Condos are Climbing Back: 3 Tips for Leveraging Their Growing Popularity

Millennials are starting to buy homes, and condominiums and cooperatives (co-ops) might be where many of them choose to hang their hats. Condominium values fell harder than single-family homes during the recession — more than 33 percent compared to the 20 percent lost by the median U.S. single-family home. But while they might be the red-headed stepchild of homeownership options, condominiums are now appreciating more quickly than houses at 5.1 percent annually, especially where job markets are thriving or urban renewal is underway. That growth rate beats out the 3.7 percent rate at which U.S. single-family homes are appreciating.

Here are 3 tips for leveraging the condominium comeback.

1. Know who’s buying condominiums

Millennials and other first-time home buyers have evolved: They’re typically long-time renters who are older, most likely unmarried and purchasing more expensive homes than they were in the past several decades. But it’s difficult to save for a down payment, and this demographic might be attracted to condominiums for their affordability, convenience and, often, urban locations. Today, condominiums make up more than 40 percent of first-time home purchases compared to 28 percent in 2001.

It’s also important that you know which condominium associations will most appeal to each client. For example, these typically older first-time home buyers (around 35.5 years old) might not want to be close neighbors with party-minded twenty-somethings.

2. Be knowledgeable about the condo lifestyle

Owning a condominium isn’t the same as owning a single-family home; be able to explain the differences between condos and co-ops, clarify what the buyer actually owns with each, and note any additional costs associated with the lifestyle. Also, outline the fundamental departures from owning a single-family home. Ask for the covenants, board minutes and most recent budgets for the communities your client is interested in so that you can speak knowledgeably about each association's financial stability as well as their rules and regulations.

3. Prepare to fight for that unit

As popular as they’re becoming (again), condominiums account for just slightly over 11 percent of new construction today, nationwide. They also represent only a small share of the total housing inventory in major metros. Clients who have decided to purchase a condominium might still face stiff competition when making an offer, and you can help them do everything they can to win the home.

Despite taking the hardest hit in the housing bust, condominiums are recovering the fastest. With their values outpacing those of single-family homes — combined with a low-maintenance lifestyle and urban locations in healthy job markets — condominiums and co-ops can be popular among millennials and other first-time home buyers. The relative affordability of condominiums can provide an ideal way for you to help clients take their first step toward homeownership.