Profile picture for laylow1198

I am a first time home buyer and am trying to find out whether a condo or an actual house be better?

  • August 02 2010 - US
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Answers (27)

Location + Lifestyle? =
Do you mind spending free time mowing & shoveling?
Is the condo "stand-alone" or apartment style? 
How much privacy do you (need) or want? 
  • September 29 2010
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Both have their benefits. Condos can be a good investment in this market. I would strongly suggest looking into the financial stability of the Home Owners Association prior to investing in a condo. With the current market filled with short sales and foreclosures many HOAs are in financial trouble which could result in higher fees and cash calls down the road.

I would also advise you to talk to your Realtor or Mortgage Broker and find if financing is available for purchasing the Condo you are interested in. In the Florida market many of our Condos are only available as cash transactions which has further deteriorated the price.

With low interested rates available for qualified buyers a single family home might be the better option if the financing is not available for the condos.
  • September 29 2010
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Profile picture for DanaDuzDenver
Towhomes or condos have many more limitations AND a CIC (Common Interest Community) fee to be paid on top of your mortgage.  One thing to consider is lifestyle.  Do you enjoy taking care of a yard?  Do you only want to spend your free time skiing or playing tennis?  Do you mind sharing common walls with your neighbors?  Is it important to you to have enough windows for air and light?  The list goes on and on!  If you start out with a condo or townhome and discover you need additional space, your only choice is to sell it and move to new space.  With a single family residence, you have the choice of adding onto your existing space. 
  • September 28 2010
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If you can afford the down-payment then I would recommend a condo, but only if you are looking for a place that does not need maintenance.

If you are the type of person that wants to put their own touch on a home, get the house. However, especially for first time home buyers there are many expenses in owning a home that people don't realize. Have a contractor enter the home and see what he thinks. If it needs a ton of repairs, it obviously wont be worth it.

Personally, I prefer the house because I enjoy doing the work, and can get it done for a reasonable price. So, it all depends on you!

  • September 28 2010
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I think it all depends upon your current lifestyle, future plans and your wallet.

Condo's (at least in Florida) are super cheap if you have cash, Banks are currently not interested in financing and the few complexs that are financable need 30% down.  Homes you can still get FHA 3.5% down.

Most buyer prefer a single family home, so the condo would be a slower resale. 

Erika in Orlando
  • September 27 2010
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If you don't like rules, do not buy a condo. Some boards are very nit picky. Be sure to read the condo docs and talk with the residents about how they feel. Condos can have escalating costs due to annual dues increases and special assessments, so be sure to look over their budget to see where your money is spent and if there is adequate reserves. If you don't mind not being able to go outside and putter and abhor outside work, a condo is probably a good fit. Many condos have amenities that you may not get in a single family home. Lastly be sure to check the occupancy % of owners to renters/investors. Depending on that #, it may cost you considerably more upfront to get into a condo. Good luck in your choice.
  • September 27 2010
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An important question to ask is , how long will you live there. If you plan to move in a few years then you might as well buy a home. Condos are harder to sell in my opinion and do not seem to appreciate as well.
  • September 24 2010
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Well, I guess that all depends on the individual. For some buyers, a condo is a great alternative to owning a house because they don't want to deal with the maintenance that is invloved. Also, often times condos are priced lower than houses in the same area, so you can get more 'bang for your buck'... Keep in mind however, that you will be paying monthly condo fees, which in my area can range anywhere from $100-$500 (and up) a month. So, while you may end up paying less per sq ft in a condo vs. a house, you need to take into consideration the extra monthly expense for the monthly dues.

You need to consider your lifestyle and which would suit you best to make the best decision for you.

Best of luck!

  • September 24 2010
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Profile picture for Bethe Frazer

A home, either a single family or townhome, is a great investment. The choice is really which fits best into your life style at the given time and into your budget.  Given certain areas, a home may be more money on the list price, but when you add in the maintenance fees on some townhomes it can be a wash.    You can ask your local realtor to see if there is any data that townhomes or single family homes sell better then one or the other in the areas you are looking.  Real estate itself over the long term is an excellent investment, so as long as you are taking location into consideration first, you will do well with probably either, so buy whay you like and congratulations on possible home ownership!

  • September 15 2010
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Many people looking at condos want either no maintenance or a home that is not too expensive.  This is usually the first time home buyer or an older buyer.

Condo's and Townhome's fit this bill perfectly.  However, to get a low downpayment loan in todays world that means FHA.  The Federal Housing Association has restrictions on these loans.  They require that the development be registered on the FHA list.  They require that there be more then 51% owner occupied units along with other requirements.

