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© image100/Corbis

For a long time, the housing choice for the urban middle class has been clear: a condo in the city or a home in the 'burbs.

Now comes Option No. 3, a melding of the two if you will: single-family homes sold as condominiums. Typically packed in tight clusters close to a city, these hybrids offer an affordable alternative for those seeking both easy access to urban life and the feel of their own home.

"It looks like a house, it talks like a house, but legally it's a condo," says Mike Pattison, an industry lobbyist who bought a unit for himself outside Seattle. "When you invite people over you don't say, 'Come over to my condo.' You say, 'Come over to my house.'"

Nationally, the arrangement is rare. Trade organizations have yet to track the numbers, and their own experts claim to know little about the phenomenon. No one can even seem to agree on a name. Listings can be found under "single-family-detached condos," "free-standing condos," "detached condos," "ground condos," "land condos" and "air condos."

Own the building, not the lot
The basic format — you own the building but not the lot — has been around long enough. It's a sensible way to sell people a house on land they either can't own — that golf course in Connecticut or ski resort in Colorado — or would prefer not to maintain, like the sprawling grounds of that desirable Virginia retirement community.

What's your home worth?

What's catching on now is different: the detached condo as a legal avenue for building cluster housing in cities such as San Diego, Los Angeles and Seattle that are choked by sprawl. There, where growth-management plans promote high-density housing developments, experts say that the homes are in demand and that they are sure to become popular elsewhere.

"It just fits in," says Chris Morrow, senior vice president of Project Design Consultants in San Diego, citing the rising popularity of transit development, new urbanism and smart growth, which promote tighter suburbs in an effort to preserve open land and reduce driving. "It's a no-brainer for the developer, and for the consumer. The cities just have to catch up.

"We will definitely see more in the future. I don't even have to rub a crystal ball to say that."

Ownership arrangements vary
The specific legal arrangements vary by place and by state, so prospective buyers should read their documents closely. Ownership arrangements can look like one of the following:

  • A homeowner might own just the interior of the house, literally, through the carpet and first layer of paint only, with the wallboard, floorboards and exterior paint to be repaired — and governed — by the condominium association.
  • The homeowner might or might not own the land the structure sits on, and could be responsible for mowing his lawn either way. Monthly dues might exceed $300 and include use of a swimming pool or trails, or sit at $100 for private street-maintenance costs only.

"The actual form of ownership has very little to do with what the association is going to do in terms of services," says Steve Brumfield, assistant director of community associations for Toll Brothers, a nationwide luxury home builder.

Cost savings passed to consumers
A detached condo might be a small, two-bedroom cottage or row house, or a 2,400-square-foot luxury home, such as these Tuscan detached condos near the beach in Orange County, Calif.

What these high-density homes typically have in common is a lower price, passed along from the developer's reduced processing and land costs. Those Tuscans might sell for upward of $700,000, but the nearby subdivision equivalents could top $1 million.

Loretta Tabereaux bought a  two-story, 2,000-square-foot detached condo outside San Diego for $500,000 that would have cost her $600,000 in a traditional subdivision, or put her in a master planned community with double or triple the commute time. As it is, she's five minutes from the freeway and a quick walk from a trolley station. Her neighbors are 10 feet away, but she doesn't see them much. "Typically, to have a location like that, you would be in a really urban environment," she says. "But here you still have the sense of being in a single-family detached home."

In 2004, Pattison bought a  two-bedroom detached condo in a cluster outside Seattle for $170,000 as the only affordable way to get out of an apartment. A similar home in a subdivision would have cost him about $350,000 in Seattle or $280,000 where he is now, in Lake Stevens, 35 minutes north.

"It was the only entry-level housing I could qualify for," Pattison says. "And I couldn't be more thrilled with it."

Three years later, the condo was valued at $260,000. "For me, it was the best financial move I could have made in my life," he says.  

That 15% annual rate of return is in line with that for other housing types in the region, says Cheryl Lotz, a senior appraiser with PGP Valuation in Seattle. In many low-end markets, condominiums have appreciated more in the past few years than traditional homes.

Whether detached condos behave more like single-family homes or traditional condominiums in the resale market remains to be seen. But their appreciation is based on the same vacillating supply-and-demand functions that affect the rest of the housing market.

"They can do much better; they can do much worse. It's very difficult to make a blanket statement about it," says Jim Gaines, a research economist at the Real Estate Center at Texas A&M University.