Condo vs House?

[stefnjeff]

Hey all!  I'm new to the board.  We're a family of 3 and we've been doing some hard core budgeting this year and are loving the savings.  But we want to find ways to live even simpler and save more.  We currently own a house (with a mortgage) and are considering selling it to buy a condo.  I'd love to hear from anyone currently living in a condo (especially if you previously were in a house) about the financial savings you've found and your thoughts on the lifestyle difference.

As far as finances for us, the lower condo mortgage plus higher HOAS makes it a near wash.  So I'm working through other ways we might save on the switch.

-We won't have to water/maintain our yards anymore
-We would be walking/biking distance to many of the places we frequent (grocery store, home depot, church, restaurants, park) (Living biking distance to hubby's work or kiddo's school is unfortunately not possible, though the new place is a few miles closer to work).

I'm wondering how much we might save on utilities with shared walls?  Anyone have an estimate?  We currently have a 1700 sqft house (but only 1300 is heated/cooled), and the condos we're looking at are around 1200.

Any other savings I'm not thinking of?  Does it sound like a worthwhile swap?  We love the house we live in now and love the convenience and safety of living in a culs de sac with awesome neighbors.  Some aspects of moving to a condo sound appealing to us, but others not so much.  Hence why we'd like it to come with a good cost savings. 

Thanks!  I look forward to getting more involved here and learning more!

[renata ricotta]

Since the month-to-month costs are a wash, I don't think I would make the switch unless the savings are pretty substantial. That's because there are pretty high transaction costs to doing this switch. You'll pay 6% of your current home's value to the realtor. You will probably pay several thousand dollars in closing costs on either the sale or the purchase. That's a hell of a lot of lawn watering (and relandscaping your current yard to be more water-efficient, like xeriscaping or switching to astroturf would be much cheaper). 

Something to note about HOA fees is that, unlike a fixed mortgage, they can go up. If the condo association needs to do a major repair or wants to upgrade something (even if you don't think it's worth spending money on), you could get hit with a substantial assessments. You also usually split major utilities like water and trash with the entire condo complex, which makes it nearly impossible for you to reduce your expenses by being more efficient with those services. You pay what you pay, even if you are careful to conserve water, etc.

[JoJo]

I'm in a condo now.  Some advantages (when I go on vacation for a few weeks, I just lock it up an go).

Some of the disadvantages I've found:
* limits on how you use your space - I can't "legally" rent my spare room, Airbnb it, etc nor can I rent out the apartment for short term  (I went on a 12 week trip but it just needed to sit empty)
* Dues at my place went from $247 to $395 in 9 years
* An assessment of $7,000 was made recently (mostly due to a ridiculous lawsuit by one owner that the association won but had huge legal costs)
* noise level - depends on the layout of what you buy but we've had some renters that liked to have parties, I can hear flushing, showers, fans of other units.
* sales prices for condos are more sensitive than houses - dropped by more in the recession and slower to go up.

You are a family of 3 - is there a chance you grow and now you need to buy again?

[stefnjeff]

You are a family of 3 - is there a chance you grow and now you need to buy again?

Nope, we're one and done.

[NV Teacher]

I've lived in both.  Mainly I prefer a stand alone house for a couple of reasons.  First is noise.  When I lived in the condo I could hear my neighbors most days.  Second was smoking.  When the condo next to me was rented to smokers I would get the smell creeping into my place.  I hated that.  And then there was the time someone brought cockroaches into the building.  That was a mess to get rid of for everyone.

[JoJo]

I've lived in both.  Mainly I prefer a stand alone house for a couple of reasons.  First is noise.  When I lived in the condo I could hear my neighbors most days.  Second was smoking.  When the condo next to me was rented to smokers I would get the smell creeping into my place.  I hated that.  And then there was the time someone brought cockroaches into the building.  That was a mess to get rid of for everyone.

Add smells to my list of negatives too!  I can smell neighbor's cooking, smoking cigarettes, and smoking weed!

[renata ricotta]

I actually owned a condo and switched to renting an apartment - totally happy with it. I don't mind at all being in a more dense space, smelling cooking from neighbors, etc. It just doesn't necessarily seem like a strong savings to you, from the information you mentioned.

[spicykissa]

If it's the lower utilities/no yard maintenance/closer to stuff perks that you like, why not just sell your house and rent an apartment? My husband and I don't mind the noise, occasional smells, etc of shared living space, but I don't like the HOA fees, special assessments, realtor craziness that condos seem to entail. (Caveat: I've only ever rented, but I love it.)

