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Jacqui Kenyon: As SFH-condo price gap widens, should you look at condos?

Jacqui Kenyon, Rate.com on

Published in Home and Consumer News

Hot demand for single-family homes amid the COVID-19 pandemic — and relatively slack demand for condos — pushed the price gap between the two housing types in 2020 to its widest since experts began tracking the statistic.

Nationally, adjusted for square footage, number of bedrooms and bathrooms, location, and other factors, single-family homes in 2020 sold for 17% more than comparable condos, or an extra $58,000, according to a Redfin analysis. The gap has steadily widened from about 13% since Redfin began tracking it in 2013. That suggests that some home buyers in some markets, focused on acquiring living space economically, ought to consider condos.

In some metro areas, the gaps are large:

—In Fort Lauderdale, single-family homes sold at a 38% premium over comparable condos in 2020, up from 34% in 2019 and just over 4% in 2013. There was a $235,000 difference between the median sale prices of single-family homes and condos in 2020.

—In Hartford, single-family homes sold at a 27% premium over comparable condos in 2020, up from 25% in 2019 and just about 17% in 2013. There was a $90,000 difference between the median sale prices of single-family homes and condos in 2020.

—In Kansas City, single-family homes sold at a 18% premium over comparable condos in 2020, up from 11% in 2019 and negative 7% in 2013 (a discount rather than a premium). There was a $91,000 difference between the median sales prices of single-family homes and condos in 2020.

 

—In Fort Worth, single-family homes sold at nearly an 11% premium over comparable condos in 2020, up from just under 5% in 2019 and 5% in 2014 (the first year it was on the list). There was a $104,000 difference between the median sales prices of single-family homes and condos in 2020.

—In Little Rock, single-family homes sold at nearly an 11% premium over comparable condos in 2020, up from a discount of 5% in 2019 and a discount of 9% in 2013. There was a $27,000 difference between the median sale price of single-family homes and condos in 2020.

In cities such as Fort Lauderdale, Fla., and Hartford, Conn., where the premium has increased relatively consistently over time, the numbers suggest that, should those trends continue, buying a condo might not give buyers the best return on investment when it comes time to sell, relative to single-family home prices.

On the other hand, in cities such as Kansas City and Fort Worth, Texas which experienced a big premium jump between 2019 and 2020, after years of remaining relatively stable, the data suggests the widened gap may be due to the pandemic and not part of a long-term trend.

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