Are Condos a Bad Investment? The Data Says Yes.
A data-driven analysis of why condos underperform every other residential property type — and the seven forces making it worse every year.
"Are condos a good investment?" is the wrong question. The right question is: "Compared to what?"
When you compare condos to single-family homes, townhomes, duplexes, or even renting and investing the difference, condos lose on nearly every metric that matters. Not by a little. By a lot.
Here is what the data actually shows.
Appreciation: Condos Lag Every Category
According to CoreLogic and Federal Housing Finance Agency data, single-family homes have outpaced condo appreciation by 1.5 to 2.5 percentage points per year over the past two decades. In some markets, the gap is wider.
Why? Several structural reasons:
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Land value. Single-family homes include land. Condos include a fractional interest in a depreciating structure sitting on shared land. Over time, land appreciates. Structures depreciate.
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Supply constraints. It is difficult to build new single-family homes in established neighborhoods. It is relatively easy to build new condo towers, adding supply that dilutes existing unit values.
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Buyer pool. When you sell a single-family home, your buyer pool includes families, investors, house-hackers, and owner-occupants. When you sell a condo, your buyer pool is immediately reduced by anyone who will not accept an HOA, cannot qualify under association rules, or is deterred by the reserve study.
The Carrying Cost Problem
Even if condos appreciated at the same rate as houses — and they do not — the carrying cost gap would still make them a worse investment.
A mortgage-free condo in Denver costs approximately $1,900 per month in carrying costs. A comparable single-family home in the same market, also mortgage-free, typically costs $800-1,100 per month. The difference: $800-1,100 per month, or $9,600-$13,200 per year.
Over a ten-year holding period, that carrying cost difference alone represents $96,000 to $132,000. That is money that builds zero equity in the condo scenario. It simply vanishes into HOA fees, insurance, special assessments, and compliance costs.
The Seven Forces Hit Condos Hardest
The forces detailed in The Condo Trap disproportionately affect condos compared to other property types:
Energy mandates primarily target large multifamily buildings. Your single-family home is almost certainly exempt from Energize Denver, Local Law 97, and BERDO. Your condo is not.
Special assessments are unique to condos and common-interest communities. Single-family homeowners control their own maintenance schedule and costs. Condo owners are bound by board decisions and majority votes.
Insurance crises hit condos with a multiplier effect. The building's master policy increases flow through to every unit owner via HOA fees. Then each owner's HO-6 policy increases independently. You get hit twice.
HOA fees are an expense that only condos carry. It is the single largest differentiator in carrying costs between condos and other property types, and it never goes down.
The Illusion of Lower Entry Cost
The primary argument for condos is affordability: they cost less to buy than a single-family home. This is true on the purchase price. It is false on the total cost of ownership.
Consider two scenarios in Denver:
Condo purchase: $350,000
- Monthly mortgage (30yr, 7%): $2,329
- Monthly carrying costs: $1,900
- Total monthly cost: $4,229
Single-family home: $500,000
- Monthly mortgage (30yr, 7%): $3,327
- Monthly carrying costs: $950
- Total monthly cost: $4,277
The monthly payments are nearly identical. But the single-family homeowner is building equity faster (larger portion of mortgage goes to principal on a lower-rate property), appreciating faster, and has no HOA risk, no special assessment risk, and no energy mandate compliance cost.
The condo buyer saves $150,000 on the purchase price and ends up paying almost the same amount monthly with worse financial outcomes on every dimension.
The Rental Alternative
Here is where it gets truly uncomfortable for condo advocates. In many markets, you can rent a comparable unit for less than the carrying costs alone — before adding a mortgage payment.
If a Denver condo's carrying cost is $1,900 per month and a comparable rental is $1,800 per month, the renter is paying less and can invest the difference. Over 20 years, investing $1,000 per month (the savings from not making a mortgage payment) at a 7% annual return produces roughly $520,000.
That is likely more than the condo's total appreciation over the same period.
When Condos Make Sense
There are narrow circumstances where condo ownership can be rational:
- You value the specific lifestyle (doorman, amenities, urban location) and are willing to pay the premium with full knowledge of the costs
- You are in a market with no energy mandates, stable insurance, well-funded reserves, and no metro district taxes (these markets are shrinking)
- You plan to hold for less than 5 years and are buying at a significant discount to comparable rentals
- The building's reserve study is fully funded with no deferred maintenance
But even in these cases, you should run the numbers against renting the same unit and investing the difference. In most cases, the math still favors renting.
The Bottom Line
Condos are not investments. They are consumption goods with a deed attached. The deed creates the illusion of wealth building. The carrying costs ensure the reality is wealth erosion.
The data does not support buying a condo as an investment in 2026. It has not supported it for years. The only thing that has changed is the magnitude of the gap — it is now wider than ever, and every structural force is pushing it wider still.
The Condo Trap quantifies all seven forces and introduces the Property Investability Score for evaluating any property. Get it on Amazon.