What does this means to you as a buyer?  If the development doesn't qualify you might not have enough money saved to put 20% down on a conventional loan.  If you do qualify for your new home and then a few years down the road want to move into a different place, the owner occupancy may have changed and your perspective buyer can't qualify for that low downpayment loan.  This makes the condo more difficult to sell to the target buyers.

Condo/Townhome living is wonderful but just realize that when you get ready to sell you may need to adjust the price depending on your individual development and how quickly you need to find the right buyer.
  • September 15 2010
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There isn't a one size fits all answer, so you need to think about what you prefer to live in, and trade off the pluses and the minuses of each.

But to dispel a few myths:

Homes appreciate more than condos. UNLIKELY. Homes sell at a premium to condos, but that is unlikely to ever change too much long term. If condos in an area are 30% cheaper than homes, they are likely to maintain that spread over fairly long terms. It isn't going to be the case that 20 years later the homes are 200% more than the condos, I refer anyone who doesn't understand this to the principle of economic substitution for reference.
  • September 03 2010
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Condos offer the convenience of having someone else see to the maintenance of the exterior of the unit. Keep in mind that monthly "condo fees" can be very expensive. You may find yourself paying for a swimming pool, tennis courts, playgrounds, and a community building that you never use. You may also be assessed for the repaving of the streets and other major projects. You will be at the mercy of a "condo board" that oversees the management of the common property owned by the condo association. If you decide to buy a condo, make sure you are comfortable with the fees.

A traditional single family residence will probably give you the best return on your investment depending on where you are located. The only downside is that you are responsible for all exterior maintenance including lawn care. As long as you do not get carried away with landscaping, hiring a lawn care service is fairly cheap if you don't want to cut grass. A house with vinyl siding or other maintenance free exterior will eliminate the need to paint in the future.

It really comes down to what you want, but if it were me, I would go for a single family because of the equity you can build, and options down the road for renting, renovating, etc.

  • September 03 2010
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Profile picture for HomeOwner1st
@ACC

The beauty of the newer condos is that they are built to be more sound proof & energy efficient. I never hear my neighbors!
  • August 11 2010
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IMHO, a single family residence is almost always better. Easier and less costly to finance and refinance or sell at a later date. 

No Board of directors handing down rules or maybe preventing a sale or refinance due to litigation. What you usually will spend for HOA dues will easily pay for a gardener and build a slush fund for unexpected household repairs.

Also, no sharing of common walls (noise) and a full size back yard to enjoy as you wish. .... Happy funding, Rudi
  • August 11 2010
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Profile picture for HomeOwner1st
Hello, I just purchased my first home exactly one year ago. And I initially only looked at single family homes. After lots of consideration the maintenance for me as a single person made SFH unreasonable. But I did see quite a few, at least 20, FHA approved condos.

In the end I purchased a brand new condo in a development on the outskirts of downtown San Jose. Plus you can live in a SFH and still have bad neighbors! And I don't have to worry about fixing anything on the interior for years!

I went through a San Jose loan program that made buying a brand new home completely affordable. I love the fact that it's my home but with less headache, especially because as a homeowner there are a lot more expenses besides your mortgage & HOA.

Finally, if you've reached a point where you are really ready to buy a home, go for it! The housing market is cyclical and there will always be an upswing for every downswing... especially in the Bay Area! 

Good luck!

  • August 11 2010
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It all depends on you and what you really desire.  Is this just an investment or will this be your home to live in and enjoy.
A Single Family property will out perform a condo for investment, but it will could also require maintenance and repairs plus of course upkeep. A lot of my first time home buyers start out thinking that they want to purchase a single family home but soon realize that the type of home they can afford vs a condo leave them with too much maintenance and they typically realize that by buying a detached home is more than what they had bargained for.

I hope that I was able to shed some light on your situation.
I have a [link removed by moderator] site that is still under construction, but you might want to take a look at it to shed some light on buying your first home.

[link removed by moderator]
  • August 11 2010
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There are so many things for you to consider.  Yes!  It is true that most of the time a single family home will build equity faster than a condo.  However, yes, there will be yard maintenance with a house vs. a condo.  But I believe a few of my collegues touched on this as well...

It matters what you want and what will work for you as a buyer.  Of course that is #1.  But dependent upon what type of loan you will use for your purchase is going to make a HUGE difference.  FHA approved condo complexes are few and far between.  If you plan to use FHA financing, and you buy a condo, you will have a sparce amount of choice and fierce competition out there as you make offers to purchase. 

