We all know single family homes outperform condos and townhouses in Silicon Valley, right?
One of the things I like about real estate is that I work with some great clients who ask me really interesting questions. Recently, one of my clients asked me about appreciation rates for homes vs. condos. He had read somewhere that condos and townhouses actually outperformed single family homes for appreciation over recent years. No way, I thought to myself, everyone knows that single-family homes appreciate better!
But do they?
So, I set out to run the numbers. Personally, I’m a data nerd who majored in economics at UCSD and almost went on to get a Ph.D. in Econ from UCSB, but at the last second declined the offer and went into tech. Anyway, I like numbers, you get the idea.
I’ve looked at Santa Clara County as a whole, then San Mateo County and finally the city of Los Altos, my hometown, to see if local factors changed these numbers. As a caveat, the Bay Area is in its own little world of real estate and employment supply and demand compared to the rest of the country, so this may not apply to broader national markets.
I compared the average price per square foot during a two-year window from July 2010- July 2012 against the most recent two years to see how average price per square foot changed over time. (All data derived from MLS)
Here’s what the data show:
Santa Clara County, Appreciation between July 2010-2012 vs. 2016-2018
- Single Family Homes 108%
- Townhouses 120%
- Condos 148%
San Mateo County, Appreciation between July 2010-2012 vs. 2016-2018
- Single Family Homes 93%
- Townhouses 104%
- Condos 120%
City of Los Altos, Appreciation between July 2010-2012 vs. 2016-2018
- Single Family Homes 79%
- Townhouses 101%
- Condos 95%
The appreciation numbers are certainly impressive for all property types. In Santa Clara and San Mateo counties as a whole, condos performed the best in this window while in Los Altos, townhouses were the winner with condos coming in second. Coming in last in every case, were single family homes. Honestly, I was surprised.
So, if you’re on the sidelines thinking that you shouldn’t buy a condo or townhouse because they don’t appreciate as much, you might want to take a closer look at the data. If you want more detailed data for your particular city, please don’t hesitate to reach out, I love talking about this stuff.
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