Your Condo, Your Money Pit?

Your Condo, Your Money Pit?

Though condo values have been rising, they historically have been much more volatile than single-family home values. Worse, living in a condo can be maddeningly complex—and costly.

Something weird is happening with condominiums across the country. They're not only gaining value, but they're appreciating faster than single-family homes. Condo values rose more than 27% between 2000 and 2002, double the increase for regular housing. Incredibly, the median value of condos in the second quarter of 2003 ($163,500) -- is now just slightly below that of single-family homes ($168,400). This is a big deal. Condos have long been the unloved stepchild of the real-estate world. Typically, they've gained value more slowly in good times and lost value more quickly in recessions than other homes.

Does this mean that condos suddenly have become a great value? Hardly. Condos can make sense for some buyers, but they'll never replace single-family homes as the best way to invest your home-owning dollars. Condos simply have too many drawbacks, and too limited appeal, ever to be more than a second choice for most buyers. Here's what is behind condos' recent run-up in value, according to National Association of Realtors Senior Economist Lawrence Yun, and why I don't think the trend will last.

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