Key points:

1. In a real shortlist, a house and a condo generally differ in condition (age) and location. House size tends to be larger. However, for comparison, let’s normalize:
2. at the same location, for the same condition and (living area) size, houses offer more or less double the appreciation potential (due to land) and also x% higher psf due to yard, basement, attic, etc. (If total running cost is lower for a house, then additional y% psf.) These features command x% additional psf due to supply and demand. On the demand side, it seems most buyers value them more than I do, so it’s actually SILLY for me to pay that extra x% rather than 0.5x%.
   • For illustration, consider a home in a “happening place” with galleries, pubs and restaurants, so there’s 10% psf premium, but I want to avoid that premium
   • For illustration, homes in top school districts might command 50% psf premium, but the bachelor would avoid that premium
   • For illustration, homes close to transportation hubs command z% psf premium, but some drivers prefer privacy and space, so they should avoid paying the premium

— advantages of condo

• smaller price tag at the same location. See i always prefer small investments, esp. property
• size —- many smaller units like 1200 – 1500. Smaller price tag
• street cleanliness —- at the same standard, a house often costs more.
• age and condition —- most of the houses I have seen are low-end and very old wood structures
• maintenance —- see my post maintenance cost: landed^condo
  • water pipes, heating equipment, wiring … less to worry about
• often no stairs
• Smaller range of variations in condition, quality, value.. —- fewer variables; more boundaries set by the condo. I see this as an advantage not limitation. Most of the decent “houses” are luxury by my standard.
• renovation budget? —- probably more predictable and lower for condo. If a house of the same size requires the same renovation budget, then the house probably has a bigger price tag.
  • initial set-up cost —- and uncertainty thereof
• pool, gym, playground
• backyard? I see it less as an advantage, more as a burden, though kids may like it
• gated community, feels safer
• probably lower electricity, heating …
• often concrete, rather than wood

— advantages of independent houses

• easily collocate with tenant, either MFD or SFH with a back entrance.
• tax + HOA ? —- (60% sure) in Bayonne I feel overall house is better for the same size + location + condition. See my post pTax^condo fee
• no rental restrictions by committee
• for the same usable size,
  • appreciation based on land
  • expansion potential? I have seen many examples, but every house I have seen has too many rooms than I need.
  • lots of storage space like basement, attic, after you spend some money and time working on them? I won’t need so much space. They encourage a wrong life style
• wood is easier to modify with a contractor.
• condo mortgage approval is harder and mortgage rate could be higher (in theory) so resale could be harder.
• condition? often less luxury and more modest, leading to smaller psf price
• maintenance —- you have cheaper options
• less restrictions on re-layout? I won’t need it.
• often more parking space

Update — I need current income more than windfall!

Property investment can take a long time. If you can’t wait, then you may be disappointed, and it is better to focus on rental income in addition to appreciation.

1. I believe Alan Shi who said that capital appreciation is based on land size not square footage of the “superstructure”. Therefore it’s lower for non-landed properties, unless it’s a very urban location, where only high-rises are available — JC waterfront, NYC…
   1. Kenneth Lemus (bofa) also agreed that the appreciation is mostly due to the land
   2. However, the land appreciation can take decades, perhaps longer than your lifespan!
2. You can get a rough estimate of the 2 components in the valuation of a landed house by looking at the construction cost (perhaps 200k) vs the total price (perhaps 450k).
3. Alan pointed out the superstructure (like a car) can only lose value over time; but land appreciates, over a longer timeframe like 20Y. In most cases, the land appreciation dwarfs the superstructure depreciation. However, in some cases the land and the location depreciates!
4. I watched fixer upper. With a rundown landed property, you or next buyer could find contractors to tear down and rebuild [1] the “superstructure/上层建筑”, so the real thing that she bought is actually 1) location and 2) land size.

[1] at any budget you have

–Like in Singapore and HK (and Beijing, BGC, the Bridge…), high-rise condo can have capital appreciation too, if the location is such that only high-rise is possible. I have a tendency to emphasize and focus on condo appreciation because

• my investment experience in Beijing and south east Asia
• subconsciously I avoid driving (like I avoid fatty food or weddings), so I much prefer walkable communities with many shops and trains. Such locations tend to have no landed homes and only high-rise apartments.
• rental demand is much higher in those prime locations
• I don’t like to deal with repairs myself and rather pay a condo fee.

–In the cold light of day, I have to agree with Jack He that “In the same location, given the same unit size like 1500 sqf, a landed home always has higher value than an apartment“, because

1. the landed asset gives owner more freedom and control.
2. when it comes to repairs, you can do it quickly or slowly (delay just like condo), nicely or economically
3. basement, garage, yard space all have utility value. All derive from the lot size.

–Give up appreciation! Among the many personal preferences, I may have to pick one to let go. It may have to be appreciation.

In reality, if I buy in a SD or CC1 location, appreciation is likely, but within such a location, one unit might have comparatively lower appreciation potential, perhaps due to age, structure, or ethnic make-up etc.

Walk-up is less popular but perhaps OK.

Su (Taiwan) said “pick the ranch with higher appreciation potential, if you feel indifferent about everything else”. Big “if” in most cases! For example, houses have higher potential but requires more maintenance (See maintenance effort(I hate it): house^condo)

–My tentative conclusion — In terms of investment, given my limited budget, tiny rental condo in a popular location can be justified -vs- a landed home in a remote township [1]:

• condo could appreciate faster or less steadily than a remote landed house, over 15Y
• condo fee vs pTax? Not sure. Jack He said condo wins.
• rental income depends on location. A popular location may have more condos than houses.
• given my existing property investments (mostly in popular locations), I don’t have to sacrifice short term needs for long term investment returns, esp when the long term gain may not materialize in my lifetime.

[1] Bayonne landed house is a rare combination of landed investment near the city.

Lisa’s aunt (Mrs Huang) pointed out that in a down turn, a good location won’t drop much. I think when the market heats up, the good locations tend to rise faster — compare TPY vs Admiralty. I believe her when she said that you can improve the “superstructure” but you can’t improve the location. However, XR said his location didn’t appreciate much. West Windsor didn’t either.