Do condos depreciate in value or rise like houses?

[ryan840]

I'm just wondering what the resale market is like for condos because we can't afford a house in our desired city and we want to at least get our foot in the door. What is your experience? Thanks! By the way, I am headed up north shortly for the holiday and won't be back until late Tuesday night, so you don't think I skipped out on the thread (although if you can find a way to flame me for this one, I'd love to see it!). Come to think of I should have waited to post, but now I've gone and typed all of this, and I'd never remember to do it later anyway... Now you have something to flame me for, I know there's lots of you on the prowl lately!

 

[barbeml]

It depends. You probably know that "condo" is a form of ownership, not a style of house. My townhouse is a condo, but people always think it has to be a "flat" to be a condo.

Location, size, condition, number of bedrooms are all factors here. My little place goes for about $320,000 right now. 1400 sf, three bedrooms, 2.5 baths, no garage, no basement. I paid $113,000 for it new 11 years ago. My development is "hot" and nothing lasts long on the market.

 

[Kimberle]

Depends on where you live.

Ours has more than doubled in 7 years.

 

[PamOKW]

Just like with houses, it's hard to say for sure. One difference is that with a house you do have the "land" and they aren't making any more of that. Worst case folks buy your house and knock it down just to get the land.

But, it seems that right now in my area everything is going up, up, up. Some of the nicer units in desirable developments are going for well over $1 million when they originally sold for about $300K 10 years ago.

 

[bicker]

Our condo has also doubled in seven years.

 

[snoopy]

We bought a condo in 1987 and have kept it as a rental property ever since. Its going on the market next month, I expect to come away with triple what I paid for it. It didn't appreciate as much as my house has, but its been a decent investment. I think you need to look at the real estate trend in your area -- is it on the upswing or on the decline? Here in the D.C. area its as high as it can probably go; and what goes up must eventually come down.

 

[The Mystery Machine]

Not only that, you have to realize that you assume "risk" when you buy into a condo. My BIL bought a brand new vacation condo and guess what the builders didn't put proper storm sewers in, so they are currently suing. (it is a lake property)
In the meantime a "Special Assessment Fee" was instituted. You have no control over that and have to pay up. His was very expensive over a 2yr period!!!
So, bottom line you might have to pay up for something and lose some of your cash that you had not expected.

It is all about LOCATION & LUCK that is for sure!

 

[disykat]

People I know that bought condos in the city did very well, around here (a residential area) they are sometimes hard to sell.

 

[va32h]

My sister owned a condo in Mission Viejo and made a killing when she sold it. But that's California. You could probably turn a profit on a nice cardboard box in Southern Cal.

 

[Cindy B]

My first home I bought was a condo is a S. NJ suburb. It was a small condo, and it fit my needs for a while.

We (I got married) had to initiate a job transfer and we wound up renting it for a while. Unfortunately, we never got to enjoy it. After renting it out for a year (covering our mortgage), we put it up for sale.

We wound up selling it for what we paid for it. Unfortunately, there wasnt much profit. But we had only owned it for less than two years.

I'm sure we would have had a profit if we kept it longer.

 

[legs22]

I just bought a condo earlier this year. The units in this development have doubled in price in the last 2-5 yrs.

I recently read that condos have actually appreciated more than single family homes.

 

[CarolA]

I think a LOT depends.

I just moved from Nashville to Atlanta. I would not have bought a condo in Nashville. I have had friends who lost thier shirt on them with limited exceptions.

However, Atlanta is a much bigger city and if you want to live close in a house can cost you TONS (think nothing decent less thane $400,000 to $500,000) So I bought a condo. Due to my location, I think if I keep it a few years I will be fine on a resale, but this is one time when I think the old "Location, location, location" statement REALLY rings true.

Several units in my small complex (townhouse style) are coming on the market. Most of these folks bought these untits over 10 years ago for around $75,000. The one I am in sold first and that is becasuse in the past 10 years the prior owner had actually kept the place up (New kitchens, new bath, new carpet etc....) Some of the other units were built in 1975 and were in ORIGINAL condition with "High prices" They are still there on the market and this is a fairly hot area. The owners are just unrealistic. (I am hoping someone buys them and starts renovations since right now I am the MOST expensive condo in the complex!)

