Buyers balking at buying a condominium take note: It’s a better investment than people often think, according to a report released Friday.
The price of condos in Snohomish County rose nearly as fast as single-family homes, and in King and Pierce counties, condos performed better, according to the report by director Glenn Crellin of the Washington Center for Real Estate Research at Washington State University.
Crellin examined data from Snohomish, Pierce and King counties for the last seven years.
In Snohomish County, he found that the median price of condos has appreciated 65 percent, from $146,500 to $240,000 during the seven years. That’s just a smidge under the appreciation rate for a house during that period. The median price of a home in 2000 was $200,000. Today, it’s $368,000.
Median means half sold for more and half for less.
He also found more people today are buying condos. In the last seven years the proportion of home sales that are condos increased from 13 percent to 19 percent in this county.
Condos in Snohomish County haven’t gained value as rapidly as King County because this county lacks the vibrant urban core of downtown Seattle, Crellin said. Land and single-family homes in this county are also slightly less expensive than in Seattle.
The condominium market remains the least understood segment of residential real estate, Crellin noted in the report. In the 1970s, condo ownership was widely considered a fad and lenders worried there wouldn’t be a resale market.
Since then, the sale and construction of condos hasn’t been tracked consistently. Until a few years ago, Washington developers weren’t building many outside Seattle and a few resort areas such as Chelan.
“In most other communities large and small, housing prices were frankly low enough there was not much incentive to produce condominium housing in any substantial numbers,” he noted in the report.
With the explosive rise in housing costs in the central Puget Sound, condos have become the only option for many first-time buyers, he said. On average, they cost a third less than a single-family home, according to the report.
“More than anything else (condos) appeal to a broader section of society because the price is lower,” he said.
Even though condos don’t offer a yard or the square footage of a house, that’s not necessarily a negative for first-time buyers or those who are downsizing, he said. “Clearly, the condo market appeals to young professionals and empty-nesters rather than households with children.”
Sales have cooled in the area in the last year, but Crellin said the national market isn’t representative of what’s happening locally. The mortgage mess occurring in other states likely won’t have much effect on local buyers’ appetite for condos.
“Even if prices soften a little bit, single-family homes are going to be out of the reach of a lot of buyers,” Crellin said.
Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.
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