23 - Condo and Townhome Living: Common Misbeliefs and Why They Might be a Great First Home

Are the myths about condos and townhomes holding you back from exploring their benefits? Tune in as we debunk 10 common misconceptions and discuss the pros and cons of condo and townhome living. Discover the key differences in maintenance, privacy, personalization, and selling between these housing options, and learn how they can offer more affordable home ownership in densely populated areas.

Don't let false beliefs stand in your way of finding the perfect home. In our conversation, we clarify the ins and outs of HOA fees, privacy, and customization options for your new abode. Plus, we share advice on what to look for when touring a potential property, and the importance of reading the governing documents of the homeowners association. Listen in to find out if a condo or townhome is the right choice for you.

Transcript

Speaker 1: 0:00

Buying a condo or townhome can be an attractive option for many people. With lower price points and less maintenance, it would seem like a great purchase for a first-time home buyer. There are a lot of misconceptions about condos and townhomes that can lead to confusion and misinformation, and to help clear that up, i've put together a list of 10 common myths about condos and townhomes, along with the pros and cons of each one. First, i wanted to just clarify what exactly a townhome or a condo is. A condominium, often shortened to condo, and townhomes are two types of housing arrangements that offer alternatives to your traditional standalone single-family homes. A condo is a type of housing where you own your individual unit but common areas are shared with other unit owners. This might include amenities like hallways, elevators, exterior landscaping, swimming pools, gyms and other shared facilities.

Speaker 1: 1:08

Condos can come in many forms. They can be part of a larger building or complex. They can be structured like townhouses or even detached homes, but what makes them condos is the ownership structure. As a condo owner, you'll typically pay homeowners association HOA fees to cover the cost of maintaining the common areas. A townhome is a style of housing that often looks like skinny, tall single-family homes, usually with at least two, sometimes three or more floors. They share walls with other townhomes. What differentiates townhomes from condos is that the townhome owners also own the land their home is built on, including any front or backyard that comes with it, and are usually responsible for all its exterior maintenance. Like with condos, townhomes are often part of an HOA that manages community features and maintenance of common areas. Both townhomes and condos can offer more affordable options for home ownership, especially in densely populated areas. The shared responsibilities can mean less individual maintenance, but also comes with less privacy and potential restrictions due to HOA rules.

Speaker 1: 2:27

So let's talk about these 10 misconceptions. Let's start with number one. Condos and townhomes are for first-time buyers or retirees only. Condos and townhomes often provide a more affordable entry into the housing market and can be a great option for first-time home buyers or retirees looking to downsize. While condos and townhomes can be great for these demographics, they can also be an excellent choice for individuals or families who want the benefits of home ownership without the hassle of extensive property maintenance. They're not restricted to only these groups. They're especially attractive for these groups, but due to the lower cost associated with them and typically easier maintenance, many first-time home buyers can be overwhelmed with the type of maintenance on a single family home. While condos help ensure much of this is taken care of, retirees also tend to want less physical maintenance, like plowing snow, and also to have more amenities like gyms and pools, which is one of the reasons these types of homes are so attractive.

Speaker 1: 3:32

Misconception 2. Condos and townhomes depreciate faster than standalone homes. Condos and townhomes can sometimes be more affordable than standalone homes, making them a more accessible option for many, so overall, their pricing tends to be lower. While it's true that condos and townhomes may not appreciate as rapidly as a single family home, in a booming market, they also tend to not depreciate as quickly. In a downturn, their value is often a lot more stable. The barrier to entry is typically lower from an overall cost, while there are additional fees such as HOAs that may be higher cost than single family homes. Overall, you'll typically find condos and townhomes to be less expensive and in a seller's market where there's low inventory, condos oftentimes become very attractive to people.

Speaker 1: 4:26

Okay, the third misconception Owning a condo or town home means you don't have to worry about maintenance. Alright, one of the big selling points of condos is that exterior maintenance and repairs are typically handled by the Homeowners Association, which can save homeowners significant time and effort. While it's true that HOAs take care of exterior maintenance, homeowners are typically still responsible for the interior of their unit. Additionally, homeowners have to pay monthly HOA fees for these services. Not all maintenance is covered. This really is the in-between point of an apartment and a single family home. You still have some responsibility for the interior of your unit, but less responsibility with exterior maintenance and repairs.

Speaker 1: 5:09

On town homes, you're actually typically responsible for that exterior maintenance, so something to take into consideration. Now, some examples of interior maintenance are things like just general painting or repairing appliances, updating flooring. The HOA will cover building, exterior pairs, landscaping and common area upkeep, but not much else. That's why it's important to read and understand what's covered or not before making a purchase. Some items like water heaters may be the owner's responsibility if it needs replacement. However, if it serves multiple units, then it's often the HOA's responsibility. There are a lot of nuances and a lot of things to consider when evaluating the cost side of buying a condo or town home. Make sure to work with an agent who understands buying a condo or town home versus a single family home. You'll also want to read the CCNR paperwork in its entirety, as it outlines all the rules. Town homes in particular typically do not cover exterior maintenance, so they're much closer to a single family home than a condo. In this regard, misconception 4.

Speaker 1: 6:22

Living in a condo or town home means you don't have any privacy. While shared walls and common areas can actually foster a sense of community and safety that isn't always present in standalone homes. You may also just have a single shared wall, which may not be very noticeable. In town homes in particular, you'll only have shared walls on the sides. You'll never have someone above or below you. Shared walls can mean less privacy than you would get with a standalone home.