Another thing to keep in mind is even a single family home may not be able to qualify for FHA financing.  An inspection/appraisal is done and FHA standards have to be met for health and safety.  If things are found in the home that don't meet those standards, they must be repaired before your lender will allow you to purchase that home.  The same is true of a condo.  This inspection is meant to benefit the buyer of course and it does benefit you.  Just keep all of this in mind and talk with your lender about this so you know what to look out for when you are in the market with your agent. 
  • August 03 2010
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The only correct answer is what suits you the best. Don't take any advice that is NOT tailored to YOUR individual needs!
  • August 03 2010
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Condo or SFR? I would also echo some of the sentiment on do you want to mow and do upkeep yourself or pay association fees to do the work for you.

I have owned both. A positive for both...SFR you make all of the decisions as to what gets fixed and by whom. A condo, you make decisions as to the inside for many of them and no outside upkeep.

Negative...SFR you do all the work. A condo association is good only if reliable and reasonable people are elected to Board Of Directors.

As a condo owner, you have 1/? part ownership in the whole association. Be involved! Get involved! Stay involved!
  • August 03 2010
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Profile picture for SoCal Engr
Add notes...

SFRs may also have HOAs and associated fees. HOAs are not unique to condos, although condos will have HOAs.

In addition to the condo, there is also the townhouse. Difference is that a condo will have shared horizontal surfaces (i.e., ceilings/floors) where a townhouse has shared vertical surfaces (i.e., walls).

Townhouse is also most likely to come with an HOA/fees.

All three, SFR-Condo-Townhouse, are subject to gains/losses in equity. While a generalization would put them in the order SFR-Townhouse-Condo, this is also subject to location, build quality, and demand.

Question to really ask is - Why buy now? Many areas are still seeing downward market pressure. If I had money-in-hand, I'd wait until I see the bottom (i.e., be ready to move on the bounce) or until there was a location I couldn't pass up.
  • August 03 2010
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Profile picture for sunnyview
Condos build equity at a slower rate and depreciate more over time as the condo complex ages. Something to consider.
  • August 03 2010
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Profile picture for cneure
What do you want?  Do you like yard work and privacy?  Would you rather pay others to take care of a lot of the maintenance and live in a more community atmosphere?  What is the price difference for each option in your area.  Both will give you a purchase money interest tax deduction, both build equity, which are the biggest financial differences between renting and buying.
  • August 03 2010
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Profile picture for Eric Booth
If you can afford a single family house then that is the route to go.  Single family houses will appreciate at a greater rate and they are easier to get loans on.
  • August 03 2010
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Profile picture for sunnyview
I prefer a single family house. They appreciate faster, they are easier to sell, they have no condo fees and they can generally be rented without restrictions. Condos have been significantly overbuilt in many areas and their values are not stable right now. The current issue with financing makes that problem even worse. My vote is for a house.
  • August 03 2010
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Although this is a preference, keep in mind that condos have monthly fees as well as taxes. In todays market a small house could have the same amount of taxes as a condo but without the fees.
Condo's don't afford much in the way of privacy, but homes take work to maintain.
Happy hunting!
  • August 03 2010
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Financing on condos is still fairly easy but there are a lot of changes that are occurring or will occur in the future for the financing of condos.  You should be aware of the changes even if they do not impact you at the time of purchase.  Why?  Because when you sell you need to have buyers able to obtain financing to purchase the condo down the road.

FHA passed some changes on Dec 7 to financing condos with FHA financing.  Most of the changes were positive changes that allowed for easier approval of entire condo communities but there was one change that could impact buyers down the road.  That change was the limitation of the percentage of FHA financing within a condo community.  Although FHA limited the percentage of FHA financed units within a condo community to 30% they also issues a waiver that allows lenders to go to 100%.  The problem with this waiver is that FHA can remove the waiver at any moment and limit all condos to 30% FHA concentration.  For full details on the changes to FHA condo financing check out the following link:
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf

Consider the pros and cons from the real estate side based on James's answer and also consider the mortgage financing side.  Both from buying the property and selling to potential buyers down the road.
  • August 03 2010
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Profile picture for ABBAUSA

Pros and Cons to both.

Condo:
    All exterior maintence covered in HOA dues.
    Close neighbors and sometime close quarters.
    Small yard.
    HOA to keep and require things be tidy and neat.

House:
    All maintenance by you.
    Yard size larger than Condo
    No HOA fees/dues
    No HOA to bug you (good and bad here)

Harder to get good financing for Condo's just now, but depending on your temperament only you can decide on which one is best for you. (just starting out or just ending up is a good fit for a condo, but only a general rule)

 Good Luck!

James Callas - Realtor®
  • August 03 2010
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