Are Condos Still a Good Buy in Today’s Market?

Condominiums have traditionally offered lower entry points than single-family homes, but 2025’s market presents unique considerations. Recent transactions at Faber Residence reflect broader market patterns, where condo prices have increased 8% year-over-year while single-family homes have jumped 12%. This raises the critical question: Do condos represent innovative buying opportunities right now, or should purchasers look elsewhere?

Today’s price advantage has widened

In 2023, the average condo sold for 24% less than the average single-family home. By early 2025, this difference widened to 32%, creating the most significant price differential in a decade. For buyers with budgets under $450,000, this growing gap often makes condos the only viable ownership option in desirable neighbourhoods.

This price advantage becomes particularly pronounced in high-demand areas. Analysis of comparable properties shows that a three-bedroom house typically costs 45-50% more than a three-bedroom condo in the same neighbourhood. This differential has created new opportunities for buyers who prioritize location over property type and yard space.

The current market also presents targeted buying opportunities in the luxury condo segment, where prices have appreciated just 3.5% over the past year compared to 9% for luxury single-family homes. This slower growth rate has created relative value in the high-end condo market not seen since 2017.

Interest rates hit condos differently than houses

The 2024-2025 interest rate environment impacts condo affordability in specific ways. While the average house payment has increased 38% since 2022, the average condo payment has increased only 29% due to lower purchase prices. This payment difference makes condos increasingly attractive for buyers whose budgets are stretched by higher borrowing costs.

However, today’s lending standards create additional hurdles specific to condo purchases. Lenders now require detailed condo association documentation and often impose 0.25-0.75% interest rate premiums on condos with association litigation, rental concentrations exceeding 35%, or reserve funding below 60% of recommended levels. These financing obstacles disproportionately affect mid-tier buildings.

The current market offers cash buyers exceptional negotiating leverage in the condo sector. Properties requiring conventional financing typically receive 3-5 offers, while comparable condos with FHA financing challenges often receive only 1-2 offers, creating opportunities for price concessions averaging 4-6% below asking price.

Current inventory levels favour buyers

Condo inventory has reached 4.2 months of supply as of April 2025, compared to just 2.8 months for single-family homes. This inventory difference represents a buyer’s market for condos, contrasted with a seller’s market for houses, creating negotiating leverage unavailable to house hunters.

New construction adds another dimension to today’s condo market. Developer incentives have reached unprecedented levels, with many offering 2-3% closing cost credits, free upgrades valued at $15,000-$25,000, or even first-year HOA payment coverage. These incentives effectively reduce purchase costs by 3-5% compared to resale units.

Importantly, this supply-demand imbalance varies dramatically by location and price point. Entry-level condos under $350,000 in prime locations maintain balanced market conditions with 2.5-3 months of inventory, while luxury units and those in less desirable areas face inventory levels exceeding 6 months of supply, creating significantly different negotiating environments.

Condos represent excellent buying opportunities in specific segments of today’s market while presenting significant risks in others. Entry-level units in well-established buildings with firm financial health offer relative affordability and appreciation potential that frequently exceeds single-family alternatives. By contrast, mid-range condos in buildings with marginal financial fundamentals face financing obstacles and potential future special assessments that make them questionable investments despite apparent price advantages.