find a condominium because there’s not a lot of competition for them. This relationship between supply and demand also has a direct impact on price – and while prices on condos have increased since last year, condos have also increased in availability by about 3.6 percent, while single-family homes have decreased in availability by more than 25 percent.
Per Redfin’s data, only about 40 percent of condo sales invoked a bidding war in August 2020, compared to close to 60 percent of single-family homes. When it comes to price and availability, condos right now are moving in the direction of being the better option.
Traditional Disadvantages of Condos
If the current trends continue, the advantages and prices of condos could well outpace the conventional disadvantages that are typically associated with them. These include a lack of privacy with your neighbors, hefty association fees and, perhaps most significant, a difficulty in selling the property when you’re ready to move on from it. Another big drawback is that condos typically have more rules associated with living in the community, which can prevent property owners from fully customizing it to make it “theirs.”
It’s too early to say if condos will truly become the next big housing trend, as Americans still prefer single-family homes for a variety of reasons. But if the price gap continues to widen and consumer preferences continue to evolve to the point where owning a home is less of a priority for Americans, then a real condo surge could take place in this country. The data is at least there to support the possibility, time will tell if it’s a lasting one.