bostonbubble.com

CC · Guest

According the following data, the median price difference between single family home and condo is only about $27,500. At the same time SFH declined 9% on a year-over-year basis. How could condo median prices increase 0.4%?

It really doesn't make any sense to me. The mortgage for the difference, $27,500, is probably around $300/ month. You don't have to pay the condo fee for SFH. SFH also provide a sense of ownership and larger space/ lots. If the price difference is so small, why would anyone buy condos? Especially condo sales slumped a stunning 19.2%. How could the value increase?

Is the data correct? Or any idea?

Eric · Guest

It's most likely one of the really common sources of data bias in real estate - it isn't comparing similar situations.

If all of those condos are in the Back Bay and all of those SFHs are in Pittsfield, the results would imply that condos cost more than SFHs, but really what it's talking about different housing sub-markets. The data you're looking at aren't comparing the cost of a condo next door to a SFH.

The MAR (and NAR) reported results do a poor job comparing apples to apples. Sometimes the median price changes because prices are dropping. Sometimes it drops because only cheap houses are selling. This is a lot of why the Case-Schiller Index became prefered (Also, Case-Shiller doesn't change their numbers with every release...).

JCK · Joined: 15 Feb 2007 Posts: 559

I think Eric has it. Condos, by and large, are concentrated in Boston metro to a greater extent than SFHs.

You need to look at condo median prices within the same town, or region. I can guarantee you that SFHs in Brookline, for example, are quite a bit more than $27k more expensive than condos in Brookline.

Before I rant about condo fees, keep in mind that, most of the cost of condo fees are for very basic items, like utilities, upkeep, and building insurance. If you buy a SFH, you will be paying at least as much (and likely, in older homes, quite a bit more) in maintenance and insurance costs than if you had bought a condo.

Unless you plan to let your home rot and not pay insurance, I don't think a SFH will ultimately save you money in maintenance expenses.