Tired of living in an apartment? Need to downsize? Then a condominium, or a condo, may be the home solution for you.
But what is a condo? “Apartments are defined as renter-occupied units, while condo buildings have owner-occupied units,” says Amanda Pendleton, home-trends expert at Zillow. “If you don’t want to spend your weekends cutting grass, weeding, power washing, and making repairs to the outside of your home, you’ll likely be happy in a condo.”
Unlike a single-family home, which is detached and sits on a plot of land, condo living is part of a greater community (with fun amenities), and you still get to own property.
The best way to decide what residential style is right for you is to speak to a real estate agent in your area. Condos can range from high-end communities with posh perks like swimming pools to condominium complexes that are great for first-time homebuyers looking for affordability.
Here is everything you need to know before you become a condo owner.
What is a condo?
A simple condo definition, according to Michael Martirena, luxury real estate advisor at Compass in Miami, is as follows: an individual unit within a larger building or community that is privately owned. “Condo owners share ownership of amenities, common areas, and property facilities with other owners and have a say in how they are maintained and programmed,” Martirena says. “A condominium’s common spaces usually include hallways, lobbies, elevators, and amenities like swimming pools, fitness centers, tennis courts, lounges, and coworking spaces.”
High-end condominium buildings in big cities, like New York and Los Angeles, may also offer over-the-top amenities like pet spas and rock climbing walls.
The primary difference between a condo and an apartment is that you will have ownership of this real estate. But don’t confuse a condo with a co-op, a housing option in which you have shares in a corporation (in this case, the entire property and not just the individual unit). To be part of a co-op, you typically have a thorough financial vetting process with extensive paperwork. Experts also note that it could be more difficult to get a mortgage for a co-op than a condo.
While a condo may have outdoor space, it is not a private yard, and the owner is not solely responsible for keeping it in order. Instead you’ll likely pay maintenance costs and the job will be hired out. “This saves you from doing the work and from having to track down and hire the right people for those jobs so you can have more spare time to enjoy,” Pendleton says.
How much does a condo cost?
“Condos have historically been a more affordable option than detached single-family homes, but that’s changing,” Pendleton says. Based on 2023 Zillow’s Home Value Index, the typical value of a condo is $342,643 nationally, compared to $347,217 for a single-family home.
As of October of this year, the National Association of Realtors existing-home sales data shows that recently sold condo homes cost, on average, $356,000, a 7.6% increase year over year, while single-family home prices are $396,100. The prices also vary by region: A condo in the Northeast averages $401,300, in comparison to $247,600 in the Midwest, $306,500 in the South, and $511,000 in Western states.
Condo costs of individual units also range by market, neighborhood, building type and age, as well as comparatives (comps) in the area and within the building, notes New York City luxury real estate broker Michael Fabbri at the Agency. “In New York City, new construction garners a different price point than historic pre-war buildings,” Fabbri continues. “Floorplans, views, square footage, and finishes all inform the pricing for a condo.”
In addition to the actual price of a condo, you’ll incur maintenance costs from the condo association or the homeowners’ association (HOA). These can range from $100 to more than $1,000 per month. The amount depends on the state of the building (an older building may have higher fees because it needs more maintenance), the size of the unit, the type of amenities offered, and reserve budgets.
Pendleton points out that you pay condo fees to a condo association and HOA fees to a homeowners’ association. She explains, “Typically condo fees are determined by how large your unit is, whereas HOA fees are the same for everyone in the HOA.”
In some instances, condo owners may have occasionally tax abatements, and there are situations where developers will cover condo fees for a specific period (i.e., the first year) to incentivize sales, Fabbri adds.
Pros and cons of buying a condo
Renters, especially those who are about to be first-time home buyers, may have to decide if a condominium is the way to go or if they should look into purchasing a single-family home. To help ease the condo conundrum look at the pros and the cons below.
The pros of buying a condo
Lower insurance costs: Since you are not responsible for the exterior and the outdoor space of your condo, your insurance will likely focus on protecting the interior of the individual unit. Typically, the HOA should have an insurance policy that covers damage to the structure. “You’ll want to become familiar with what is and isn’t covered by the HOA’s insurance policy before you shop for a policy,” Pendleton says. “Your policy should cover any gaps in the HOA’s coverage.”
Lower property taxes: Chances are, your condo doesn’t have as many square feet as a single-family home, which will probably lead to lower property taxes, even if your condo is a town house.
Better accessibility: Condo buildings are likely to have elevators and other functional add-ons, like ramps, for better accessibility. If you’re looking for stair-free living with a view, this option may be good fit.
Social and community benefits: The shared living space and amenities, like the swimming pool or a rooftop, can present more opportunities for interactions and socialization. “If you love to meet and mingle with your neighbors, you may feel right at home in a condo,” Pendleton says. “Proximity doesn’t always lead to an instant community, but the opportunities for human connection are there if you’re open to them.”
Convenient amenities: You might not be able to afford to build a private pickleball court, but your condominium complex can. You don’t have to purchase a high-end condo to get access to perks like a gym, swimming pool, or playground. Luxe options include high-end condos that are branded as well as condos within a hotel or a country club, Martirena notes.
Maintenance-free living: While you will incur condo fees, these will take care of any exterior and outdoor space maintenance. That means you won’t have to shovel sidewalks, mow the lawn, or clean the swimming pool.
