Single-family home sales have been driving the U.S. housing market of late, as homebuyers continue to leave populated cities behind and instead opt for space and privacy in the suburbs and rural areas.
But where does that leave the condo market?
According to a new report from Redfin, the desire for privacy is keeping a lid on condo prices, making that segment somewhat of a sleeper in terms of value.
The typical single-family home that sold in the U.S. this year was purchased for an average of 17.3% more ($58,000) than the typical condo. That’s up from 15.4% last year and represents the largest premium since at least 2013, when Redfin began recording this data.
Sales data backs the trend — the median sale price of single-family homes surged 15.5% year over year in October, outpacing the condo market’s 9.9% growth.
Condos are also taking longer to sell—the typical condo spent 36 days on the market last month, compared with 27 days for the typical single-family home.
And less than a quarter (22.8%) of condos sold for more than their listing price, compared with 36.6% of single-family homes.
But condos have been catching up. According to Redfin, condo sales rose 22.7% in October from a year earlier, following a 50% plunge in the spring. That’s on par with the 23.3% growth in sales of single-family homes last month.
“Condos sales are rebounding because buyers are finding great deals,” said Redfin Chief Economist Daryl Fairweather in the report. “Families are fleeing cities in search of more space in the suburbs, which has presented an opportunity for millennials who are looking to become homeowners but don’t need extra bedrooms or a backyard.”
But extra space and a backyard come with a cost. The premium for an unattached home was the highest in Fort Lauderdale, where single-family homes sold for an average of 38.3% more than condos in October.
In Miami, single-family homes sold for an average of 27.7% more than condos in October, a premium of $109,292.
In the Seattle metro, where single-family homes are selling for a 17.9% premium, condos are taking several months to sell rather than the usual couple of weeks, according to local Redfin real estate agent Forrest Moody.
“Before the pandemic, it was challenging to find a condo in Seattle for less than $500,000, but now there are plenty selling for under $400,000,” Moody said in the report. “The people who are buying condos now are the people who couldn’t afford to buy one a couple of years ago because prices were so high,” he said. “I recently sold a condo that was within walking distance of Amazon’s headquarters for $510,000. Condos in that building normally go for $550,000 and up.”