Condos in cities like Toronto, New York, Miami, Chicago, Los Angeles, Houston, Boston, London, Tel Aviv, Dubai, Tokyo, Seoul, Sydney and Melbourne are valuable. For many, the affordable ones are an entry point into home ownership and the real estate market. For others, they are an entry point into a lifestyle only a select group can have.
Condos are an attractive option for many first-time buyers and investors. Many buy them and rent them out (like they do with apartments). However, a lot of condo buyers and owners wonder if this unique kind of real estate can boast the same kind of appreciation and potential return on investment (ROI) as suburban homes.
What drives the values of condos in the market?
Many factors influence the value of condos in the cities mentioned previously. Understanding these dynamic factors is key for buyers and investors alike. Let us now understand them briefly:
Location plays quite a role in a condo’s value. If it has proximity to amenities, public transport, and other desirable neighborhoods, then it will have a very good price tag.
On-site amenities such as pools, gyms, indoor sports arenas, communal spaces, more security, and the like, do add a good bang for the buck in the value of condos.
The fees associated with a condo can also affect its value. They do cover essential services and maintenance of cooperative and shared spaces, but they also have an impact on the affordability factor of condos. They can also impact its resale value.
Hence, Prospective buyers should carefully assess the financial implications of these fees and payments. This can affect their monthly budgets if they cannot pay them on time.
Comparing condos and detached homes
When compared in economic terms, condos, and suburban homes have some similarities. But in what ways do they compare concerning appreciation and long-term gains? Let’s find out.
Suburban homes (including their detached and non-detached counterparts) have the potential for expansion and renovation. They also have been perceived as a more stable and appreciable asset.
But in some markets the population density is high. Among them are
Dhaka,
Mumbai,
Dubai,
Istanbul,
Tokyo,
Toronto,
Mexico City,
Rio de Janeiro,
New York City,
London,
Barcelona,
Madrid,
Buenos Aires,
Santiago,
Sydney,
Melbourne,
Jakarta,
Hong Kong,
Manila,
Bangkok,
Singapore,
Osaka,
Vancouver.
A condo is as valuable as a suburban home. Condos in these markets have remained close to suburban homes in many ways. Forensic Delay Analysis experts reveal that cities and markets with rising population density go for vertical housing. Apartments and Condos are valuable in these cities.
In the cities mentioned, condos have access to on-site and off-site amenities. They offer high-convenience living and proximity to some of the best neighborhoods which keep their demand strong.
When it comes to resale, these condos cater to many potential buyers given their starting price point. This can pay dividends in the form of multiple offers.
The market’s influence plus other contributing factors
Not every real estate market is the same. They evolve, change, and at times, favor homes over condos. Los Angeles, Miami, Houston, and New York have condos. But buyers there would still go for homes.
Economic conditions, changes in demographics and social fabric, population changes, interest rates, policies of municipalities, the state and federal government, and vice versa. From the perspective of value appreciation, condos and homes are susceptible to influence from market trends. This can either raise their values or drop them based on various factors.
Any new developments plus pre-construction properties
Values of condos are also impacted by surrounding infrastructure plus any developments in progress or coming up. For instance, in Toronto, and Tokyo, condos near public transit or having skytrain stops near them catch a lot of good value.
Construction of new housing projects, any initiatives for improving neighborhoods, and urban revitalization projects can raise the values of condos. Unless and until state and federal governments regulate the prices, these condos will become quite expensive.
If condos are located near areas that are public housing schemes having higher rates of crime and delinquency among youth and adults, then those condos will fall in value. They might also get razed down.
What do the principles of supply and demand dictate?
Keeping in mind the principles of supply and demand, the influx of new condo developments can raise the competition between owners. This can have a bad effect on the resale values. However provided the long-term demand for housing held by various markets, it is unlikely that an inventory surplus can harm property owners. That however doesn’t suit all markets.
Proper urban development must be practiced. Toronto unfortunately is spreading as far as Hamilton, and bad urban development will lead to future issues. Lobbyists are vouching for Dutch-style housing development in the United States. That model won’t work due to different demographics and societal fabrics.
Another issue that buyers face is construction claims. Buyers are at times in desperate need of a home and they can find an attractive home or condo in a development that is attractive.
In the future, if a change in government puts the status of that property in jeopardy due to unethical practices involved in its construction, any environmental considerations or the like, then residents and property owners can sue both the government, municipalities, state governments and construction companies.
Conclusion
The construction of condos is a complex and hotly contested topic. Many cities and markets often are against their construction due to a myriad of concerns and hazards surrounding them. Toronto has come under fire for its construction as it is interfering with the economic development of other cities in Canada.
Proper urban development is needed. Its not just Canada. It is also other developed and developing countries. While the Dutch take pride in their frugality and small-sized homes, that housing won’t suit Italian cities and British municipalities.
Asian countries are facing a huge problem where cities are growing beyond limits. That growth needs to be curtailed to ensure it is sustainable else infrastructure issues will cripple their development.
