SEATTLE, WA - Condos are appreciating faster than single-family homes in markets across the U.S., especially where job markets are thriving or urban renewal is underway, according to the third quarter Zillow September Real Estate Market Report. Condos in the U.S. are appreciating at a rate of 5.1 percent, compared to the 3.7 percent appreciation among single-family homes.
Condo values crashed hard during the housing bust that kicked off the Great Recession. From the pre-recession peak to the lowest value, 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 housing market has since bounced back, and condos have finally caught up to other homes. In September, according to Zillow's data, they are 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.
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.
"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 Dr. 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."
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.