Conventional wisdom dictates that single-family homes appreciate more quickly than condos, but that long-held belief may be gone with the wind.

According to research from Trulia, the median appreciation rates of condos has surpassed those of single-family homes over the last five years, from February 2012 to the most recent February.

The Trulia report indicated that median condo values rose 38.4 percent, compared to the median single-family home values, which appreciated by 27.9 percent.

In general terms, single-family homes have tended to appreciate more than condos. A key reason for this is that many people can’t envision paying a higher sales price for a property where they have to pay condo fees.

However, as single-family homes in some regions are selling for less, it could be an opportunity to get an asset that will appreciate more quickly by purchasing a condo.

For investors willing to put up the money for multiple units, the return on investment could be huge. If they are willing to purchase several condos, the seller may agree to reduce the asking prices on individual units for a buyer who takes several units. The buyer can then turn around and sell off the units individually for a profit.

If an investor purchases all of the condos in a small unit – say three or four condos – they can avoid condo fees by essentially becoming the association themselves.

One contributing factor to higher home values in some regions is tight inventory, according to David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. This ultimately is impacting affordability.

“There are still relatively few existing homes listed for sale and the small 3.8-month supply is supporting the recent price increases,” he said in the statement. “Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable to lower mortgage rates.”

A prime example is Atlanta’s Tony Inman Park neighborhood, where condo values have increased 117 percent over the last six years. Another contributing factor: Virtually no new condo supply has been recently added.

In Seattle, the first quarter of 2017 was torrid, for condo buyers and sellers, with low inventory, increasing demand and rising values. The city has seen median sales prices of condos during the first quarter of this year outpacing the same period a year ago by more than 15 percent, hitting $435,500.

Similar stories can be seen in markets across the country.
Even in the Bay area, where S&P CoreLogic Case-Shiller found condo values had slid 0.2 percent in December, they remain 3.2 percent higher than the same period in 2016. They also are 20.8 percent above their previous high-water mark in October 2005.