To buy or rent? To invest in condominiums or apartments?
The buzz is that the condo market is slowing down. Thus, the hot question is whether to go condo or apartment, a key one for both developers and potential home buyers alike. First, a couple of facts:
– Condo sales in the U.S. set a tenth consecutive sales record last year (896,000 units), 9.3% better than 2004.*
– Condos for the first time ever at the end of last year sold for more ($223,500 average) than single-families ($218,600).*
– The mortgage interest rate is about 1.1% higher now than it was last year. That means to maintain the same amount of payments for that $220K condo at 5.7%, you could only buy one for $196K at 6.8%. However, average condo prices are not dropping that low.
So the answer is, it depends. If you’re finding or are looking to build average condos, better to go the rental route until the market corrects itself and prices drop according to the interest rate hikes. But not so if investing in unique properties with cooltown attributes, like The Pulse (pictured) in Cincinnati, whose developers are sticking with condos. Not only is The Pulse unique in the market with concrete floors, 10 ft. ceilings, movable walls and rooftop decks, most importantly, it’s priced less than the national average because it’s strategically located in a ‘not-quite-there-yet’ neighborhood where homes average $96,000. You may be sorry if you don’t go condo in cases like that…
*Source: National Association of Realtors
About The Author
I’m working on a development in Columbia, SC where we’re bucking the national trends. You could say we’re behind, and are playing catch-up, but I’m a glass is half full kind of guy. :) Pretty sure the city will easily absorb around 500 or so units for the next several years. The trick here will continuing to get money from the banks as they see the market slowing nationally.
Pulse is actually across the river in Covington where most of the really cool stuff is happening. But downtown Cincinnati is catching up fast with many new projects. Plus the new Fountain Square will open early September and one of these years the Banks project will begin.