Speaker 1: 6:51

Noise can be a problem if neighbors are inconsiderate, and this is definitely one of the trade-offs. While living in a condo or town home can have its advantages, you will need to accept lower levels of privacy and added noise. If extra privacy is important to you, then these types of homes may not be the right fit for you. Now, when touring, really pay attention to how well insulated the walls and floors are. If you can hear your neighbor through them, then that could be a sign of poor insulation and build quality. Additionally, think about how much natural light you get. If the windows are small or the housing layout isn't ideal. That could mean less privacy from your neighbor's view. Listen for things also like road noise, as condos tend to be located on main roads or near highways, make sure to listen and observe as much as possible before making a purchase. It doesn't hurt to talk with the neighbors as well to see what the noise levels are like.

Speaker 1: 7:47

Let's talk about the fifth here. You can't personalize your condo or town home. Condos and town homes often come with restrictions on exterior modifications which can help maintain property values and really ensure a consistent, pleasing aesthetic in the community. While it's true that there are usually restrictions on exterior changes, you're generally free to make whatever modifications you'd like to the interior of your unit, within reason. This includes painting, flooring and other minor changes. It really depends on the governing documents of the HOA. Read them thoroughly, as mentioned before, to determine what is and isn't allowed.

Speaker 1: 8:27

The sixth one here condos and town homes have exorbitant HOA fees. Okay, hoa fees typically cover common expenses such as maintenance, landscaping and sometimes utilities or amenities which can actually save homeowners time and effort. While HOA fees do cover these expenses, they can be quite high depending on the location and the amenities provided, and they can increase over time. It's important to read the governing documents of the HOA to understand what is and isn't covered by the fees. Ask your real estate agent to look into price increases in the HOA fees and if there are any large expenses coming up that may raise the HOA fee. Also ask about other fees such as parking and storage. All of these fees can add up and should be taken into consideration when planning your budget for purchasing a condo or town home.

Speaker 1: 9:22

7. It's Difficult to Sell a Condor Townhome. Condos in townhomes can be attractive to a wide range of buyers, from young professionals to retirees, and can be particularly appealing in urban areas where standalone homes are much more expensive. Depending on the market conditions and the specifics of the unit and its community, it can sometimes be more challenging to sell a condor townhome than a standalone home. In this environment, it's important to do your research and understand the local market before making a purchase. Ask your agent to look at comparable sales in the area and get an idea of any issues previous owners may have had in selling their units. That can give you a good indication of what to expect when it's time for you to sell. Additionally, make sure you understand how the HOA may affect your ability to sell. There may be restrictions on rental or sale units that could limit your ability to sell quickly.

Speaker 1: 10:20

8. All Condos in Townhomes Are Small and Cramped. Well, condos in townhomes can offer efficient use of space and often provide shared amenities like pools or fitness centers, and often because of that they do have smaller lot sizes And the homes themselves typically aren't going to be your larger size. While it's true that condos in townhomes can be smaller than standalone homes, many offer spacious and actually quite sophisticated layouts. They come in a variety of sizes and floor plans to suit different needs and can actually be very much like a single family.

Speaker 1: 10:56

Detached home. Condos vary greatly in size, and, though many are not as large as their single family home equivalents, there are plenty that exceed even 3,000 and 4,000 square feet. One thing that many condos in townhomes lack is a large backyard, so if that's an important factor or something you just can't go without, you may want to consider a detached single family home. The next is condos in townhomes don't allow pets, while some condo and townhome communities do have rules in place to ensure a peaceful living environment for all residents, including restrictions on pets And while some communities may have pet restrictions, many are pet friendly and even have amenities like dog parks. Always check the HOA rules before buying. For example, in California, the Davis Sterling Act requires HOAs to allow pets subject to reasonable rules and regulations of the association. They may have some breed or size restrictions, but cannot outright ban pets.

Speaker 1: 12:00

The last here is that renting is a better option than buying a condo or townhome. Renting can offer more flexibility and fewer responsibilities than home ownership, which can be advantageous for certain lifestyles. But buying a condo or townhome can offer many benefits that renting doesn't, such as the opportunity to build equity, potential tax advantages and the ability to make your space truly your own. Ultimately, the decision between renting and buying is a personal one. If you're debating whether to rent or buy, consider your needs and preferences, budget and financial goals, as well as the market conditions in your desired area.

Speaker 1: 12:42

Condos are the closest to apartment living, then townhomes and then detached single family homes. From a cost and maintenance perspective, condos will be the least expensive of the option, but will also be the most restrictive. They're a great way to start home ownership, but it's important to decide what your reasons for home ownership are. Moving from an apartment where you have a fixed monthly cost, low utilities and no maintenance costs, to owning your own home can be a pretty big step in both time and money. A condo or a townhome can be a great way to make the transition. It offers the benefits of your own home that you can build equity in, lower maintenance costs and predictive monthly payments. You'll likely feel very familiar with the community concepts and for many it's a very easy transition. It's also a great way to build equity to use in future home purchases that may have been out of your reach previously.

Speaker 1: 13:42

If you're looking for the best way to build equity and lower your risk with maintenance costs, a condo can be an excellent choice. There are definitely some extra steps from the finance side of things when considering a townhome or condo and I'll cover that in an upcoming episode, so keep an eye out for that. But basically there are restrictions on the types of loans and the amount of homes that can utilize specific loan programs in condo and townhome communities. Some communities, for example, need to be FHA-approved for you to use an FHA loan to purchase there. I hope this helped you guys get a little bit more understanding about buying a condo or a townhome and how that compares to apartment renting or buying a detached single-family home, and that it might be a good option for you. Now, as always, please visit us at FTHBprosecom for all of our episodes, articles, tools and resources for the first-time homebuyers, including our home affordability calculator and budget worksheets. Thank you and happy homebuying.