Investment: Since your monthly housing cost goes into something you own, a condo can be an investment, especially in a good real estate market. “They are ideal for investors who only want to spend part of the year in the condo,” Martirena says. “Pending the rules of the board, you can generate income by renting it out.”
The cons of buying a condo
Enforced rules and regulations: “HOAs are controlled by an elected board of directors, which can set rules on everything from the type of pets allowed, home businesses, including short- and long-term rentals, and access to common areas,” Pendleton points out. “However, a dysfunctional HOA board or weak enforcement of rules and regulations can lead to neglected maintenance and even legal liability for the entire condo community.” Make a point to know what you’re signing up for as these rules could clash with your long-term financial goals. Say you’re buying a condo so that you can rent it—make sure that you won’t be blocked down the line. Alternatively, you might not want to live next to a renter or a string of new neighbors.
On the flip side, set rules and regulations can be a pro if you like predictability and order.
Hefty HOA fees: Before you buy a condo, understand the HOA and condo fees and what they cover. Some include water and trash disposal, while others are used to maintain amenities. Consider what you’ll be using—otherwise, you may be adding a serious monthly maintenance cost and not reaping the benefits.
Delayed repairs: Much like a management company takes care of the apartment building, the condo board should stay on top of building maintenance. The keyword here is should, but that’s not always the case if those in charge neglect problems. “If a condo is not run well, there may be special assessments that can increase the cost significantly,” says Brian Cantrall, vice president of Chestnut Hill Realty in Cleveland, Ohio.
Letters of recommendation are required before buying: “The condo association’s board of directors and even the lender may require references or letters of recommendation from previous landlords,” Pendleton says.
Who is condo living best for?
One big benefit of purchasing a condo is that it can appeal to different types of people. First-time homebuyers are great candidates, especially if the housing market has limited inventory. “Considering all home types could make your search easier and open up options in neighborhoods or communities that may have been previously out of reach,” Pendleton says.
A condominium is also a good solution for anyone on a fixed income since the monthly fees are controlled and can include utilities, Cantrall adds. Since condos are somewhat similar to apartment buildings, making the change is also less overwhelming since the buyers won’t have to take on big and unexpected expenses (like a leaky roof) that can come with a single-family home.
Those looking for a part-time residence can also benefit from living in a condo, as they are maintained by a management company while you’re away. “Owners do not have to spend time dealing with landscaping contractors or snow removal companies,” Cantrall says.
Martirena recommends condo living for owners who prefer a hands-off approach. “Condo owners can show up, turn the key, and enjoy their home,” he says. “Condos are popular with young professionals who want to build equity in a property, empty nesters, and anyone seeking an easy-to-maintain home.”
FAQs:
What are the red flags for buying a condo?
Look at outstanding lawsuits against the condo HOA, which can impact the monthly dues. Cantrall says it's important to review the condo financials to see how often they have had special assessments and if they carry a healthy balance in a reserve account in case any unforeseen costs arise. “If they don't have much in reserves, then the purchaser is taking a chance that in the future either monthly dues will have to rise or a special assessment will be charged to owners if a significant repair needs to be made to the common areas,” he says. “It's also an indication that the HOA is poorly managed.”
As you research a potential property, pay attention to whether the condo is under ongoing improvements—especially if it is located in a flood zone, as is the case with some Florida condos. “It could mean that the building is incessantly making these updates on a need-to-update basis,” Martirena warns. “The idea of nonstop construction is less than ideal and it poses the question of the overall quality of construction.”
Due diligence is crucial when making any real estate investments. “Beware of high turnover in condo buildings where there are several units on the market,” Martirena continues. “This could signal structural or maintenance issues or an upcoming assessment that will impact—and likely increase—fees.”
Make sure to review all HOA documents and sign off on the bylaws and financials before making the final offer. When in doubt, hire a reputable real estate attorney to help identify potential red flags.
What is the difference between a condo and an apartment?
High-rise condos can be very similar to apartments in terms of design and layout, although in an apartment you do not own anything aside from your furniture. “Unlike renting an apartment, a condo owner has more freedom to customize their unit, and they are responsible for the cost of repairs,” Martirena says.
The other main difference is that you’ll have a say in customizing common areas as condos have an elected management board and present an opportunity to vote on changes. In an apartment, the management company makes all the renovation changes without consulting with tenants.
What is the difference between a condo and a town house?
A town house can also be a condo. Similarly to condominium complexes, town house condos share a wall but look more like a single-family detached home and can be multilevel. But unlike a single-family home, you don’t have to worry about the common space grounds and parking, as they are covered by maintenance costs. “In a town house condo, the roof repair, exterior painting, as well as landscaping and snow removal are likely the responsibility of the homeowners’ association,” Cantrall notes.
What are the different types of condos?
“There is a special category called condops, in New York, which is a building that contains both condo and co-op properties,” Fabbri says. “They are very rare and slightly complex in nature. Often, the retail space [or spaces] are the condo portions of the building, while the individual homes are the actual co-op residences. They were ‘born’ in the ’80s as the result of a tax law that is no longer in use.”
You can also find hotel/condo properties. Much like it sounds, the privately owned condos are in a building that also houses a hotel. The famed Plaza Hotel is one such example. “Owners can rent out their homes for use as a ‘hotel room,’” Fabbri says. “It can also be categorized as a condo share that people use as pieds-à-terre or secondary homes.”
Read more at ArchitecturalDigest.com
Related Links
Moving Up in Life: 5 Things to Know When You Upgrade from Apartment to Home
How to plan a home renovation from picking an architect to managing the build
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