I admit I have a problem. I bought my Seattle condo in the International District/Pioneer Square neighborhood when I had no clue about real estate back in late 2007. I thought I was getting a great deal, but we all know how that turned out. To make matters worse it was a new conversion. New conversions and construction are sold at a price premium. In other words, I paid a heck of a lot for this Seattle condo and prices have yet to fully catch up.
I found my dream home in Columbia City back in 2013. It’s an oddball with tons of space, but it’s perfect for us. I didn’t buy it when I had the chance because I hesitated. The problem: I didn’t want to sell my condo for a loss. Yes I had equity in my condo, and yes I was able to afford this new home, but to do so I would have to sell the condo, and I wouldn’t recover all the money I put into it by tens of thousands of dollars. As the economy continued to recover, prices in Columbia City started (and continue to) soar. A year and a half ago you couldn’t find homes that could sell for $500k on that block. These days smaller homes have sold for over $700k on the same block. Meanwhile my condo appreciated by maybe $30k.
Even though I knew the facts, I made an emotional decision. I wanted to avoid the feeling of losing money on a property. Now I’m priced out of the part of town that I really love.
The data compares the median prices of all condos sold in Seattle vs. built-on-lot single family homes in Seattle. First of all, prices for condos have yet to fully recuperate while single family homes surpassed the peak in 2007. Worse yet, the gap is widening. Holding onto that condo while you wait to get your money back means that you’ll be spending more on your new home than the money you’ll be “making” by waiting to sell. You will be priced out of your market if you hang on to that condo for too long.
Condos make sense for first-time buyers, those who want less maintenance responsibility, or those who want to live downtown. But if you feel the need to upgrade, don’t make the mistake of waiting for that condo to appreciate before making the move.