So you’re looking at listings and you see lots of different types of properties, all with different features and square footage. Should you buy a condo? Or should you buy a house? There are advantages and disadvantages to both.
One is close to downtown and has a pool. One is in the suburbs and has a fenced-in yard. It’s condo vs. house. Which one wins? How do you decide?
Let’s take a look at both types of housing and find out which might be better for you!
What is a house?
You may be asking yourself, What kind of dumb question is that? But for our purposes here, it’s good to define our terms. A house is a free-standing residence with four outer walls that are not connected to any other residential structure. It’s usually on a lot with a yard in the front and/or back, and the owner of the house also owns the land the house sits on and any other structures like a detached garage or in-law unit.
Although you’ll find row houses that are built side-to-side on small lots (often in densely populated cities), a more typical example is the suburban home on a big lot with a couple of trees and a large lawn to mow.
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What is a condo?
A condo (short for condominium) is more like an apartment you own. It’s in a shared building or a complex, and it’s usually much smaller in square footage than a house.
A condo board or homeowners association (HOA) owns and maintains the exterior of the building and all the common areas like parking garages, swimming pools, the clubhouse and maybe a gym. Different condo complexes have different stuff depending on their size and location.
Condos are very popular with first-time homebuyers, downsizers and investors. They’re typically less expensive than houses, but you do have to pay attention to those pesky HOA fees.
What are the costs of a condo or a house?
Okay, folks. It’s time to talk about money.
We know the cost of any piece of real estate is not limited to the listing price. You’ve also got homeowner’s insurance, property taxes, mortgage insurance (if your down payment is less than 20%) and possibly HOA fees.
A condo is usually less expensive than a free-standing house. Condos are much smaller in square footage, and maintenance is typically cheaper because you’re only responsible for the interior of your home. You don’t have to worry about landscaping, the roof or the exterior walls. The condo board or HOA covers those.
Oh, yes, condos typically charge HOA fees. This is one area where the costs of a condo can really shoot up. Keep in mind that the fewer amenities the condo complex has, the lower the HOA fees should be. Doormen, swimming pools, dog parks, gyms, parking garages, storage units and security all cost money. So if you don’t care about a pool or a gym, let your real estate agent know when you’re shopping around.
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And because you’re only responsible for the interior, homeowner’s insurance will cost a lot less than it does for a single-family house. The HOA often covers the insurance on the exterior. If the roof comes off, the HOA’s insurance should cover it. But if you try to fry a turkey that’s still frozen and it explodes and engulfs your kitchen in flames, you’d better hope you have good homeowner’s insurance.
Bottom line: Just make sure you understand all the costs associated with a condo before buying one.
A detached, single-family home is typically going to be more expensive than a condo for a number of reasons. First of all, as we mentioned, they’re bigger than condos. And when you own a house, you own the whole thing, inside and out.
Insurance is also more expensive for a house because you’re insuring the whole house and the property it sits on. You’ll also be responsible for things like landscaping and maintaining gutters and the roof. Do you like mowing the lawn? Great! If not, you may have to pay someone to do it, and you’ll need to factor that into your monthly expenses.
Cities and counties don’t normally tax condos and houses differently. Property is property, and they assess it that way. But if you own a house, you probably own a lot more property, so expect your property taxes to be higher.
What are the pros and cons of living in a condo or a house?
Unlike comparing condos and townhomes, which is very much an apples-to-apples comparison, the differences between condo living and house living are much more significant. Condos are smaller and part of a community. Houses are in neighborhoods, and many new houses are built as part of planned developments that may also come with HOAs.(1) But your four walls and your yard are your own.
Condos are smaller and part of a community. Houses are in neighborhoods, and many new houses are built as part of planned developments that may also come with HOAs.(1) But your four walls and your yard are your own.
Here are some big things to consider:
1. Condo living is community living.
You’re naturally going to be a lot closer to your neighbors when you share walls. You’ll also have more opportunities to interact with your neighbors in the communal mail room, shared parking lot, club house and swimming pool area and at periodic meetings of the HOA or condo board.
This can be a blessing if the community is well-managed and you like your neighbors. But if you tend to be a hermit or your condo is full of “Nosy Rosies” who are all up in your business every time you step out of your door, condo living can be a curse.
Pro: There are lots of chances to make friends.
Con: You may not want to be friends with these people.
2. You’ll have a lot more privacy in a house.
Looking to avoid Mr. Sidcup—the guy who’s always yelling about the color of your drapes? When you own a house, you can put up a No Trespassing sign in your yard and turn the dogs loose when you see this jerk coming.
Depending on the neighborhood, the size of your lot and, course, the size of your house, you can have a lot of privacy in a single-family home. But this increased privacy could come at an increased cost as you pay for the luxury of owning those four walls.
Then again, some people are social and there could be such a thing as too much privacy. Good neighbors can be a blessing. For example, if you’re leaving town and need someone to keep an eye on your place, you’ll have more peace of mind knowing your neighbors are watching. You just have to balance what’s important to you.
Pro: You don’t have to interact with the HOA police on a daily basis.
Con: You have to handle a lot of stand-alone issues yourself.
3. Your HOA’s rule is the law of the land in a condo.
Remember weird Mr. Sidcup? The Barney Fife of the HOA police who yells about the drapes? Condo HOAs actually do have rules about what color your curtains should be. You’ll want to read the condo covenant and get intimately familiar with the rules and regulations or you could find yourself answering to the board.
As a condo owner, a good HOA will make your life easier and help increase the value of your investment. A poorly run HOA can do the opposite. You need to do your research before buying a condo. Make sure the units are mostly occupied by owners. If there are too many renters, it means you’ll be trying to own a home in a sea of temporary occupants who don’t have any real skin in the game when it comes to taking care of the common areas.
Now, you may run into an HOA if you buy a house in a planned community. They are typically less authoritarian (although there may be rules about what type of fencing or style of mailbox you can have in front of your house), and they mainly exist to maintain things like community playgrounds and pools. Ask your real estate agent about this before you buy. The HOA fees for a housing development are usually a lot lower than condo HOAs except in very high-end neighborhoods.
Pro: A good HOA is a pleasure to work with and makes condo ownership a breeze.
Con: A bad HOA will make you wish you’d bought somewhere else.
Are you ready to buy a condo or a house?
If you’re ready to buy a home of your own, whether it’s a condo or a house, don’t go it alone! Talk to a real estate agent who’s an expert in your local market and will find you the perfect home at the perfect price.
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