I am a single female who's tired of renting
and I would like to purchase a condo. But I read online that
you shouldn't buy a condo because you can never resell it
for the amount you purchased it for. Also, the maintenance
fees could become higher than the mortgage. Am I better off
buying a single-family home?
-- Kay Condo
There are many absolutes in real estate, but the notion that
you'll never be able to sell a condo for the amount you paid
for it is certainly not one of them.
Au contraire. Our friends at the National Association
of Realtors say that condos have actually outpaced single-family
homes in rate of appreciation since the early 1990s -- even
doubling the single-family rate in some markets. Other indicators
point to a record year in 2004 for U.S. condo sales.
But statistics are simply that -- raw and without
context. Geography and several other factors should play a
big role in your condo vs. single-family-home decision.
If you live in such property-constrained markets
as New York, Chicago, Boston and Southern California, condos
are the home of choice for many urban dwellers, and the good
units are always in high demand. But in many other metro areas,
the number of traditional homes dwarfs the number of condo
units. And, when it's time to sell, you'll likely find potential
buyers of traditional homes will dwarf the number looking
Lifestyle is another issue.
If having a family isn't in the offing for you
and you'd like to simplify your existence while minimizing
time spent on yard work and other maintenance, a condo could
be for you. As you note, condo maintenance fees can be high
(generally from $100 to $400 per month or more).
But those fees go toward the day-to-day upkeep
of common areas such as swimming pools, tennis courts, exercise
rooms, courtyards, clubhouses, storage areas, parking lots,
hallways, etc. You have to decide if you'll use those amenities
you're paying to support, if they're worth the money and whether
you could pay the same fees or less to look after your single-family
house in the burbs.
If you plan to go the condo route, do your homework
thoroughly. If the condo complex needs a lot of work, the
condo board (which is made up of residents such as you) may
stick you with an extra assessment at some point in the year
if it can't fully cover major maintenance problems.
Talk with residents, including a condo-board
member, if possible. Ask about the association's budget and
reserve fund and whether the majority of the complex's maintenance
liabilities are funded. Find out about recent capital improvements
or plans for future ones. Ask whether some or all utilities
are included in the fees.
And make sure the condo covenants don't restrict
Get a really good idea of who lives at the complex.
Like in an apartment, your solitude may only be as good as
the quality of your neighbor.
Condos can also be volatile in pricing. New
ones stand to gain in value more quickly but may also lose
value more quickly if the surrounding community doesn't develop
like owners thought. Existing ones are a little more stable.
But note: There were a few years, since 1990, in which condos
actually lost value nationally, but there were no years when
single-family homes lost value.
Some of the fastest appreciating condo units
are located in so-called New Urban areas of a city where residents
have access to restaurants, nightclubs, light-rail transit
and other street-level amenities.
A compromise for you may be a stand-alone "zero-lot-line
home" or a townhome, which will probably have a minimal yard
and a neighborhood association that handles maintenance. These
have become increasingly popular among young singles and Baby
Boom empty nesters.
In general, condos have become a pretty secure
investment for careful buyers over the last decade. With diligent
research on your part, you'll be able to answer your own "am
I better off?" question in the end and feel better about your