Condo vs. house: Which is best for you?
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If you’re reading this, you’ve probably decided to purchase a home. Congratulations! It’s important to consider the different kinds of dwellings available. And two of the biggest types are houses and condominiums, or condos for short.
While both options allow you to become a homeowner and build equity in a property of your own, the similarities stop there. Specifically, many people weigh the choice to buy a house over a condo depending on their budget, space needs and lifestyle preferences. Read on to determine the outlines of the condo vs.house debate — to help conclude which option works better for you.
What’s the difference between a house and a condo?
The biggest factor houses and condos have in common is that they are types of residential real estate owned by individuals. When you buy either, you’re owning real property (unlike, say, a co-op, in which you technically own shares in a cooperative entity), and you are liable to pay property taxes each year. However, nearly everything else about them is different.
Houses (often called single-family homes) come in many shapes, styles and sizes, from modest bungalows to multi-story mansions, from detailed Victorian dwellings to streamlined, one-level ranch houses. In general, though, they’re usually detached, standalone structures, often with land surrounding them. In some cities, especially in historic neighborhoods, they can take the form of a townhouse or row house, a narrow multi-floor home that shares one or two walls with adjacent properties but has its own entrance and patch of front or backyard.
In contrast, condos are single units within a larger building, a multi-family dwelling. While condos can also take the form of row houses, the most common type of condo is that of an apartment. So you can have neighbors above, below and next to you.
Owners of single-family homes purchase the home structure and the land it sits on, while condo owners own just the unit they live in, not the larger building or the land on which it’s built. Generally, with a condo, the surrounding exterior space is shared among the condo owners.
Condo vs house: specific differences
- Cost: The cost of owning a house vs. a condo can be dramatically different, depending on your neck of the woods (or city). For instance, a condo in New York City can cost substantially more than a single-family McMansion in Boise, Idaho. Generally, though, a condo is likely to be less expensive than a house in many markets across the country — but, you’ll need to account for monthly homeowners association dues, known as HOA fees or carrying charges.
- Insurance: Homeowners insurance is typically less expensive for condo owners because they’re responsible only for the “walls in” aspect of their unit — the interior — while the HOA is responsible to secure insurance for exterior elements like siding and roofing. Owners of single-family homes must insure their entire structure, from the foundation to the roof, as well as any detached buildings like a garage or shed.
- Maintenance: In a condo community, the HOA is responsible for exterior maintenance, while condo owners must maintain areas inside their unit like the HVAC units, pest control and appliances. A house owner is responsible for all that and more, including yard care and exterior maintenance. (Here are top tips for avoiding pricey home repairs.)
- Amenities: In a condo community, the cost of amenities like a pool, gym or business center is shared among all the residents, making them more affordable for each individual. The owner of a house is solely responsible for the cost of installing similar perks on their property.
- Location: Condos tend to be located in densely populated city areas, so owners can be within walking distance to local restaurants, shops and cultural attractions. Houses, on the other hand, sit on their own pieces of land, so they can be in less dense areas. That said, many housing developments fit many homes together on small parcels of land, especially in urban environments.
- HOA rules: Most condo communities have a governing board that can dictate a variety of things: what kinds of pets residents can have, where they can park and whether they can sublet their units, for example. So, when considering a condo vs a house, it’s important to decide whether you want to abide by HOA rules. While some single-family home neighborhoods have HOAs, they are typically less restrictive and allow for greater autonomy among homeowners.
- Selling: In general, it can be easier to sell a house than a condo. Before you sell your condo, you’ll need to check with your HOA to make sure you comply with any rules, including being current on your dues. The HOA might also screen prospective buyers, which can limit your offers.
Condo vs house: Who should buy a condo?
Purchasing a condo can be great for a first-time homebuyer looking to make the transition from renting to owning or for homeowners who want to downsize, since much of the maintenance is taken care of by the HOA. A condo can also be a smart buy for someone who travels frequently or who wants to be right in the middle of a coveted part of town where single-family homes would be out of their budget. Condos also are a good choice for owners who want amenities like an on-site pool or gym but can’t afford to install or maintain them.
- Affordability – Condos are typically less expensive than a house, so they can be ideal for first-time homebuyers with limited down payment savings or retirees wanting to scale back.
- Less maintenance – If you own a house, all of the upkeep of the property falls on you. If you don’t want to worry about maintenance as much, a condo might be a better fit.
- More perks – Unlike a house, many condo communities come with amenities like a pool or playground, and features like security systems. If you want these for your house, you’ll have to install and pay for them yourself.
- Fees – Condo associations charge a monthly HOA fee to cover upkeep and other expenses, including insurance coverage for the property as a whole. They may also impose special assessments from time to time, to cover financial shortfalls or unexpected expenses. Individual condo owners have no say in the setting of these fees or choice of carriers, unless they join the condo board of directors.
- Less privacy – Since you’re sharing walls with neighbors, you won’t have as much privacy or quiet as you might be able to get with a house. And you’ll have to share amenities like the gym or pool.
- Rules – You might not have as much freedom to decorate or customize your condo, depending on your HOA’s rules.
Condo vs house: Who should buy a house?
A single-family house typically comes with a lot more space, so it’s an ideal choice for growing families or those who want complete control over structural and aesthetic decisions about their home (assuming you don’t have an HOA in the ‘hood). If you value privacy and don’t want to share common spaces with other residents, a single-family house is the way to go. However, you must be prepared to handle — physically and financially — all of the interior and exterior maintenance and repairs.
- Customizability – If you own a house and it’s not in an association, you can do pretty much whatever you want to it, provided it adheres to your local jurisdiction’s ordinances.
- Privacy and space – With a house, you might be farther away from your neighbors, so you won’t have to worry about excess noise or privacy issues.
- Easier to sell – You won’t have to get the approval of an HOA to sell your house, so there’s one less barrier when it comes time to put your house on the market. Houses also offer a better return on investment.
- Can be pricey – Depending on its location, size and many other factors, a house can be much more expensive than a condo or other type of property.
- Maintenance is your responsibility – Unlike a condo, with a house, you’re tasked with maintaining the property, both indoors and out. This can add to your costs.
- Lack of built-in community – Compared to the shared spaces of a condo, it can feel a bit more isolating in a house. You might not run into neighbors as frequently, which can be a downside if you value social opportunities.
To a large extent, answering that question depends on your budget. Condos almost always cost less than homes, especially in desirable parts of town. If money’s not an issue, the question is: Do you value autonomy or do you value a maintenance-free lifestyle? You’ll have more of the former with a single-family home but more of the latter with a condo. Also bear in mind that houses tend to appreciate more in value than condos do.
When comparing properties in similar parts of a city or town, a condo will almost always be more affordable than a single-family home, especially when you look at list price. If it’s a particularly well-appointed condo community, though, HOA fees might make the monthly out-of-pocket costs approach the monthly mortgage payment for a house.
That depends on the condo’s HOA. If they take an active role in the selling process — particularly if they have to approve buyers or dictate a minimum purchase price — selling that condo will be more challenging. In contrast, with a house, all the decisions are up to you. If the HOA board is accommodating, though, selling a condo and selling a house can be a fairly similar process.