Robust appetite for more living space and privacy is keeping a lid on condominium prices, spurring sales in some metros as buyers take advantage of the discounts.
A recent Redfin showed that, on average, the typical US single-family home sold this year was purchased for a premium of $58,000 or 17.3% more than the typical condo – marking the largest premium since Redfin began tracking this data since at least 2013.
Despite a white-hot US housing market amid COVID-19, the condo market “has missed out on much of the gains as homebuyers have left dense cities in search of more space and privacy AKA single-family homes,” Redfin said.
The same is true of Seattle’s housing market, where single-family homes are selling for a 17.9% premium, according to local Redfin real estate agent Forrest Moody.
“Before the pandemic, it was challenging to find a condo in Seattle for less than $500,000, but now there are plenty selling for under $400,000. The people who are buying condos now are the people who couldn’t afford to buy one a couple of years ago because prices were so high,” he said. “I recently sold a condo that was within walking distance of Amazon’s headquarters for $510,000. Condos in that building normally go for $550,000 and up.”
The single-family market posted 15.5% annual gain in sales price appreciation in October, outpacing the condo market’s 9.9% growth. Condos are also taking longer to sell, with the typical condo spending 36 days on the market last month, compared to the 27 days for the typical single-family home. Moreover, less than 22.8% of condos sold for more than their listing price, compared with 36.6% of single-family homes.
There were just three metros areas where single-family homes sold for less than condos: San Antonio (-12.9%), Omaha, Neb. (-6.2%), and Salt Lake City (-1.7%).
In San Antonio, there’s been a resurgence of high-end condos in the downtown area, local Redfin real estate agent Jim Seifert said.
“There are more people buying condos in San Antonio than I’ve ever seen before,” he said. “Young people who work in tech and healthcare are moving here from Seattle, California, Washington, DC and Maryland because San Antonio is so much more affordable, and they have a bigger appreciation for downtown living than the average person from Texas. San Antonio’s condo market is also likely being fueled by the fact that buyers know they can get in. There’s a shortage of single-family homes for sale, but the supply of condos is growing like wildfire, so some folks are opting for condos because they don’t want to deal with a bidding war.”
However, sales of condo units have been catching up, according to the report. Condo sales were down 50% in the spring. In October, they had jumped 22.7% on a seasonally-adjusted year-over-year basis – on par with the 23.3% growth in sales of single-family homes.
“Condos sales are rebounding because buyers are finding great deals,” Redfin Chief Economist Daryl Fairweather said. “Families are fleeing cities in search of more space in the suburbs, which has presented an opportunity for millennials who are looking to become homeowners but don’t need extra bedrooms or a backyard.”