Which should you buy? – Forbes Advisor
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Attached single-family homes, like townhouses and condominiums, are among the most popular housing types in America. They tend to be great starter homes and are often less expensive than a single family home.
Both options also offer less liability for the outdoors or landscaping since a owners association (HOA) usually handles this, and then you pay for it via a monthly HOA fee. Although you’ll likely have less space than most single-family homes, a townhouse or condo might better suit your budget if you want to live in a particular neighborhood while owning a home.
Choosing between a condo and a townhouse
The decision to buy a townhouse or a condo will depend on many factors, including cost, how much space you’ll need, and whether you want to live in something similar to a single-family home.
Two things that condos and townhouses have in common:
- Your house will be connected to at least one of your neighbours’ houses.
- You will be part of an HOA who is in charge of common areas and amenities.
Living in a condominium may be more like living in an apartment than a single family home. You will likely live in a unit surrounded by neighbors, perhaps on all sides, and you may need to climb stairs or take an elevator to get to your home.
Here are some advantages of this type of arrangement:
- More amenities. While townhouse communities have common areas and may offer a pool and clubhouse as part of an HOA, you may find more amenities in a condo community. For example, there may be a rooftop recreation area, fitness center, and/or dining options.
- Proximity. If you want to live near an entertainment district or walk to downtown shops and restaurants, a condo might be the most cost-effective way to do it. Buying a condo in a city with convenient public transit options allows you to get to work without using a car and walk to nearby restaurants, theaters and more.
A townhouse may be the best choice if you prefer to live in a place that resembles the size and appearance of a single-family home.
When you walk into some townhouses, you may feel like you are in a detached single family home, as there are usually no neighbors above or below you. The townhouse style can be a single-story ranch or be spread over three or more levels.
Here are some other advantages of a townhouse over a condo:
- You own the land. While your townhouse will be surrounded by neighbors’ homes and HOA-controlled common areas, you own the area where your home is located. The responsibility for the interior lies with you. Exterior maintenance could be shared between you and the HOA. For example, the HOA can take care of the upkeep of the siding, roof, and driveway while you are responsible for the windows and deck.
- More privacy. Although your home is connected to at least one neighbor, you won’t have one above or below you like you would in a condo. Also, it may be easier for people to find a quiet private space to work in a townhouse, as there may be one or more floors between a person in a home office and a basement where children play, for example.
- Exterior access. You can easily get to the common areas at the front or back of your accommodation, which is useful if you want to barbecue in the front of your house, have a party on your back patio or take your dog.
Understanding Your HOA Fees
Before deciding to buy a townhouse or a condo, you will also need to consider the cost of HOA fees. You might be impressed with the range of amenities in a condo development, for example, but the monthly HOA fee could cut into your budget significantly.
HOA fees can range from around $200 to several thousand dollars per month. While fees for townhouses and condos generally cover exterior housing, such as lawn maintenance, each HOA will have its own breakdown of items like who takes care of the roof, siding, and balcony.
Be sure to check the HOA rules, regulations, and restrictions on a home before buying. Additionally, condominium dwellers can sometimes pay higher fees because there may be more community features and activities within the community than a townhouse.
It is important to note that HOA fees are not static – they can increase each year. And additional assessments may be levied if the HOA needs to pay for a major project or major storm damage recovery.
What amenities can I get with a townhouse or condo?
Townhouse communities and condominiums provide amenities for their residents, which helps generate buyer interest and makes it easier for residents to enjoy a variety of activities without leaving their neighborhood.
Some popular features are:
- Swimming pools: Whether outdoor or indoor, a swimming pool can be appealing to all ages, especially if it is difficult and/or expensive to find others nearby.
- Rooftop entertainment: Condominium owners could open a rooftop area for socializing, barbecues, games and more.
- Club house/meeting areas: Expect to see a variety of uses for the club space like a game room, fitness area, and kids’ activities.
- Security: Some townhouse communities may be closed, requiring a pass and possibly a security guard. Some condominiums will feature a secure main entrance, possibly with a security guard, as well as a doorman in more upscale urban areas.
Know HOA rules and regulations
All HOAs will have a document of Undertakings, conditions and restrictions (CC&R) which provides guidelines for the protection and maintenance of the building or neighborhood.
You may find that HOA condos have more to cover in their C&CRs since everyone lives in the same building. For example, they might need to suppress noise more than in a townhouse community, regulate behavior in common areas, and specify how residents can dispose of trash in the building.
In townhouse communities, rules may focus on outward appearance, such as regulating the types of alterations residents can make to their property, as well as parking on neighborhood streets.
Other costs and fees
There are other costs and fees you should expect when buying a townhouse or condo that the HOA board or your real estate agent should disclose.
To start, you will need your own Home Insurance to protect items in your home. Policies for condos and townhouses will be different on this, as the townhouse owner may also have some responsibility for the exterior of the house, such as the patio.
You also need to make sure you have some wiggle room in your budget in case HOA imposes additional fees or a special assessment down the road. For example, if there is a major expense that is over the HOA’s budget, such as fixing a structural problem with the building or garage, the HOA will seek additional funding from its residents.
Resale value of condos and townhouses
The resale value of townhouses and condos can be limited by the amount of work you do to update the home.
Unlike a single family home, you cannot make as many major additions to a condo or townhouse because the HOA will limit your ability to do so.
That’s why you’ll need to look out for two other factors when buying this type of property: location and HOA maintenance. If an HOA does a great job of maintaining the property, they’re likely to leave a strong, positive impression on homebuyers, which will ultimately increase your value.
Location is also vitally important. You might have a nice house that’s completely updated and a solid HOA that maintains the property, but you might have trouble maintaining or increasing your home’s value if the surrounding area is struggling or unsafe.
Condos and townhouses have many advantages. Your lifestyle needs and budget will ultimately help you determine which one is right for you.