[dess1313]

currently a condo owner.  Townhouse style, one shared wall

-We won't have to water/maintain our yards anymore

FYI.....no you won't have to water or maintain your yard.....but you will pay a premium for someone else to do it

I'm wondering how much we might save on utilities with shared walls?  Anyone have an estimate?  We currently have a 1700 sqft house (but only 1300 is heated/cooled), and the condos we're looking at are around 1200.

add some insulation into your current house....problem solved.  I added a lot where i could in my place and dropped heating costs in winter(talking -20 to -40C) by a 1/3 or so.  not so sure abut summer AC but its dropped some too.  insulating foundations make a big difference in cold climates.  as well as attic insulation, windows, and furnace

Downsides to condos
Condo fees.  sure they look cheap now but wait until foundation issues come up or fences need to be rebuilt.  There is no guarantee the condo fees will stay the same down the road.  heck it could be years of the same then all of a sudden you get hit with a $20k assessment because no one planned ahead.  or like at my place where they were wanting to put the fees up 10% yearly for 3 years in a row.  i know some places here have 400 or 600 a month fees..........
can't modify the outside of your condo.  no color changes etc.  when your place looks like every other place it would be nice to have a different colored door.  people are constantly getting lost at my place and can't find who they are looking for
condo board members can be nit picky as hell.  some are nightmares to deal with!!!
shared walls can be good for heating/cooling costs but depending on the level of sound proofing it can be very noisy depending on who your neighbor is.  got neighbors who like loud music at 2am?  too bad you're going to hear it!

good parts
easy maintenance....if that's important to you then great

[ZiziPB]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

ETA: To the OP: if you are buying a condo, make sure the association has a healthy reserve fund (you will receive that information before closing).  I would also suggest looking for a complex without a swimming pool.  Pool maintenance and liability coverage are a large share of the condo fees if your complex has a pool.  As to the additional savings, your insurance is likely to be a lot lower in a condo versus a house.  My condo insurance is equivalent to a renter's insurance as the majority of the property coverage is through the association and included in the condo fees.

[TravelJunkyQC]

I currently live in a condo, and while I don't hear or smell anybody's business (old stone building with 1.5 foot-thick cement walls), and yes, the heating costs are lower (3 shared walls), the fact that I have no control over certain things bugs me to no end. For example, I've discussed at length on the MMM forum how irritated I am that I can't replace my old worn-out windows for more energy efficient ones (the whole co-op needs to approve, everyone needs to do it at the same time to keep the exterior aesthetic the same, blah blah blah.... and no one else wants to pay).

Also, the fact that I can't rent when I'm not there.

So yes, while it's practical that there is little maintenance and things are easy if I leave for a few days, the lack of control over my living space is a bother to me. I hate having to ask for permission from 40+ other owners to do something.

But then again, I'm a control freak. :p If you're more zen, it could be a great option.

[TravelJunkyQC]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

True, but you have control over replacing those things. Even if you pay someone else to do it, you still vet your contractors, you approve plans, you decide when to do it. That control over the amount that comes out of your bank account is important, at least to me. Someone telling me that I need to shell out 500$ to fix something, when I can't be proven that they shopped around for the best price... that bothers me.

[ZiziPB]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

True, but you have control over replacing those things. Even if you pay someone else to do it, you still vet your contractors, you approve plans, you decide when to do it. That control over the amount that comes out of your bank account is important, at least to me. Someone telling me that I need to shell out 500$ to fix something, when I can't be proven that they shopped around for the best price... that bothers me.

The best solution in this case is to get on the condo board to ensure that your voice and your concerns are heard.  Or just participate in the association meetings.  All owners have a say in the budget approval process.

[dess1313]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

yes and no

I can decide to not put in $$*$*$&*% expensive bushes that need continuous trimming
my condo decides to put in $*($*#($ expensive bushes and i'm stuck with the added cost of trimming and maintaining them.

