Condo vs. House: Before You Buy, You Must Read This

Condo vs. house: There are many reasons people choose one over the other — but which is right for you?

My wife, Ana, and I have owned and lived in seven houses and two condos in 15 years, and there were pros and cons at each.

A few years ago, we owned a condo in Naples, Florida. But I felt uneasy about the high dues, so we bought a house in North Port, Florida.

I hated all the yard work and maintenance. By the time I mowed the far side of the lawn, the grass had already grown longer where I started. So we bought a duplex in Florence, Colorado, and lived in one side for eight months, but that’s another story.

A few months ago, we arrived in Tucson, Arizona, where we bought a condo. It’s small, but it’s the best home we’ve had.

But back to the question: Should you buy a condo or a house?

I think most people should buy a house, even though I prefer a condo for now — but it really depends on your lifestyle and goals. To help you determine which is best for you, here are some of the benefits and drawbacks of each, along with some of our experiences.

Why You Should Buy a Condo

These are a few of the reasons people choose condos over houses.

Condos Cost Less

We paid $55,000 for our condo here in Tucson, and it came with new carpet, tile and paint. We did add a washer, refrigerator and some patio work for another $2,000 or so, and we paid a few hundred dollars in closing costs. But there’s no way we could have bought a comparable house for that price.

Recent pricing data from the National Association of Realtors shows a median sales price of $240,900 for single-family homes in the U.S. versus $225,100 for condos. But that includes a lot of luxury condos and masks the much bigger differences you’ll find in some communities. For example, the median house price in Tucson is $193,300 versus $118,800 for condos.

Here are few randomly chosen cities from around the country, with the median house price followed by the median condo price:

• Madison, Wisconsin: $254,700 vs. $173,800

• Reno, Nevada: $314,400 vs. $169,500

• Tampa, Florida: $205,000 vs. $134,900

• Colorado Springs, Colorado: $264,700 vs. $172,400

• Atlanta, Georgia: $191,500 vs. $168,800

• Syracuse, New York: $137,000 vs. $117,100

Of course, part of that difference can be attributed to the smaller size of many condos. That’s not necessarily a bad thing, though.

Condos Can Have Lower Monthly Expenses

The $390 monthly dues for our condo in Florida made it almost as expensive as a house, but if you shop wisely, you will find lower living costs in a condo. Now, our homeowners association dues are $145 per month and include water, sewer and garbage, as well as exterior maintenance and insurance. The insurance you do have to buy covers only from the interior walls inward (including contents), so it’s much cheaper than a typical homeowner policy.

In our last single-family house, water, sewer and garbage collection cost $105 monthly. The average cost of homeowner insurance in Arizona is about $58 per month, and we pay just $20 monthly, a savings of $38. Clearly, our total housing costs are pretty low, despite paying dues, and that’s before we even consider the lack of expenses for exterior maintenance or yard care.

In fact, our overall cost of living is lower here than it was in any of our houses.

We pay cash for our homes at this point in our lives, but if you finance your home, the biggest ongoing savings with a condo may be in your borrowing costs. When (if) you pay significantly less than you would have for a house, the mortgage payment on your condo will obviously be much lower.

Condos are Easier to Take Care of

We opted for a one-bedroom condo, and we love how quickly we can vacuum and clean the place. We would rather spend our time reading, writing or walking downtown than cleaning and maintaining a home.

It isn’t just the size that makes it easier, though. With a condo, you don’t ever paint or maintain the exterior. Management does that. There is no lawn to mow, no mailbox to replace and no shingles to repair. You just take care of the inside. Home maintenance is simply easier in a condo.

Amenities are Included

You may not be able to afford a house with a pool and hot tub, and who wants to clean and care for them anyhow? But with many condos, you get these and/or other amenities (exercise room, playground for the kids, tennis court) without additional cost or work. We’ve been in the hot tub and pool more than 20 times since we moved here a few months ago, and I’ll be using the basketball courts later today.

You Get a Better Location

My wife and I walked downtown for happy hour yesterday and took the bus home. Within walking distance, we have numerous parks, three grocery stores, our bank, 20 restaurants, a hardware store, shoe store, discount clothing store and much more. We never could have afforded a house so close to so much, which is perhaps the biggest reason we love our new home.

If location is important to you, and you find you can’t afford a house in your favorite neighborhood, check out the condos for sale.

Why You Shouldn’t Buy a Condo

Here are some reasons people hesitate about buying a condo when they consider the question of condo vs. house.

There Are More Rules and Restrictions

Our condo in Florida came with plenty of nitpicky rules. You couldn’t back your car into your parking spot or leave a pool towel out to dry on a chair on the patio. Our rules here seem more reasonable, although I think we were supposed to get approval before putting potted flowers in our fenced-in patio.

Know what the rules are before you buy a condo to avoid surprises. For example, we found that many condo complexes in Florida didn’t allow pickup trucks and had restrictive pet policies. You don’t want to move in and then discover you have to immediately sell your vehicle and put the dog on a diet so he conforms to the maximum weight allowed.

You Have Less Storage Space

With a small condo (ours is just 675 square feet), you have to organize your stuff more efficiently or just get rid of much of it (we did both). And if you think you’ll just add storage, read the rules first. Our HOA rules allow an outdoor shed of just 25 square feet.

You Don’t Have a Yard

I can’t imagine this as anything but a benefit, but some readers may love that big, green field of sweaty weekend work, and you won’t get it with a condo.

You Have Less Privacy

You’ll be much closer to your neighbors. In our Florida condo, Ana was particularly bothered by the torso-level window in the shower right next to where everyone walks between the buildings. The sound of high heels clicking on the tile floor above us was also annoying.

