Resale Value of a Condo vs. a Detached House

Home appreciation depends on your market.
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Because your home is likely to be the largest investment you make in your life, it’s only reasonable to want to make sure you get the most bang for your buck when you place your pad on the market. A variety of factors impact real estate’s resale value, and there is no clear-cut rule to determine if a condo or a detached home will have a better resale value, although houses typically appreciate faster.

Historical Appreciation

The value of a detached house will usually increase faster than that of a condo. According to the Chicago Tribune, that's is because the demand for detached houses is greater. There are exceptions: In some markets -- including San Francisco -- the median selling price of condos increases faster than the median price of standalone houses.

Condition of Property

The condition of a home affects resale value. Condo associations handle much of the maintenance for their members. If you’re trying to decide between buying a detached house and buying a condo and you plan to hold onto your investment for a significant length of time, the relative certainty that the condo will receive routine maintenance -- such as paint, roof care and structural repair -- is a factor to consider.

A well managed condo association looks to maintain owners' equity in their investments and attends to routine maintenance while building up cash reserves to handle major repairs or emergencies. If your building’s condo association hasn’t been on the ball or frittered away its reserve fund, you’ll pay for its shortcomings when it comes time to sell.

Improvements and Subdivision

If you purchase a condo, your investment’s growth is more or less capped by growth in the market, but if you purchase a detached home, there’s more room for expansion. House owners may add improvements -- such as additional bedrooms and bathrooms -- that can significantly increase the value of their homes. Condos’ values aren’t impacted by increases in the value of the real estate they’re built upon, while standalone homes’ value increases as land becomes a hotter commodity. In some areas, lots may be subdivided and portions sold.

Rental Market

If you’re shopping for an investment property, resale value may be only one of the things you should consider. While the odds are that a house will appreciate better than a condo, in the short term you’ll see better returns on renting a condo over a house. Landlords who rent apartments can usually expect returns of 4 percent to 7 percent, while detached houses often bring profits of only 3 percent to 5 percent, according to Fox Business. Dig into rents and appreciation rates for your market, and average rents to determine if the higher returns for condo landlords outweigh property value increases.

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