 

[bicker]

My BIL bought a brand new vacation condo and guess what the builders didn't put proper storm sewers in, so they are currently suing. ... In the meantime a "Special Assessment Fee" was instituted. You have no control over that and have to pay up.

This is no different than a new single-family home -- the only difference is that the "driveway" in a condo is often, but not always, a bit longer than for a single-family home. That Special Assessment Fee is the same as the bill from the person who rewires your home because your builder, who's gone out of business (which is always the case here in MA -- builders always incorporate to build one development, whether it is single-family homes or condos, and then go out of business, so that lawsuits cannot follow them to their next project), didn't wire it safely to start with.

 

[LoraJ]

It is much easier to re-sell a condo that has 2 or more bedrooms. I got in a huge bidding war to get the condo that I bought last year. I ended up paying $30k over asking. It is now valued at $35k over what i paid in just one year. And condos are also easier to sell than a co-op. Everyone I know has made a good profit from their condos they have sold.

 

[Lisa F]

Traditionally condos have been the first to fall flat and the last to start appreciating again when the market has its ups and downs. Sure, in pretty much ANY area of the country if you bought a condo more than 5 years ago, you should be able to turn a nice profit on it now, but that is because of how wildly ALL real estate has appreciated over the last several years. Traditionally, though, when the market slows down condos are the first to slow down and they don't appreciate as much as the equivalent single family housing would. There is a very real risk at this point that if the RE market slows down long enough, you could end up owing more than the condo is worth or having a hard time selling it in the future depending on when you decide to sell. Of course with starter homes being so out of reach for so many people, I'm not sure what that does to the "tradtional" trends of condos, but I think as far as all economists are concerned we are kind of entering uncharted territory when it comes to housing prices. Their guess is as good as ours at this point, some have been screaming "bubble" for 5 years and some of those are now saying "well maybe not bubble, but slowdown." The best protection against any potential slowdown/bubble burst is to buy a place large enough that you can see yourself living there for the next 10 or so years if you absolutely had to. It's only a "loss" or "gain" once you sell.

 

[ryan840]

Thanks everyone, these are great points! I don't really think we have a choice right now due to housing costs, it's a condo or an apartment. I will be doing more research on the are we want to live in, and I'm not ruling out a house yet- just not getting my hopes up! We have to get out of our current apartment, we no longer have a sense of secutriy since finding out (the hard way) that there are a ridiculous amount of cars stolen/broken into here and the police and property management could pretty much care less! My husband and I and most of the residents feel that is it someone who lives here, or on the block directly behind us because it is not such a big problem in the general area. Anyway, we want to get out ASAP!

 

[vacanut]

The first property we purchased was a Condo/Townhouse. It doubled in value over 5 years. I think its a great investment to purchase a home vs. renting. I think condos are desired more today due to their low maintenance. Its nice to pay $100 a month for a maintenance fee and have lawns mowed and grounds kept up. This included trash pickup and snow removal. Good luck on your search!

 

[ryan840]

The first property we purchased was a Condo/Townhouse. It doubled in value over 5 years. I think its a great investment to purchase a home vs. renting. I think condos are desired more today due to their low maintenance. Its nice to pay $100 a month for a maintenance fee and have lawns mowed and grounds kept up. This included trash pickup and snow removal. Good luck on your search!

You brought up a great point that I meant to ask about- what exactly are all the fees I will encounter, aside from my mortgage?

 

[nowellsl]

I made a nice profit when I sold my condo. Be sure to check the books for the complex - make sure they have reserves set aside for repairs (roads, roofs etc.) if not, you may be in for some special assessments. Especially if it's an older complex. Talk to people on the board (homeowners association) if possible. Find out all you can. Is there a manager on site? Do the grounds look well taken care of? Everytime I have to mow my yard I think - boy I wish I still had my condo!

 

[LoraJ]

You brought up a great point that I meant to ask about- what exactly are all the fees I will encounter, aside from my mortgage?

It depends on the condo association. Mine is $156, which is cheap for the area. It includes water, sewage and garbage removal.

Then you have property taxes, which usually aren't too bad for condos.