With Dallas poised to be one of the nation's hottest housing markets this year, finding your first home is becoming increasingly challenging. But a new analysis from Zillow identifies a key area of real estate that could afford big opportunities to those trying to break into the market for the first time.
In 2020, single-family home sales soared (both nationally and locally), but condo sales were left behind, the real estate authority says.
While single-family home inventory dropped, condo inventory recovered and rose, and the national median condo sale price rose just 7-8 percent year-over-year, compared to single-family home prices growing by 14 percent. Another bonus: condos generally are priced lower than single-family homes (in November, the median-priced U.S. condo sold for about $41,000 less than a home).
“Condos provide a unique opportunity for prospective buyers looking for a foot in the door, especially in markets where house prices have risen out of reach or where proximity to urban centers is a priority,” says Nicole Bachaud, economic data analyst at Zillow, in a release.
In Dallas-Fort Worth, condo inventory declined only slightly year-over-year, and local condos sold for far less than single-family homes. Here are the highlights of the DFW metro area's condo market, according to Zillow:
- In November, the median sale price for a condo was $206,150, $97,183 less than for a single-family home.
- Condo sale price was up 2.6 percent year-over-year in November, compared to 11.7 percent for a single-family home.
- In December, condo inventory was down only 2.1 percent year-over-year, while single-family home inventory dropped 32.8 percent.
Zillow's report shows a similar trend in other top Texas markets. In Houston, the median condo price was $149,633 in November, a significant $117,533 less than the price of a single-family home. And in red-hot Austin, condo inventory actually increased year-over-year by 20.8 percent in December, while single-family inventory decreased 35 percent.
“In scorching-hot markets like Austin, competition for single-family homes is extreme. Prices in desirable locations may feel like they are climbing out of reach for first-time homebuyers, but condos are often an affordable alternative to large single-family homes," Bachaud says.
"Their lower prices and shared amenities, like landscaping and roof maintenance (a few items that can carry shocking price tags for new homeowners) can help a first-time buyer ease into homeownership and begin to build equity. As home values rise over time, these buyers can trade up to something bigger in just a few years."
Bachaud notes that mortgage rates are at near historic lows, which can help ease monthly costs, but she reminds that condos typically come with HOA fees that should be considered when calculating monthly expenses. And, while "shared amenities like a pool or gym aren’t exactly popular during the pandemic, [they] should regain their luster as the virus is contained."