Q: I am contemplating purchasing a $200,000 condo down the (Jersey) Shore with my life partner. We both expect to retire in three years. I am very unhappy with the $383-per-month association fee, and I remember that condos used to be considered bad investments. What do you think?

A: You’re right – condos were once thought to be bad investments. But that has changed.

According to the National Association of Realtors, condo prices have gone up in the past three years at about double the rate of single-family homes. In 2004, for example, the median condo price rose by 17 percent, compared to 8.3 percent for single-family homes.

Condos tend to be cheaper than single-family homes of comparable size, and they generally are easier to maintain. So they appeal to baby boomers nearing retirement, says Lawrence Yun, NAR senior economist.

Also, they are riding the same price boom that single-family homes are, as Americans disappointed by stocks and bonds hunt for alternative investments.

Finally, Yun says, the condo market benefits from a tax-law change enacted in 1998. Previously, a homeowner who sold one property and bought another that was less expensive could be hit with a big tax bill on any profits made on the first property. The new law eliminated the penalty for “trading down” to cheaper properties such as condos.

Condos also are hot among the “echo boomers” – the boomers’ children, Yun says. Many are buying their first homes and finding single-family properties too expensive.

But will the oversized condo appreciation continue?

“We think it probably is not sustainable,” Yun says.

Most likely, he says, condos will appreciate at about the same rate as single-family homes – about 10 percent for 2005 but just 5 percent for 2006.

Of course, this is a nationwide forecast and results could be quite different in any specific area, such as the Jersey Shore.

As you know, there’s a lot of talk these days about whether the housing market is in a bubble that will burst, leaving people with homes worth less than they paid. No one knows for sure, but it seems likely that prices will fall in some superhot markets if interest rates rise, since higher rates would leave buyers with less money to spend.

I think some of the hot vacation markets may be especially vulnerable. Since people don’t have to have second homes, demand could dry up if money becomes tight.

On the other hand, there’s only a limited supply of space in prime vacation markets, and that should help hold prices up. Who knows which force will prevail?

For a buyer, I think the biggest issue is how long you expect to keep the property. If you’re going to retire there and expect to live another 30 years, it’s a home, not an investment. Temporary downturns won’t matter to you, and prices are almost sure to go up in the long run.

Many people buy vacation homes with plans to rent them out to cover expenses. That would be more risky than buying the condo as a primary residence, since there’s lots of competition for renters and lots of unexpected expenses in that business.

As for that nasty association fee … well, that’s a downside to condos. Remember, the fee typically pays for lawn mowing, snow shoveling, repairs and maintenance. You’d shoulder those by yourself with a single-family home, so the fee may not be as bad as it seems.

The association members – the condo owners – generally will want to keep the fee from rising too much. But if the majority decides to spend a lot of money to dress the place up, you’d be stuck with the fee increase even if you didn’t agree.

Best take a very close look at the association’s rules. And try to meet some of your prospective neighbors, as they’ll hold your future in their hands.