Condo prices soaring above traditional home prices

Renee Smith walks her dog at the Villas at Quarry's Edge

Renee Smith walks her dog at the Villas at Quarry's Edge

Renee Smith auctioned off her three-bedroom ranch house on a Friday and closed on a home in a villa development the following Monday. Both places are in upscale Sylvania Township.

But Ms. Smith's transition to condominium living came with a hefty premium.

"My house didn't sell for as much as I paid here," conceded the retired teacher, who plunked down $200,000 for a new unit in the Villas at Quarries Edge Development, off Centennial Road.

Across the nation, the price gap between stand-alone homes and condominiums and villas is narrowing -and in some cases disappearing. While condos generally are a less expensive alternative for first-time home buyers, they clearly aren't the sucker's bet they were once popularly assumed to be, experts say.

Renee Smith's condo has a fire place and sun room.

For the first time last year, median-priced condos and cooperatives nationally sold for more than traditional homes. The median price of condos was $193,600 compared with $185,200 for traditional homes.

Locally, in a development at least partly attributable to the age of Toledo's stock of houses, the gap is even wider. Through Sept. 13, median-priced condos sold for $141,000 in northwest Ohio, or 20 percent more than homes at $118,000, according to figures from the Toledo Board of Realtors.

The gap is actually smaller than in 2004, when a $145,000 median-priced condo sold for a 28 percent premium to single-family homes.

A big reason is that condos and villas are generally newer than tra-ditional homes in metro Toledo, where, according to the 2000 U.S. Census, half of homes were built before 1960 and a quarter were built before 1940.

Nationally, condo prices are increasing three times as fast as single-family homes, according to a study at the end of 2004 by the Joint Center for Housing Studies at Harvard University. That has prompted a building boom with developers boosting condo construction 50 percent in two years, the study found.

Demand is coming from younger buyers as well as empty-nesters looking to capitalize on skyrocketing housing values by trading down to smaller, lower-prices condos and pulling the equity out of family homes, said Rachel Drew, a research analyst at the center.

The reality in some high-priced markets is that many first-time buyers have been priced out of single-family homes and have turned to condos as an affordable alternative, she said.

That isn't the case in Toledo, where a median priced existing home last year was $113,500.

Here, however, single parents represent a growing market for condos, said sales agent Rachel Osnowitz.

"People are so busy raising their kids that they don't want to take time to do yard work and shovel the snow," said the agent, who is with Danberry Co. Realtors.

Despite the experience of Ms. Smith, who bought in Villas at Quarries Edge, new condos or villas can usually be purchased more cheaply than newer homes in Sylvania and other popular suburbs, she said.

Typical scenarios involve working mothers with teenage children who are house-hunting after selling the family place when their marriages dissolve. "They want their kids to finish high school in Sylvania, but can't afford a single-family house," Ms. Osnowitz said.

The sales agent, who is 55, has lived in condos for many years and prefers the freedom it gives her. "I can lock the door and go out of town and not worry about snow or grass," she said.

When many people hear the word condo, they think of the apartment-like condo conversion projects that once dominated the category locally.

But the term also includes "zero lot line" villa communities that are governed by homeowners associations. Unlike traditional condos, homes and the land under them are owned individually while surrounding property is held collectively.

The interiors of these homes are also often radically different than what people expect with granite counter tops, cathedral ceilings, wood floors, and master suites.

They have prices to match. Current listings include a villa on Old Post Road for $405,000, Citation Road for $465,000, and King's Hollow Court for $300,000.

The Northwoods subdivision, in Sylvania on land that was formerly part of a camp operated by the Boy Scouts, includes 75 high-end villas.

Developer Jim McGowan said he has had little trouble selling the lots, where the value of villas ranges from about $400,000 to $750,000.

Often, the homes in that and other villa developments Mr. McGowan has led are fetching more than buyers' home in traditional upscale areas along River Road and in Corey Woods.

"There used to be resistance," Mr. McGowan said. "People would say, 'This costs more than the home I'm in.' I don't see that any more at all. It's vaporized."

While the advancing age of the Baby Boom generation is most often cited as an explanation for the popularity of condominiums, the trend is actually being driven by several demographic factors, said Anthony Sanders, director of the Center for Real Estate Education and Research at the Ohio State University.

More singles are buying houses. More couples are either childless or opting for one child. For these people, "the economics of a three- to five-bedroom house is poor," Mr. Sanders said.

Despite the advantages, there are drawbacks to condominium living.

Homeowners associations often have broad authority to tax owners for renovations and improvements. Yet dealing with a noisy or troublesome neighbor isn't as easy as in an apartment complex where a landlord can bring eviction proceedings.

In many places where condos and villas have been overbuilt, Mr. Sanders predicts values won't hold over the long haul.

"As interest rates go up and the market gets saturated, we will see the condo-bubble bursting," he said.

Still, buyers like Ms. Smith of Quarries Edge, are happy.

Upgrades such as Corian countertops, tile floors, ceiling fans, a garage door opener, and a choice lot drove up the price of her unit, she said.

And she wasn't upset or surprised that the villa cost more than her house, which was built in 1953.

"I could have gotten a new house with land for $179,000, but it might not have been in Sylvania or somewhere else I wanted," she said.

"I have no regrets," she said.

Contact Gary Pakulski at:

gpakulski@theblade.com

or 419-724-6082.