I can decide to set aside money for maintenance knowing my roof will last aprox 10 or 20 years.  I'm not naive.  I know maintenance has be done to maintain a house
My condo board thinks that our reserve fund is too low, they can jack up the price sky high.  Even if they're overshooting it by 50% i can't stop them.

jack the condo fees up too high, you won't be able to sell your place
and yes our board thought we needed to raise the rates 30% over 3 years.  thats when i got myself elected to the board to stop it

I can decide to do preventative maintenance before things get bad, even if i have to hire someone
The bad condo boards can ignore stuff, and then we have a 2x as high bill when we have to fix more things that were ignored 5 or 8 years

If some idiot decides to change plumbing without checking their shut off valve and damages part of the external building the condo corp is on the hook for the cost of the repair, or the insurance premium.  If they use insurance, the insurance for everyone goes up and it will cost us more next year.  so the board ends up paying it out of pocket for small items.  it adds up over time

There's also an added cost of having a realty management group organize your condo business, plus legal fees, accounting fees, mailing fees and the like.  its not just pure maintenance in the condo fees.  Heck to do the audit of our reserve fund we dropped $5k or $7k i think on it

[frugaliknowit]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

ETA: To the OP: if you are buying a condo, make sure the association has a healthy reserve fund (you will receive that information before closing).  I would also suggest looking for a complex without a swimming pool.  Pool maintenance and liability coverage are a large share of the condo fees if your complex has a pool.  As to the additional savings, your insurance is likely to be a lot lower in a condo versus a house.  My condo insurance is equivalent to a renter's insurance as the majority of the property coverage is through the association and included in the condo fees.

+1

With a home, you have better CONTROL over the operating costs and capital expenditures and upgrades.  With a home, you need more cash reserves.  A condo complex is often staffed with union employees with "built in" increases set by the union.  Watch out for Condo complexes with 24 X 7 Parking Valet garages (riddled with staffing overhead) and swimming pools.  With a home, you can choose to mow your grass or fix your water heater yourself.  I DO think MOST homeowners underestimate their costs versus condo assesments.

Condos DO tend to be more volatile in price, which sux if you want to move in a crappy market.

[Spitfire]

If the monthly costs are about the same, I would stay in the house. I bought a condo about a year ago because it was in an area I really liked and it cost over 50% less than the houses. It's a 2/2, just under 900sq ft.

My highest electric bill (including the stove and central air conditioner) has been $64, which was in July of a South Florida summer. I feel like the HOA is run well, it's been the same fee for 8 years, and the budget includes reserves that get allocated to parking lot, roof, exterior paint every year based on the useful life. It's non-mustachian of me, but I don't love doing yard work/maintenance so it's nice that I don't have to.

So far I am ok with the normal limitations of condo living. My shared wall neighbors are nice, not loud, and have never given me problems. The community pool is nice and cheaper than having my own. I don't have any loud hobbies so my daily activities would not change much if I was living in a house.

I am probably in a lucky situation from the horror stories I have heard about condos. If it were the same price, sure I would have gotten a house instead, but with the price, property tax and energy savings, and the fact that my lifestyle would not be much different in a house, I went with the condo and do not regret it.

ETA: Most, if not all, houses in my area are in communities with an HOA. They do limit the freedom on certain things, like exterior paint color, roof type, anything in the front yard since it is visible to the whole community. They will also make the homeowner pressure wash the roof and repave the driveway at certain intervals to maintain appearance. They charge fees as well for community pools and community landscaping. This extra cost/regulation went into my decision as well.
   

[TravelJunkyQC]

For people who are leery of special assessments or condo fees going up, don't you have the same issues with a house?  Your house will eventually need a roof or a fence replaced or a deck fixed or painted.  You are talking about home ownership as if there were no maintenance or replacement costs for a house other than maintaining your yard.  Sure, if you live in a condo, you are paying someone else to do these jobs, but not all of us are handy enough anyway to build a new deck or replace a roof.  And as you get older, maintaining a house may not be even physically possible.

True, but you have control over replacing those things. Even if you pay someone else to do it, you still vet your contractors, you approve plans, you decide when to do it. That control over the amount that comes out of your bank account is important, at least to me. Someone telling me that I need to shell out 500$ to fix something, when I can't be proven that they shopped around for the best price... that bothers me.

The best solution in this case is to get on the condo board to ensure that your voice and your concerns are heard.  Or just participate in the association meetings.  All owners have a say in the budget approval process.

True, but even though I'm always present in those meetings, if I'm the only voice out of almost 50 co-op owners... it still doesn't mean squat. Perhaps it's because I'm in a building that tends to have new, young owners... they don't tend to see things long term (such as windows).

