Here in the Upper Valley, there are some problems with condos aside from the personal difficulties described in my last post.  It's these problems that are the most profound and hardest to cure and these are also the problems that, in the end, have the biggest impact on buyers and sellers.

• Ugly Problem # 1 - As a function of total housing units in this area, condos are a smaller than average percentage of the housing market. In larger metropolitan areas, condos, co-ops, and other common ownership arrangements are, in some areas, the norm and in some areas, at least equal in market size to single family residences. Bottom line - there just aren't very many condos in the Upper Valley. The reasons for this are both complex and simple. The simple reason is that the Upper Valley's municipal mentality toward large housing projects is not very favorable. The more complicated reason is that there is a kind of cultural bias against condos because, by their very nature, they are viewed as the antithesis of what makes this area a special and desirable place to live.

• Ugly Problem # 2 - Partially because of Ugly Problem # 1 and partially because of a lack of economies of scale associated with building larger common interest projects, brand new condos are expensive for what you get and offer few, if any, of the happy side benefits of community life, i.e. golf courses, swimming pools, etc. The result is that many buyers pay too much.
  

• Ugly Problem # 3 - Mostly because of Ugly Problem # 1 combined with Ugly Problem #2, condos, particularly attached units, do not hold their value. People who buy brand new units from the developer, unless they buy and hold for the long term (20 years or so), most times have trouble even recouping their original investment. Further, when "hard times" arrive in the real estate market, I usually say that "condos are the last in and the first out." What I mean is that condos are the last housing units to appreciate in value and the first ones to depreciate when the market turns.

• Ugly Problem # 4 - The "last in, first out" syndrome usually winds up as a big bonus for residential investors and a bad situation for condo owners. When the market turns and owners can't sell their units for what they have into them, many think, "I'll just rent my unit until the market rebounds." The fly in the ointment is that when a large number of would-be sellers decide to rent, the glut of new rentals drives rents down and makes the problem worse. If the "hard times" persist, it can lead to foreclosures and auctions where block investors come in and buy up units at a deep discount and because they bought them on the cheap, are able to hold them for rental at whatever they can get, further aggravating the situation. Block ownership also changes the owner occupancy ratio making units harder to finance and things get even worse. And so on until the next boom, if it comes.

Of course, the above doesn't apply to every condo project, all of the time, but represents a disturbing trend that I have observed over the last 25 years in the Upper Valley real estate market.  What does one do? I don't know, but "forewarned is forearmed".