It’s a real estate question that historically has had an easy answer: Do single-family detached houses appreciate in value faster than condominiums?
The standard answer has been: Of course single-family houses appreciate faster. They are what most Americans prefer to live in, so there’s stronger demand. They come with their own piece of land — and we all know that land is a crucial driver of value.
Condos, on the other hand, tend to be smaller in square footage as well as more complicated. They come with boards of directors, association fees, rules and restrictions.
But hold on. New research conducted for this column by Trulia, the online realty marketing and information company, suggests that these old assumptions could be giving way to changing market trends. According to data compiled by Trulia on millions of properties in the 100 largest metropolitan areas between February 2012 and February of this year, the median appreciation rates of condos outpaced those of single-family detached houses.
It wasn’t even close. Median condo market values rose by 38.4 percent over the five-year period, while median single-family detached houses appreciated by 27.9 percent. In some local markets, especially those that have seen significant new condo construction downtown or that have little available land suitable for detached housing, the median value of condos exceeds median values of single-family detached houses in the surrounding suburbs.
The most extreme example is metropolitan New York, where median condo values are now at 138 percent of median single-family detached house values. In Detroit, the median condo value is 125 percent of median single-family house values. Major urban areas where condos are appreciating faster than detached single-family units include Seattle, San Francisco, San Jose, Atlanta, Dallas-Fort Worth, Denver, Syracuse, San Diego, Boston and dozens of others.
Single-family house values continue to be higher in the vast majority of markets, but the gap is narrowing in many, thanks to the faster appreciation rates of condos in recent years.
Ralph McLaughlin, chief economist at Trulia, says one reason for the trend is that in many urban markets, condos are “located in areas that are becoming more desirable because they are closer to amenities”: employment, transit and other attractions.
Some metro areas — such as Washington — that have high-cost single-family houses in parts of the city and in the close-in suburbs, are seeing only slight increases in median condo values relative to single-family houses. The D.C. market has experienced modest growth in values during the past five years, but condos have appreciated a smidgen faster: 22.4 percent, compared with 21 percent during the same period for detached single-family houses.
Other major metro areas, such as Chicago, aren’t seeing the pattern noted by Trulia. In the past five years, median Chicago condo values are up…