Should I Purchase a Condo or a Home?

Updated: May 4, 2022

When it comes to housing, only three options exist, buy a house or a condo, or rent. The question: “Should I purchase a condo or a home?” gets answered with pros and cons.

In a nutshell, should you buy a condo or a home comes down to “where you are in life, and what are your preferences?”. What are your needs and preferences?

Let’s explore the pros and cons between condos and homes.

The Benefits of Buying a Condo

Condos are Less Expensive than Homes

The National Association of Realtors (NAR) surveys indicate that in August 2021, single-family home sales prices nationwide averaged $356,700. While at the same time condo sales prices averaged $302,800. That’s a difference of nearly $54,000.

Thus, condos cost less than homes.

Less Exterior Repairs and Maintenance

Homeowners must repair and maintain the interior and exterior (roof, sidings, lawns, yards, and fences). Condo owners only need to take care of the interior.

The condo Homeowners Association (HOA) repairs and maintains the interior common areas (entry, elevators, stairs, and hallways). Also, the exterior (parking lot, roofs, siding, pool, clubhouse, etc.). Of course, condo owners pay dues to their HOA for these services, but less than what homeowners normally pay per year.

This saves money and frees up time for condo owners over homeowners.

More Amenities

Benefits of Buying a Condo, amenities, gym, gymnasium, pool

Large condominium communities are packed with shared amenities. These can include:

Swimming pool;
Tennis courts;
Clubhouse;
Gymnasium;
Park areas;
Golf courses;
Jogging trails; and
Pet parks.

A typical single-family home doesn’t offer all these amenities.

Convenient Location

Downtown condos while smaller and densely packed are located closer to amenities. These include:

Cultural activities;
Entertainment;
Shopping;
Restaurants;
Public transportation;
Parks;
Shorter commutes to schools and work; and
Job opportunities.

Social Connections

Detached single-family homes neighborhoods tend to experience distance between neighbors. Contrary, condos (like apartments) being neighbors closer together. Especially when they share common amenities.

Density also makes a difference. A home typically may be on a tract of land from 1/4 up to one acre separated from neighboring homes. A condo community of 20 to 30 units may sit on an acre of land.

Intimacy exists in a condo community as opposed to a large subdivision of homes. Condos tend to attract people of similar income, interests, and backgrounds which encourages social co-mingling. Especially when congregating around social areas, gymnasiums, and swimming pools.

Cons: The Risks of Buying a Condo

It’s always good to know the risks of any investment. Condos carry some risks. You need to know them before buying a condo.

Financing Condo Purchases More Difficult Than Homes

Getting a federal mortgage loan for a condo may be tougher than you think.

The Federal Housing Administration (FHA) requires all condo developments to have at least 50% of the units occupied by their owners before an FHA loan is insured. New condo developments only require 30% owner occupancy. Learn more about the FHA loan requirements for condos.

Condos Don’t Appreciate as Homes Do

The fact is, “condos don’t appreciate in value as the rate of homes”. When you try to sell, depending on the market, you may end up losing money. One reason is you may find yourself in competition with your neighbors trying to sell similar units. Or, the housing market is bad for condos.

Tip: Buy a condo unit in the most “attractive location within the building”. Or, buy a condo with extra bedrooms because they are always easier to sell. This will set you apart from your neighbors competing with your listing.

Bonus Tip: If you can’t sell, renting is an option. If the HOA rules don’t prohibit renting units, rent it subject to a future sale with enough time for your renter to seek another rental.

The Extra Expense of HOA Fees

Condo associations charge HOA association fees which you pay on top of your monthly mortgage. These extra membership fees can run up to $1,000 a month.

Your HOA fees pay for normal repairs and maintenance of the common areas. However, they may increase to pay for extra costs like:

Major required renovations like a new roof or new city requirements like larger water storage containers or green energy;
If members don’t pay their dues the rest of the members end up subsidizing them; and
Lack of reserve funds to pay for emergencies.

Tip: Before buying your condo, look into how much money the HOA keeps as a repair fund or reserve fund for emergencies. A healthy reserve fund of 10% of the yearly revenue budget or 25% for older buildings.

The Benefits of Buying a Home

Now, let’s look at the benefits of owning a home.

Owning Land

Owning a home means owning land. Condo owners don’t own land. This is a big advantage of homeownership over a condo.

You can do whatever you want with your land within zoning restrictions and nuisance laws. You can build a tennis court, a swimming pool, a deck, a BBQ area, and landscape your backyard. A private fenced-in backyard lets your kids and pets play safely.

Your front and side yards give you options for lawns, gardens, and landscaping. Also, a driveway if your garage isn’t big enough for the family vehicles.

Room to Grow

As your family grows, you can grow your house. Depending on zoning and building codes, you can tear down walls and add additions. Build a deck in your backyard.

In suburban areas, you can build a guest house if zoning laws allow.

Condos do not give you these growth opportunities.

Greater Self-Expression and Self-Determination

A disadvantage with a condo is uniformity. Not owning the exterior of your condo means you can’t grow.

On the other hand, you can paint your house in your favorite colors. Put flowerbeds anywhere on your property. Build a playhouse in the back for your kids.

A house can always be customized while a condo’s exterior can’t.

A Home Accommodates Life Changes

Benefits of Buying a Home, life changes, in-laws, pets

Some condo owners complain about HOA rules and governance that control the way you live.

Uniformity restricts freedom of expression. For instance, if pink or yellow is your favorite color the HOA may prevent those colors in your window curtains or venetian blinds.

In-laws & Pets: If your brother and sister-in-law and their two kids need a temporary place to live, you can let them live in your house. However, your condo HOA rules may prohibit that arrangement. The same goes for pets as many HOAs restrict how many and what sized pets are allowed.

It’s Easier to Sell a House than a Condo

Condos are tougher to sell than homes. Maybe the HOA rules are too restrictive scaring off potential buyers? Or, your closest neighbors may be too noisy or like to party too much turning off quieter buyers.

Many buyers look at a condo as a substitute home. It’s an easier transition from apartment living, but many renters prefer a home of their own. Robust housing markets make condos ideal because of affordability.

Detached homes on privately owned lots are more liquid in all markets from bad to “hot”.

Individuality plays a large part in the housing market. Every home is unique, especially after customization by the previous owner. Unique homes appeal to specific buyers.

On the other hand, condos are uniform. One unit doesn’t stand out from the others in a condominium building. It could take a year or more to sell your unit because you must compete with your neighbors trying to sell their units. This is a big reason why condos end up as rentals.