Our partial solution here in Tucson was to buy an end unit in a one-story complex. We share only one fairly soundproof wall with a neighbor, and the fenced patio has privacy screening.

You might pay a higher price for an end unit, but in our opinion, it’s worth a couple thousand dollars more for the added privacy. You might enjoy that privacy for years to come, and you’ll probably recoup the cost when you sell. The condos with the most privacy might also be farther from the pool, mailbox and parking, so you’ll get more exercise.

You Have to Pay Association Fees

We’ve seen condos with HOA dues as high as $750 per month. Fortunately, that’s not the norm, but even when dues are low, you need to look at the HOA budget and other financial documents. Big deficits and/or a lack of reserves suggest that dues could increase soon.

Don’t convince yourself that higher dues are worth it because of amenities, unless you’ll actually use them.

Calculate the value of the amenities based on your lifestyle. The hot tub and pool here are worth at least $25 per month to us, since we spent that much going to pools and hot springs before we bought this place. But most residents here never use these facilities, so the value to them is zero.

You May Have Special Assessments

Sometimes the dues the association collects are not sufficient for the necessary maintenance and other costs the association faces. In that case, the HOA may have to implement a special assessment, which can be an unpleasant surprise.

For example, a neighbor where we now live tells us there was an assessment of $150 last year to cover unexpected pool repairs. When we had the condo in Florida, the need to catch up on roof repairs led to a $600 special assessment for each owner.

Once the decision is made, there generally isn’t anything you can do but pay (usually, you’ll have a couple months before the deadline). This is why it’s important to look at the condo documents before you buy. Ideally, you want to see sufficient reserves to deal with unexpected problems — but even if these don’t exist, you’ll know to be prepared in case of a surprise.

Mortgage Rates May Be Higher

A condo mortgage may have an add-on charge of 0.75% of the loan amount. It’s usually rolled into the loan, effectively increasing your interest rate. However, there are several important things to consider here.

First, the extra charge is only added if you borrow more than 75% of the condo’s value. You may have planned on a down payment of 20% for a house to avoid mortgage insurance, so if you decide on a cheaper condo instead, you can probably afford a down payment of 25% to avoid the extra charge.

More importantly, if you’re borrowing substantially less for the condo than you would for the house, your payment is likely to be lower even if you pay the extra 0.75% for the condo loan, so don’t sweat it.

Finally, you can avoid the extra charge, even with a low down payment, by getting a Veterans Affairs or Federal Housing Administration loan. The only catch here is that the condo development must meet certain guidelines.

Why You Should Buy a House

For some people, a house is simply part of their American dream. Here are some other reasons people choose houses over condos.

Houses Have More Space

According to census statistics, the median size of new houses is 2,467 square feet, while for new condos, it’s 1,408 square feet. Bigger means more space for your stuff and the people living there. I wouldn’t want to cram a large family into a condo.

You Get to Have a Yard

You rarely get a personal yard with a condo, which is one reason some people prefer houses. While a yard does mean a lot of work, there is room to play and space for the dog to run, plus it helps with the next advantage.

You Have More Privacy

You’ll almost always have more privacy with a house versus a condo. You don’t share any walls with your neighbors, but also that yard puts even more distance between you. You can create even more privacy, too, thanks to the next advantage.

You Have More Control

Although a house might come with neighborhood association rules, in general, you have more control. You can add on to your home, put up a fence, own the vehicles you like and so on.

When you live in a condo, association rules affect every decision regarding the home. For example, the corner of the roof on our Florida condo was sagging and rotted, but 14 roof repairs were in line ahead of it, so it was going to be left that way for years. Had it been a house, we would have fixed it right away, but in this case, it wasn’t our decision to make.

Other potential freedoms that come with a house include being able to run a small business at home and rent out rooms, which is how I paid off my first mortgage.

If we ever own a house again, one big reason will be to have greater personal control over our home space and lifestyle.

Why You Shouldn’t Buy a House

Finally, here are some reasons you might want to avoid buying a house.

Houses Cost More Than Condos

NAR pricing data shows that houses cost more than condos just about everywhere. Sure, that’s partially due to size differences, but even if you want to go smaller, you may not have many options with houses. We couldn’t have found a decent 675-square-foot house (the size of our condo) around here, and if we did, it still would have cost more than the $55,000 we paid for our condo.

Houses Have Higher Initial Expenses

When you pay a higher price for a house, you also face higher one-time expenses like mortgage points and closing costs.

It also costs more to set up the household. For example, when we moved from our condo to a house in Florida, I had to buy a lawn mower, weed whacker, shovel, rake, branch cutter, ladder and many other tools that I never needed in our condo.

Houses Have Higher Regular Expenses

When you buy a bigger house instead of a condo and pay more for it, just about all of your ongoing expenses will be higher. That includes:

• Mortgage payment (a bigger loan = bigger payments)

• Insurance (higher value = higher insurance premiums)

• Taxes (higher value = bigger property tax bill)

• Maintenance (more things to maintain = higher costs)

• Heat (more space = higher cost to heat)

• Electricity (more room = more lights and devices = bigger bills)

• Water (more things to water = bigger water bills)

Houses are Much More Work

OK, I get it. Some people just love mowing the lawn, painting the garage and cleaning that black gunk out of the gutters. I don’t.

And if there is one thing our experiences have made clear, it is that houses are so much more work than condos. I would rather be doing work I get paid for — or just soaking in that hot tub.

Your Turn: Condo vs. house: Which do you prefer? Let us know in the comments below.

Steve Gillman is the author of “101 Weird Ways to Make Money” and creator of EveryWayToMakeMoney.com. He’s been a repo-man, walking stick carver, search engine evaluator, house flipper, tram driver, process server, mock juror, and roulette croupier, but of more than 100 ways he has made money, writing is his favorite (so far).