Should you buy a condo or a single family home?

One of the most common questions surrounding buying a condo: is it as good of an investment as purchasing a single-family home?

While condo communities and complexes often allow buyers to get a bit more size or a better location than they would be able to afford in the single-family home market, the concern is valid. People want to know if getting a condo that suits their needs is going to pay off in the long run - especially when compared to buying a single-family residence (SFR) that may be smaller or farther away. 

Aside from possibly saving a bit of money and being in a more entertaining part of town, not having to deal with exterior maintenance, roofs, landscaping, and often water and garbage makes condo-buying an attractive choice. From a pure return standpoint, what you get with a condo often outweighs what you get when purchasing a SFR. Pools, gyms, shared banquet rooms, offices, lounges, and shared parks and outdoor space allow owners to share costs for maintaining amenities that SFR owners would have to find and/or pay for on their own. HOA fees feel like money out the window for some, while those who take advantage of their community amenities tend to truly benefit.

Although some communities don’t have as much to offer, they are in closer proximity to community staples that provide convenience to Silicon Valley’s tech-driven working class. The HOA fees themselves should be analyzed through a lens of “what does the community itself provide for the monthly fee?” as well as “is the community in a location that caters to the (buyer’s) desired lifestyle?”  

During the past five years, the average sales price for San Jose condos (1200-1500 SqFt) has appreciated from around 500k to about 775k (45%). Over that same time, the average SFR in San Jose from 1500-1700 SqFt has appreciated from 815k to 1.15M (41% increase). Taking into account HOA fees and cost associated with maintaining a single-family home, these appreciation numbers look quite similar. While the dollar amount is higher on the Single Family homes at the time of purchase and sale, the appreciation rate is about the same. 

The condo market is more straightforward for sellers, as they benefit from comparisons from recent sales with similar finishes and layouts/amenities. For a single-family home where owners have the ability to change and alter their property, there may be significant variations between recent sales which could help or hurt the value.

There exist advantages and disadvantages in purchasing condos and SFRs. Your decision should ultimately be based on what works best for you, as a buyer, based on your personal situation and desired lifestyle.