First-Time Home Owners
Condo or Single Family Home
What To Buy:
Condominiums have been a significant part of the real estate market for the last 20 years. In fact about one-third of all residential real estate transactions are condos. Townhomes or coach homes have many of the same strengths, weaknesses and special considerations. However, as a rule, when it comes to resale townhomes sell more easily than comparable condos.
Condo ownership allows a person to own a predetermined area of space, not necessarily land, and to share in common the ownership of all common areas such as hallways, foundation, stairs, social rooms, etc. under a legal arrangement. With a single family house the owner owns everything and is solely responsible for the entire property. A house entitles the owner to the rights of the land (including mineral rights), all permanently attached structures and the air above it.
Condos
In both instances owners of condos and houses have title of ownership and
tax responsibilities and can rent and sell the property they own. Condos appeal
to many groups of people, but first time home buyers and older persons are
the primary purchasers. In general, condos tend to cost less than single family
homes which appeals to many first time home buyers. Because there is no exterior
maintenance, they tend to appeal to older people. "Empty nesters"
also like leaving larger houses for the convenience and increased safety and
amenities of a condo.
Because condo owners share ownership for common areas and because of the close proximity of residences, by-laws are established to set certain rules and manage the overall property. A condo association (group of owners within the condo) is formed to enforce and change by-laws. Usually the board is elected annually. By-laws are usually very extensive and typically cover areas such as noise, pets, common area usage, exterior decoration restrictions, interior renovations, etc.
In addition, the common areas need to be maintained, cleaned and repaired. Financial responsibility for common areas is shared by the owners. Typically there is a monthly association fee that is paid into a fund to cover maintenance, repairs and cleaning. Generally this monthly fee takes into account extended repairs needed in the future: the roof will need to be replaced every 15 years; the parking lot will need to be resurfaced every five years, etc. For unforeseen expenses, the association may call for a special assessment for a particular project (a one time fee).
Condo fees vary greatly and should be considered in determining affordability of a property. On the other hand, condo owners do save on some general maintenance costs because these are covered under association fees. There is no cutting the lawn, trimming hedges, painting the exterior of the building, shoveling snow, etc. Many condos also have common amenities such as pools, work out rooms, tennis courts, even golf courses. Many people purchase condos as an investment, earning income by renting out the condo. High absenteeism of landlords in a property is generally undesirable and can make it difficult to get mortgage approval.
Single Family Homes
Everything about a single family home is yours. You have no association rules
and no association fees. There is also a tendency for single family homes
to appreciate in value more quickly than a condo of comparable size, accommodations
and community. With a single family home you enjoy more privacy and more control
and have sole responsibility for the property.
Condo Pros
Generally More Affordable
Generally More Secure
Often Offer Amenities (pool, etc.)
No Outdoor Maintenance
Earn Equity (like a house)
Get to Deduct Interest Payment from Taxes (like a house)
Condo Cons
Less Control Over Space
Condo Fees
Generally More Difficult to Sell than Single Family
Single Family House Pros
Generally Appreciate in Value Faster Than Condo
Give Control Over Property
No Association Fees
No By-Laws
Single Family House Cons
You Do All House Maintenance and Yardwork
You May Have Limited On-Property Amenities
Does Not Offer the Security of Community Living
Not Always as Affordable