[stefnjeff]

I appreciate all the feedback!  I think the big draw of condo living for me is the simplification aspect.  I often feel like our 1700 sqft home is ridiculously large for a family of 3, and I hate that driving is pretty much a must everywhere we go.  But in the end you all bring up excellent points about the downsides of condo living too.  Since there's really little financial incentive for the switch, I think we're probably better off staying put for now.

Thanks everyone!

[beee]

Sorry for reopening such an old topic but there's one point that is missing in the discussion:

As far as finances for us, the lower condo mortgage plus higher HOAS makes it a near wash.

The thing is that part of condo fees goes to the maintenance and reserves fund. Which is not the case with housing, you have to allocate additional money for it.

I can't see how living in a detached house with everything of your own can be cheaper or even the same money as living in a multi-apartment building sharing utilities/walls/yard maintenance/etc. Condos are usually smaller than houses too.

Condo fees must increase year over year just because of inflation (utilities cost more) and general ageing of the building.

It doesn't matter if you live in a house or a condo, you pay for the same things in the end (administration, as one example, must be done anyways, either by a property management company for money or by you with your own time). With condos you pay less because you get less in general. And for some people the downsides (less control and less privacy) are worth it (cheaper, easier, better location) (for us, for example).

[Noodle]

Although there's always a lot of negativity toward condos when this question gets asked, it's the right choice for some people. Like me.

My friends who own houses are constantly replacing and maintaining major systems--roofs, sewers, HVAC, etc. Plus they either do a lot of work maintaining the house and yard or hiring and managing others to do it for them. I have zero interest in spending my time that way, and I don't mind the downsides of multi-family living. Being hearing impaired is the perfect fit for multi-family living (and yes, I am careful the noise I am making!)

If I want to live in multi-family, why not just rent--well, partially, because at the time I bought rents were skyrocketing in my city because of a rental shortage, and for the same monthly cost I was getting a nicer unit in a better location. But also, the lack of control mentioned by a previous poster. Some people hate having an HOA set rules for them. Well, I hated never knowing for sure that I had a place to live the next year, depending on whether the landlord would renew my lease. I didn't like the pressure to be a "good" tenant. The landlord at my last place was terrible about proactive maintenance, in a climate which is very hard on buildings. To give him credit, as soon as something broke he fixed it, but he didn't do anything preventative to make sure we weren't without hot water for a week plus or without a bathroom ceiling.

If I wanted to buy in a multi-family complex, I would try talking to some of the neighbors and find out what they have to say. Some boards are awful. My HOA board is fine and as far as I am concerned, saints for putting up with my weird-ass/numb as a hake neighbors. I found a complex with small units in a great location--the residents tend to be modest earners so the board tries hard to keep fees in check.

Every housing choice has downsides--you just have to decide which set matches up with your personal preferences.

[mistershankly]

Living in a condo requires you to live under HOA rules and oversight.  The HOA can be run by responsible and reasonable people, or it can be run by whoever survives the attrition of fed up HOA board members.  This change can happen in over as short a time as 3 years (personal experience).  Consequently, I would rather live out of my car than ever go back to dealing with an HOA who has the indiscretion to crater your property value.  Want some more insight? Read the posts on this blog...

http://askmistercondo.com

I know, I'm biased but the choice goes beyond just the numbers and objective parameters.  You will be intertwined with other human beings and you have little power to contribute to what may become a nightmare situation for you... all inextricably connected to the roof over your head.  If your numbers are a wash, stay in the house and don't fall into the trap of "I have too much home" with 1700sq ft.  Your future self will thank you with your investment choice.

[lefty]

I ended up in a condo because I didn't want to buy a house in a particular school district. It was the best bang for buck condo in my opinion but who knows...

HOA covers nothing. I pay for everything,water, trash,cable and HOA fees are pretty hefty but thats the price I am willing to pay.

If I had it my way, I would rent a condo or house and still qualify to be in the school district of my choice.
Leave the HOA, taxes and other admin headches to the owner.

[ETBen]

People are usually firmly sitting on one side or the other of this. Basically, did you mind living in apartment and will it bother you not having complete control over the repairs etc. I live in a townhouse style condo. Everyone here has laid out the pros and cons. Personally, not doing home maintenance and yard work is worth it to me. But I also travel a lot so time is an issue.

Also consider the noise issue with a child. Not sure how old yours is. Some people are self conscious about making noise for others. Or it’s a building without many kids and others do not like the noise. There are plenty of kids in our neighborhood but I’m still amazed that people don’t mind the stampede of my boys.