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What's up with the Austin condo market?

Despite our ever-changing skyline, Austin is still very much a single-family home town. People want yards for their dogs and kids, and that vision of an "Austin" life doesn't usually include a balcony and elevator.

But as prices for single-family homes inch toward $1 million in Austin's central core, more buyers are taking a look at Austin's condo* market as an alternative option. So let's examine the condo market in Austin and how it's doing, and tackle some of the more common questions I get. Full disclosure: my husband and I decided to sell our single-family home next year and are buying a condo in a new building called Parkside at Mueller - we will have lovely views of the park!

*And let me be clear: I'm talking actual condos in a building, not detached condos with yards.

Are condos a bad investment?

One of the myths I regularly hear about condos is that they are a "bad" investment compared to single-family homes. This is not accurate. Historically, condos do not experience as much price appreciation as single-family homes in Austin. That doesn't mean there is zero price appreciation, but that the values rose more slowly over time versus single-family homes.

But let's see what the data shows; I think you will find the results really surprising! I know I did.

In Austin, the median value of a single-family home increased from $510,000 in December 2020 to $599,000 in December 2021, a 17.4 percent increase.
The median value of a condominium in Austin went from $353,250 in December 2020 to $452,250 in December 2021, a 28 percent increase. Which really flies in the face of what we're always told about condos and price appreciation.
Just in case those numbers are skewed by the amount of luxury condo inventory hitting our market, I ran the numbers in a specific ZIP code: 78704. The median value of a single-family home in December 2020 was $871,000 and by December 2021 the median value rose to $1.3 million, a 49 percent increase. The median value of a condominium in this same ZIP code went from $415,000 in December 2020 to $550,000 in December 2021, a nearly 33 percent increase.
Texas Realtors also notes a similar phenomenon in the Austin condo market, citing a 36 percent increase in prices in the Greater Austin area from May 2020 to June 2021.

My main conclusion from reviewing these numbers is: if you're interested in condo living, don't pay much mind to the whispers about it being a bad investment.

There certainly are some condo buildings in Austin that I would consider a bad investment, but the same is true for houses. If you aren't buying as an investor (which is a whole 'nother newsletter), then think about a condo vs. home decision as a lifestyle decision and not simply as an investment.

What are the benefits of condos?

If you plan on owner-occupying, condos are your ticket to a more maintenance free-lifestyle.

Your weekends won't be spent on yard work and instead on fun pursuits like going to the movies or hanging out by the pool. It's also easier to get to know your neighbors and build a community in a condo.

For out-of-town investors, condos are an appealing option because they tend to be more turnkey and require less attention. I think they make less sense for an investor who lives in Austin and can play an active role in managing their own properties.

Many condo buildings also come with fun amenities, such as pools and gyms, which are not available at many single-family home communities. Sometimes there are also building managers to help with packages and escorting visitors, so there is a layer of extra security.

Lastly, condos are typically built in really walkable areas, so living in a condo means restaurants and retail at your fingertips.

What are the negatives for buying a condo?

Condos come with HOA dues, which cover the maintenance of the building and the amenities and the salaries of any building employees.

HOA dues can range widely and vary depending on the size of the building and the size of your unit.

Typically HOA dues will run at least $200 a month, all the way up to thousands of dollars for a high-end luxury penthouse.

he other drawback to condos is the owner gives up control over maintenance decisions to the homeowner's association - which can impact not just your dues and special assessments but how attentive the board is about repairs and maintenance items.

And some people just aren't comfortable with the idea of living so close to their neighbors. This is Texas, after all! We are used to our wide open spaces and private property rights are sacred.

What about having pets or kids in a condo?

It's interesting to me that in Austin, it's rare to see families in condos. They exist, it's just uncommon.

In Manhattan, this is how everyone lives, but in Austin most parents want to have a single-family home with a private yard for their kids to roam without having to pack everyone up and head to a park.

Most condos in Austin accept this reality and don't really offer many amenities geared toward families with kids, with one exception being the Independent, which has an amenity space for children.

As a result, condos in Austin tend to attract a certain type of buyer: young people without kids (DINKS!), downsizing couples age 60+ who are empty nesters, second-home buyers and investors. Particularly in the luxury market you will see a high proportion of second-and-third-home buyers, some of whom own other homes in Austin!

Pets are a different story. Lots of people own dogs and cats in Austin condos and many buildings have amenities for dogs, like washing stations and dog run areas. Condo owners with dogs just adapt to walking their dogs twice a day, and knowing where all the good grassy spots are. I should state the obvious: most condo associations forbid exotic pets like pigs, so it's mostly traditional animals such as dogs, cats and fish.

How many condos are in Austin?

Answering this question is like answering that "how many M&Ms in the jar" question. Even though I track the condo market for a living I couldn't name every single one - there are easily over 100 in the Greater Austin area! That said, there are some good reports out there that track the downtown condo market in particular.

We're also starting to see much more new construction condo activity in 78704, 78702, 78722 and 78745. Reach out if you want a more extensive report on these areas, or are interested in knowing about new projects that might not appear in the MLS. I stay on top of each new condo announcement with an exhaustive spreadsheet.

Reach out with any questions. I love hearing from you.

Five Things To Read - Condo Edition

1. Are South Florida condos a ticking time bomb?

After the Surfside condo collapse, there is a lot of renewed interest and attention on the aging condos in the South Florida area. And questions about whether there should be heavier regulation of older condos, many of which were built in a developer heyday decades ago when building inspectors were overwhelmed and overlooked potential problems.