In this video, we review how condos have held up as a long term investment vs. Single Family housing. Many people think that single families are "a better" investment. Historical housing prices are easy to get, so we use that information to see who did best!
Transcript of Video Follows
Hello. Hello, how are you today? Today we're going to talk about whether or not condos are a good investment and whether or not they have been a good investment. I'm going to Dive Right In here.
Quick overview: Why are we going to talk about condos because condos today honestly are what most people do for starter housing, right? A lot of times if you talk about traditional starter housing, those would be ranches and capes built in the 40s and '50s, people have a hard time getting super excited about those options. They consider them older housing stock, even though many of them have been updated and they just generally have concerns. So they tend to say, “okay, well, if I want something younger, what are my options?” Usually that option means condo. But whenever we talk about condos, people are concerned, are they as good an investment as (single family) housing. So today, we're going to talk about whether or not that is the case.
For those of you who are new to this channel, I am Matt Heisler. I am the broker owner of Vanderbilt Properties here in Massachusetts, I have been selling real estate for 22. 23 years, something like that. I am not an attorney as I like to remind people that I'm not a lender. Today, I'm going to talk about a 10-year history, which is a pretty long snapshot but past performance doesn't predict future results. While I am optimistic on the future of housing in Massachusetts as an investment because here our economy is strong and continues to grow. However, at the end of the day. You know, if things go into reverse then, so will housing prices. It is a risk. It is a levered investment, anyone who buys a house should understand that. And they should make sure that they are being as careful with their money as they would be buying any stock or any other kind of investment. Okay.
For housing return, what I did is I looked at houses in Ashland. Ashland has a lot of condos, so it was a good place to look to do this kind of comparison. and I looked at homes that were built from 1980 to 2000, okay? And if I look at them, then the average sale price way back in 2014 was $485,000 - a bargain of a deal. Now if you want to look at this here, those same houses from 1980 to the year. They sold for 923 thousand dollars. So that is a heck of a return over the last 10 years. About 90 percent. So You know, that's great. And that's what we expect to see, right? Because these are houses, these are single family houses. And generally over a long time, we expect to see a robust Return. It’s a little surprising to see it be, you know, around seven, eight percent a year compounded. That's a lot. You know, longer term studies of housing, would only be, you know, maybe four, four and a half percent, but the last 10 years have been good ones. What can we say, right?
All right. So then we jump and we look at condos how did, the condos do in Ashland. So, again, I use the same years 2014 and 2024 I looked at Ashland condos that are sold on Captain Eames Street. Those of you who know, Ashland know that there are a ton of condos, On Captain Eames and the surrounding streets. So many in fact that I was able to get a robust enough data set in order to do this little video. So I thought it'd be a good place to look and it was! Back then, in 2014, $297 000. Would get to a condo down there today that same condo would be six hundred thousand dollars and the return is 104 percent. So for those of you who are to keep you from scrolling back to the last slide in the video, that means that the condos have actually returned uh a little bit better (than single family housing). An extra 10 better than the single families now. You know, I didn't use hundreds of data points for this. I use a couple of dozen. I think that the data is relatively accurate,, but basically the point here was to show condos aren't lagging when it comes to financial performance, okay? They are going up just as fast as houses. And in some cases they may be going up faster. And that's really the message here. If you have a concern about how, what whether or not a condo is a good financial investment relative to a house, it is basically the same investment, okay? It is housing.
Now, there are things that make it different. You shouldn't just jump in there and say, well, any condo or any house is going to be a good investment because that's not how it works. Okay? Any house is a combination (or condo), of both cosmetic things that need to be fixed, and they also have Capital Improvements that need to be done, AC units, and burners and windows and all those things and in a lot of ways, houses and condos are very much the same. You (still) have to assess whether or not those bathrooms need to be remodeled and the kitchens need to be redone and then make sure that the price that you're paying reflects the amount of work that needs to be done. Good news. There's lots of people out there that can help you with this because we look at lots and lots of property and we can figure out what the market rate is for stuff that needs extra work or extra money down the line.
People who are thinking about a condo or not thinking about a condo, let's talk about the reasons why condos work, They work because for the most part, the construction is relatively moderate. It's not easy to find condos that were built in the 1970s. So most of the time condos that are older than 1980 are actually converted apartment buildings, they were built as apartments and then converted legally into condos, but that's not really the same thing. Those are really, you know, sort of Apartments. Today's condos are basically attached housing, okay? I mean it's the modern day version of the duplex or a Triplex. They have more privacy than some luxury apartments. Obviously there are some really expensive apartments out there that have lots and lots of privacy, but for the most part, condos are going to beat your typical rental apartment.
The condos can be really great for folks because there's fewer maintenance issues. Let's face it: leaves, snow, Landscaping, The roof, at almost all complexes, these kinds of things are taken care of by the managing company and a professional management company. Are they a pain in the neck? Sure sometimes. But at the end of the day, they tend to get this stuff done with very little effort on the part of the owner. Of course, the whole reason we're having this discussion is the price.
Per square foot for housing for condos, it's considerably lower and condos typically are smaller than single family housing. So in the example that I had the average house was like 2,700 square feet in the average condo was 2,000 square feet which is not too shabby. And again, as I mentioned it's sort of like starter housing. You're giving up some square footage and you're getting some some price discounts plus just on a dollars per square foot basis, condos are cheaper. And they should be because you have to pay a maintenance fee, but they are cheaper and ultimately that's what attracts people into that market. Usually, like I know the fees aren't aren't great. But about 70 of the fee, goes to the ongoing maintenance. Okay. It goes to leaves and snow and Landscaping and roof. Obviously, there are a lot of different complexes and there are a lot of exceptions to this. if you want to know how to find a cost efficient condo, make sure you reach out to me and we'll see if we can't help you find one because not all of them are cheap to run. About 30 percent of Your condo fee usually goes into the budget for Capital Improvements, things like roofs decks, those are pretty common things that occasionally need replacement and so everyone puts into the, into the fund for 25 30 years until those things need to be done, and if it happens to happen while you're there, then you're probably going to come out ahead on that deal because it's going to end up costing you less to do the roof of what you paid in. And if it doesn't happen, while he's there, well, That's just kind of how it goes.
But like I said earlier, not all condos are low risk and low maintenance even though they are a great product, I think that they're a great starter project product for a lot of people.It does make sense to evaluate them, especially today. I mean, they're just as complicated as houses and sometimes more. So even though over time, they've started to get more and more like housing. You still need to evaluate them. I mean, a lot of them have AC (units). AC is almost never covered as part of your maintenance fee so you don't want to walk into a condo and have to replace the AC, you know, like right off the bat, you want to make sure that you've had an inspection and you know that that's coming. Similarly, a lot of times, the windows and condominium associations, do need to be replaced. A lot of times, the owners are responsible for window and door replacement, that is an expensive thing to do. You want to make sure that it hasn't already been done and kitchens and bathrooms are expensive everywhere? If your unit was built in the 1980s and it hasn't been remodeled, it's probably looking like it needs to. So you shouldn't be paying the same amount that you would for a unit in the same complex that has been remodeled. And I think a lot of times people have a hard time assessing units inside the same complex, when the conditions can be quite a bit different, they tend to look at the prices and say, well if someone paid this for this, then I should pay this for this, even though there could be a lot of money. In terms of the times of improvements that have been done for one unit versus another. So with all those things set, I hope you enjoyed this video. If you are thinking about condos love to help, there's a lot of great condo complexes in the area and I've seen most of them so I can help have a good one.
