Pick Your Best Investment as a Residential Buyer
By Norris Minick
In a recent post, we presented some data on a gap that opened up between 2002 and 2010 between condo/townhome prices and prices for small single family homes. Then we noted that this gap narrowed substantially in most local communities over the past few years. This raises a question: If buyers see a price gap opening up, does it made sense to buy a condo or townhome, rather than a single family home, to maximize the potential of their investment? How do you pick your best investment as a residential buyer?Condos Did Better than Houses
Looking back, our data shows that you would probably have done better with price appreciation had you bought condos rather than houses. This assumes you'd invested broadly across all the markets we cover 2008 or 2011 for example.- From 2008 to June of 2016, small houses increased in value by an average of 61%, where condos/townhomes increased by an average of 69%...a difference of 8%.
- From 2011 to June of 2016, small houses increased in value by an average of 62%, where condos/townhomes increased by an overage of 76%...a difference of 14%.
- The gap we noticed between the small house and condo prices actually narrowed, rather than continuing to expand.
- The complex you purchased your condo in appreciated at or above the rate characteristic of the community as a whole.
- If you sell your condo before the condo market softens again and the price gap reopens.