Why Condos Appreciate Less in Philadelphia

Smaller Buyer Pool

In general, condos fit a particular lifestyle. They’re great for someone who doesn’t need a ton of space such as a single buyer or a couple without kids. But traditionally, families shy away from condos due to the lack of storage that they typically have. Therefore, there is a smaller buyer pool that exists for condos versus a house. A house tends to appeal to more people including families, couples, and single buyers. A smaller buyer pool means that there is less competition for that type of property. Competition drives prices. Without competition, prices usually stay steady as opposed to increase. 

Competing Condos in the Same Building

Oftentimes, condo buildings are renovated around the same time. Therefore they tend to have very similar finishes, upgrades, etc. Let’s say you own unit #503 and list it for sale. And unit #303 goes up for sale around the same time. Given the unit numbers, these condos are most likely an identical layout and probably have a similar interior as well. When that happens, the only differentiating factor becomes price. And one unit owner might lower the price to attract more buyers. If the other unit sells at a lower price, that will become a new comp for the building. And the buyer for your unit will most likely not want to pay much over the unit that recently sold.

HOA fees

HOA fees typically cover common area maintenance, general building upkeep, insurance, amenities (pool, door person), snow removal etc. However, as a building ages and more maintenance is required, the higher the HOA fees will become. The more the HOA fee increases, the more buyers will be looking for a lower purchase price to offset their overall monthly payment. This will keep sale prices steady or cause them to decrease depending on how significant the HOA fees are.

Houses Are Affordable in Philadelphia

In New York City, your options are condos or extremely expensive brownstones. In Philadelphia, houses are generally affordable. Therefore, buyers will often opt for a house over a condo in Philadelphia since they are usually the same, if not less expensive than a condo once you factor in the HOA fee.