Condos to outpace Single Family homes for the 2nd year in a row. Atlanta, one of the strongest condo markets.

I was going through some news and blogs last week and noted this article, tonight another more abridged one.   I have added the links below.   I also noted the Regional Business Chronicle Papers tended to pick it up with their own local spin.   So I was thumbing through Dallas, Charlotte, Seattle (yes I own among others).   It basically states that in most urban markets in the US condominiums outpaced Single Family homes in terms of appreciation.  It lists the Atlanta market with condo appreciation near double the rate of single family homes.   Truthfully, given that there is a greater concentration of attached housing inside the perimeter, I am not surprised with this outcome.

OTP there remain many areas of South Atlanta that have not seen excessive amounts of appreciation.      With that factor driving down SFH rates of appreciation, coupled with most Condo properties being inside the perimeter, the growth in appreciation could just as easily be attributed to being in the the city (ITP) vs. suburban (OTP) for condos.       Indeed, so as much as I would love to jump up and down and proclaim the death of the single family homes, anyone driving through Brookhaven could just as quickly point out any number of small subdivisions which have appreciated with similar vigor.

I had, at one time,  forecast the rise of city living and thus condos/lofts/highrise appreciation based on peoples interest and ability to be closer and networked.    This trend is proving to be as strong, or perhaps even stronger then I could have anticipated.   If one stops and looks at technology, and specifically those Apps on your phone that use daily to function in society, most all of these are driven by their congruence and scale.    Where as when I graduated University, many “experts” concluded that between the internet and a Starbucks coffee in every suburb, the internet would further disseminate the masses to deeper and deeper suburbs.  Indeed, even while working in the fashion industry in NYC, I remember meetings both for Lord and Taylor and for JC Penney on new Malls opening further and further out, in Atlanta’s case, think Buford Mall.    The mantra, was in fact, if you build new subdivisions, have a Starbucks or two, and are close to a freeway they will come.   To some extent that worked, and the McMansion  had its day.    Increasingly, people are seeing that that day has long since passed.

Today, with the advent of the mobile handheld device, we are seeing freedoms and and a new level of efficiency never before witnessed.     The Smart phone is most important consumer device in past 100 years, if not EVER.    Whereas the former model was the internet pushing everyone further apart since the internet was democratic and a leveling the playing field.   For example, you could sell stuff on EBay from Montana.  You also had access to to the same information as those in the big city in real time via the internet.    The world would become a place where physical contact and relations would no longer be paramount.

Today it seems these mobile apps, and their efficiency lend themselves more towards urban centers, where the vast sum of people, skills and goods can easily be quantified, ranked, tracked and specialized to their finest analytical point.     The world wide web is now a game of localization, and unlike before, less democratic and perhaps arguably more specialized.   Owning a condo, or in many people’s case, leasing a condo or apartment in the city, gets them closer to the action.   In the past week I have read up on two large real estate deals in the REIT Mult-Family housing arena.    The Starwood REIT (STWD) is paying $5.4 billion dollars for 23,000 units (from EQR) in largely close-in (think areas similar to Perimeter or Sandy Springs) suburban prime markets.    At about $235k per apartment unit, that implies someone see further growth in rents and thus values to come.   Another REIT (IRET)  I have a decent size $25k position in, is paying over $200k a unit ($56 million for 276 units) for a development in St Paul MN (unemployment rate below 4%), both of these deals show that firstly the Mult-Family market is VERY rich.   That said, it also shows me that the condominium market from an income/cap rate perspective, or construction cost perspective are still undervalued at very lease comparatively.

As a landlord seeing enormous growth in demand and rents over the past few years I see all of this first hand.     Its not just the advantages of the city outweighing the suburbs, its as much about not being left behind, socially, economically or otherwise.     A greater and greater percentage of the masses are seeing this.   I expect this trend to fully continue.     Condos, a 2nd year in a row out pacing a largely Single Family Home market OTP?   Indeed, 2015, bank on it.    Please see the excerpts below from’s articles.

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