NOTE: see Months Supply of Inventory by property type in monthly Market Updates for current comparative information
When I start to work with first-time home buyers I am frequently asked whether it is better to buy a house or a townhome or a condo. There is no right answer…but it's a good question to explore to find the right fit for you. (Click here for an overview of the differences in owning a house, townhouse or condominium…click here for information on townhome/condo restrictions.)
In addition to lifestyle and cost differences, people also often ask about market differences…so I did a historical overview of the Twin Cities metro area for the last four years by type.
First, let's look at supply. In the chart below you can see that there have consistently been many more houses on the market than townhomes or condos. Last month 70% of the homes for sale were houses, 30% were townhomes and only 10% were condos.
You will also notice that the supply of houses has dropped the most…last month by 19.5% over the same time last year, with the townhome and condo supplies declining by only about 10%. That ties in with the number of sales by type shown below…housing sales for the last 12 months increased by about 12% for houses, but dropped by about 9% for townhomes and 23% for condos!
This means that despite the lower total number of condos available for sale, because they are selling so much more slowly their months supply of inventory is the highest of the three types. If you talk to people selling condos they will likely tell you they feel it…there is currently about a one-year supply of condos available for sale!
About 5 months of inventory is generally considered to be a balanced market. Houses appear to be moving in that direction…townhomes are holding steady…but the supply of condos relative to sales has been continuing to go up. This means a better position for condo buyers and typically a longer wait for condo sellers.
The last comparison I will do is for price. It's very interesting…average sale prices for the last twelve months declined by 15.9% for houses, declined by 11.7% for townhomes…but increased by 7.6% for condos. If you told this to people selling their condos they would beg to differ with you! This increase likely is at least partially indicative of the types of condo properties actually being sold.
The overall differences by type reflect that the share of foreclosure and short-sale properties is the highest in houses and lowest in condos. Last month 34.9% of houses were lender-mediated… 30.4% of townhomes were lender-mediated… but only 15.6% of condos were lender-mediated.
Average sale prices of foreclosure and short sale properties have dropped much more dramatically than for traditional properties, leading to more significant overall average price declines in houses. The declining supply of houses reflects the high number of foreclosure and short sale properties being sold…a sign we are heading in the right direction for a more balanced market.
Sharlene Hensrud, RE/MAX Results – Email – Minneapolis Homes for Sale
RELATED POSTS
- Condos – Townhomes – Associations – page with links to other posts/articles on the subject
- Condo vs Townhome vs House - ownership differences
- No Dogs Allowed…about CIC association restrictions
- Market – monthly market updates including comparisons by property type
- Townhome vs Condo vs House – cost differences
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