Are condos the new bargain property?

Single-family home sales have been driving the U.S. housing market of late, as homebuyers continue to leave populated cities behind and instead opt for space and privacy in the suburbs and rural areas.

But where does that leave the condo market?

According to a new report from Redfin, the desire for privacy is keeping a lid on condo prices, making that segment somewhat of a sleeper in terms of value.

The typical single-family home that sold in the U.S. this year was purchased for an average of 17.3% more ($58,000) than the typical condo. That’s up from 15.4% last year and represents the largest premium since at least 2013, when Redfin began recording this data.

 Sales data backs the trend — the median sale price of single-family homes surged 15.5% year over year in October, outpacing the condo market’s 9.9% growth.

Condos are also taking longer to sell—the typical condo spent 36 days on the market last month, compared with 27 days for the typical single-family home.

And less than a quarter (22.8%) of condos sold for more than their listing price, compared with 36.6% of single-family homes.

But condos have been catching up. According to Redfin, condo sales rose 22.7% in October from a year earlier, following a 50% plunge in the spring. That’s on par with the 23.3% growth in sales of single-family homes last month.

“Condos sales are rebounding because buyers are finding great deals,” said Redfin Chief Economist Daryl Fairweather in the report. “Families are fleeing cities in search of more space in the suburbs, which has presented an opportunity for millennials who are looking to become homeowners but don’t need extra bedrooms or a backyard.”

But extra space and a backyard come with a cost. The premium for an unattached home was the highest in Fort Lauderdale, where single-family homes sold for an average of 38.3% more than condos in October.

In Atlanta, single-family homes sold for an average of 21.6% more than condos in October, a premium of $60,441.

In the Seattle metro, where single-family homes are selling for a 17.9% premium, condos are taking several months to sell rather than the usual couple of weeks, according to local Redfin real estate agent Forrest Moody.

“Before the pandemic, it was challenging to find a condo in Seattle for less than $500,000, but now there are plenty selling for under $400,000,” Moody said in the report. “The people who are buying condos now are the people who couldn’t afford to buy one a couple of years ago because prices were so high,” he said. “I recently sold a condo that was within walking distance of Amazon’s headquarters for $510,000. Condos in that building normally go for $550,000 and up.”

What buyers see: A new study used eye-tracking hardware to find out

What are potential buyers really looking at when they’re at a showing? You might think you already know the answer to that, but a new study not only takes the guesswork out of it, the results might surprise you.

Using eye-tracking hardware, followed a number of potential buyers at three different properties to see what actually caught their attention. While the study was conducted in the U.K. — where the housing market is also experiencing a boom — it offers insight on what sellers anywhere should focus on to prepare a property for viewings.

  • HVAC/Radiators
  • With temperatures cooling, the experiment found that buyers went straight for the heat source when looking at a property, one reason why turning up the heat before a showing, especially when the weather is cold, is always a good idea.
  • The Great Outdoors
  • The eye-tracking experiment showed that buyers looked out into the yard as soon as they entered a room that backs onto it. Due to the pandemic, many buyers are looking for a home that offers private outdoor space.
  • Cabinet Doors
  • When walking around the kitchen, one of the first things buyers did was check the kitchen cabinets to see if they were well built and in good condition. Not only is it important that the cabinets are presentable and function well, the study noted that tidiness inside the cabinets matters — buyers were seen looking inside them during the experiment.
  • Oven
  • Besides the cabinets, the other thing potential buyers looked at was the oven, which they also, perhaps surprisingly, turned on to see if it worked. Therefore, it’s important to make sure the oven is clean before a showing.
  • Bed
  • The experiment showed that when potential buyers walked into the bedroom, the bed — perhaps surprisingly — was the first thing their eyes went to. What’s more, they were seen feeling it or sitting on it in the experiment, one reason to make sure it’s staged for optimal comfort.
  • Water Pressure
  • During the experiment, one of the first things potential buyers did was to turn on the water in both the kitchen and the bathroom to see what the pressure was like. Knowing that, it’s important to ensure they’re extra shiny and clear of limescale.
  • Smell
  • While a scent isn’t something you can physically see, the eye-tracking experiment used diffusers and candles in the homes and found that not only were they one of the first things potential buyers spotted, they also picked them up to smell them.
  • Lighting
  • Most Realtors know to turn on all the lights in a house before a showing, but they might want to consider telling their sellers to purchase new fixtures and lampshades. Buyers in the experiment were seen checking light switches and looking at ceiling lights as soon as they entered the room.
  • Accessories
  • They’re not buying the pillows, cushions or throws, but that’s exactly what buyers looked at when walking into the bedroom and the living room especially. “Buyers want to visualize themselves living in a property, and while their interior preference may differ, they still want to look at a room and think, ‘Wow, I could live here,’” said the study.