Most first-time home buyers often have to choose between stand-alone housing units and condos. While such decisions are majorly based on budget, monthly expenditures, and accessibility, prospective homeowners should consider other factors.
Despite the increase in construction activity of multi-family homes, the percentage of the units available for sale in the last year remained at an all-time low. This trend has persisted even as demographic factors favor the market for condominiums. As the real estate market recovers from the effects of the COVID pandemic, the demand for condos remains all-time high. Below are a few reasons behind this increasing demand:
1. Offers several benefits
Condos are increasingly becoming a popular option for prospective homeowners for many reasons. Generally, the increase in demand is because the urban living lifestyle is slowly making a comeback. Condos, such as Square One condos for sale, are primarily found in metropolitan areas or towns with easy access to shopping centers, restaurants, and transport facilities.
The increase in demand is also attributed to their ease of maintenance. Unlike mansions and other single-family units where you must hire someone to work on your backyard or pool, the management covers all the maintenance requirements. Living in a condo also means unlimited access to exercise facilities, pools, and other installations that are otherwise expensive to build and maintain.
2. Value appreciation
Buying a condo is a wise investment because of the ever-increasing demand and significant value appreciation. Condos are low-maintenance, highly sought after by renters, and are a perfect choice for first-time homebuyers. Unlike mansions and single-family units, prices for condos are rarely affected by the market. However, the value of condos increases depending on the location, age, and accessibility of the unit.
3. Flexible payment options
Flexible payment options are the other reason behind condos’ increase in popularity. Unlike other residential units, which require mortgage options or extensive savings, you can pay monthly installments for pre-selling units. You can also take a bank loan to make the downpayment and complete the remainder later.
4. More affordable than single-family homes
Condo prices are comparably lower than single-family units in most towns and cities except Philadelphia and New York. The gap in costs of multi-family homes and single-family units significantly widened during the pandemic, as most families traded proximity for more space. This made condos much more affordable.
Due to this, most first-time homeowners looking to experience homeownership tend to prefer condos. Some people also purchase condos and use equity on their condos to purchase large single-family homes.
5. Demographic trends favor condo development
Condos are also becoming popular because they align better with demographic changes. For instance, the percentage of people living alone has risen to 28% from 12%. Similarly, the percentage of two-person households has increased slightly from 28% to 35%. The growth of single-person households in the past decade also contributes to the increasing demand for condos.
Endnote
While the demand for condos remains high, condo production remains low for several reasons. A common reason is developers face serious financial constraints. Sponsors should sell completed units to fund ongoing construction. This means buyers should have ready cash or available financing.
