It seems almost everyone these days is trying to get a bigger house, a first home, a vacation home or maybe just a new place in a cheaper part of the country. At least they dream of these things. But with so many determined buyers and not enough homes for everyone, many people face difficult real estate decisions.
As move-in ready, single-family homes have hit record-high prices—and record-low availabilities—many buyers are turning to their cheaper, oft-overlooked cousins: condominiums and townhouses. Sales of these units have exploded over the past year as people who could work from anywhere moved across the country or scooped up a second home to enjoy on vacations near the beach or the ski slopes. Nationwide, there were twice as many condos sold in May 2021 as there were in May 2020, according to a Realtor.com® analysis of home sales data.
But where are they the hottest? The Realtor.com data team set out to look at where in the U.S. condo and townhouse prices are rising the most.
More and more buyers, it seems, are finding condos an acceptable Plan B to their initial, perhaps more ambitious, housing schemes.
“There’s just a nationwide lack of starter housing,” says Brad O’Connor, chief economist at Florida Realtors®. “People aren’t able to get the single-family home with the white picket fence they’ve dreamed of.”
These less expensive housing alternatives give buyers on tight budgets the opportunity to own something of their own and build equity, which can eventually be used to purchase a single-family home. And of course, some folks prefer them to free-standing homes, drawn to their conveniences—such as being able to pass along the responsibility for exterior maintenance. (No more raking the leaves and shoveling the snow!) Plus, they allow buyers to afford real estate in pricier, otherwise exclusive resort areas near the slopes or the beach.
Condos, which are defined as a building or housing complex where homeowners can buy an individual apartment or townhouse for themselves, initially got hit hard in the COVID-19 pandemic. People who lived in big cities wanted more space—including more distance from their neighbors. So they went on the prowl for single-family homes in the suburbs, and even the exurbs. Demand for condos and townhouses just wasn’t as strong.
While the number of sales fell for both condos and single-family homes and just about all residential real estate in the first couple of months of the pandemic, condos fared far worse. There was a 46% drop in condo sales in May 2020, compared with the same time a year before. (Single-family homes saw a 32% drop in sales.)
After that, the story changed.
There was a rebound for both types of housing, and condo sales shot up starting in early 2021. By May, the number of condo sales doubled, far outpacing single-family home sales, which saw 70% growth over the same time.
Intrigued by this big turnaround, we decided to take a deep dive to see where the condo market is really taking flight. To come up with our findings, we looked at cities with at least 250 condo, co-operative, and townhouse listings. We then figured out which ones experienced the largest median list price growth from August 2020 to August 2021.
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