Is THAT new-ish condo building an appreciator or a flat-liner?

If you bought a condo in a newish building about ten+/- years ago, your equity today can tell a tale of two markets. While we expect real estate to always go up, a number of buildings show a 50/50 split: half have appreciated, while the other half are trading at—or even below—their, say, 2016 prices. Today, I’m explaining why.

When a building is new, buyers pay what we call the “New Construction Premium.”

‘You’re paying for the builder’s warranty, the untouched finishes, the status of being the first to live there, and a tax abatement. But research on “Premium Decay” shows that after a decade, the “new car smell” is gone. The building is no longer the shiny new object; it’s now the resale property that has to compete on its own merits, not just its age.

So why is it a 50/50 split? The most common growth today is in “irreplaceable” assets—features like protected views that aren’t blocked by new construction or floor plans that remain functional as tastes change. The other 50%? Those are the units where the initial premium was simply too high for the market to absorb yet, or where rising HOA fees and 10-year maintenance cycles are putting pressure on the price.

This isn’t a reflection of the building’s desirability or quality—it just isn’t. It’s a reflection of the cycle. In major urban markets, we’ve seen that new construction condos can often take a full decade just to break even on their original purchase price, once you account for closing costs. At the 10-year mark, the market finally strips away the “new construction premium” and prices the unit based on its actual utility and comparable resale value.

If you’re an owner, you need to know which side of the 50/50 line you’re on before you list. If you’re a buyer, this reset could be seen as an opportunity—you’re essentially letting the previous owner pay the “newness tax” for you. I specialize in identifying which units in these established buildings are poised for their second growth spurt. Send me a message, and let’s look at the numbers for your specific floor plan.

Mark Wade
BHHS Fox and Roach Realtors®
CenterCityCondos.com
267.237.3404 | Mark@CenterCity.com