While the values of condominiums and other city-living homes are falling, their associated parking spots could be saving their owners’ hides – and not just because they do not have to walk very far to park their cars. Parking space values are on the rise, and in dense urban areas where parking is at a premium, the owners of these spots are experiencing something that feels almost unheard of in today’s real estate market: appreciation[1]. In Philadelphia, for example, one condo owner spent $100,000 on two parking spots near her home in 2007. Today, those spots are worth $150,000, or $75,000 each if she wished to sell just one. “My apartment is probably not quite worth what it was,” she says pragmatically, “[but] I’m a parking profiteer.”
The demand for parking spaces is fueled in large part because the option simply is not there to build more parking in many urban areas. And while many urban dwellers are happy to use their legs or mass transit for daily commutes, most retain a car for weekends and need somewhere convenient to put it. Construction restrictions on building parking lots in areas like Manhattan also contribute to the rising value of existing spaces[2].
So should we stop buying houses and start buying land in 200-square-foot plots? Maybe so. In some complexes, the associated parking alone goes for the price of a house in other areas of the country. As one developer puts it: “If you’re spending $4 million for a suite…$100,000 isn’t out of line for parking.”
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.
[1] http://realestate.msn.com/blogs/listedblogpost.aspx?post=9cc24fe9-a47c-4550-a5f2-e6c3ab3e9b20
[2] http://online.wsj.com/article/SB10001424053111904199404576538302924449120.html
