Condominiums vs. Single Family Residences – Podcast Episode & Article

Condominiums vs. Single Family Residences – Podcast Episode & Article by Dennis Beckwith

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How does buying a condo compare to a House?

I have been blessed to help people buy and sell homes for over 25 years now and many of my clients have chosen to purchase a condo or Townhome, particularly as their “starter home”.  My wife and I did.  It’s a great way to begin homeownership, where you don’t have quite as many issues to worry about as with a house (or SFR).  Now many empty nesters and people in all stages of life are choosing the condo lifestyle for the ease of ownership and maintenance, or to get a little more living space for their money.  They are also attracted to their newer construction and updated features, as many complexes are newer than surrounding homes.  I have often been asked however “don’t houses appreciate better than condos & Town homes?  Aren’t they better investments?”   That is the main question I’d like to address; is a condo a good investment?

Before I get into that, let me first explain the differences in the terminology and the legal meanings.  There are 3 legal types of housing within this discussion.  You have SFR, which is your traditional detached home on a dedicated lot with no shared or common area with other neighbors.  The second type are Condominiums where you would own the airspace within the walls of your home but your home is attached at the walls and/or floors to other units.  There may or may not be someone above or below you and in urban settings these are often high rise buildings.  You also own a share of the “common area” which may consist of pools, recreation areas, roads and walkways etc… The third type in this discussion would be a Planned Unit Development or PUD.  This is a bit of a hybrid as these may consist of a group of free standing homes or attached homes, but where you also own a share of some common area.  Typically in a PUD the home owner is still responsible for the outside of their structure unlike a Condo where the Homeowner’s Association typically cares for the exterior.

So what about Town homes you ask?  Well, this is actually an architectural term, not a legal one.  A town home is typically thought of as two story units with no one above or below you, but with a common wall or walls with other homes.  They usually have attached garages and patios.  Town homes can legally be either Condos or PUDs.  This makes it a little confusing at times, but if it sounds nicer to call it a Town home, go for it!  Condominium is the more universal term.

Regarding the question of investment, the old adage is that “condos don’t appreciate as well as SFRs”.  In the past this was true.  But in my experience in the last quarter century here in Southern California, this has not been true.  There is even evidence in some markets where condos have out-paced homes in appreciation in recent years.  On balance I believe they will both increase at about the same rate in a local market.  So the question really becomes one of preference.  Here are some of the pros and cons.

The pros for a condo would include:  Lower expenses due to shared maintenance with the other owners and one monthly fee which generally includes covering hazard insurance (earthquake and fire), routine maintenance of the exterior of your building and common grounds, and sometimes covering utilities such as water, garbage and sewer. (Each complex is unique in what they cover).  Some complexes have pools, spas, and gyms too (fun-factor).  Also attractive is the “Turnkey” lifestyle, especially if you like to travel, or you are simply a workaholic and never home….you can close your door, turn the key, and not worry about watering the lawn.

The cons for a condo would include:  Home Owners Association CC&Rs – (Covenants, Conditions & Restrictions) – These can be very limiting as far as remodeling goes and everything exterior has to be approved by the association. Also you are in close proximity to your neighbors, usually sharing at least one wall with them or someone may be above or below you, so be sure you are a “people person”.  Thirdly there is little to no yard and there may be stairs or an elevator involved to get to your unit.

Pros for a single family home would include privacy and space! No shared walls, and land around your dwelling that only you have the right to walk on, so if you need to be “king or queen of your castle”….better go with single family home.  There are no CC&Rs to restrict your home remodel or expansion in general and no fees for HOA.

Cons for a single family home would include having to do all the upkeep and maintenance and they are at the owner’s expense – alone.  You may also not have amenities such as a pool or spa in your yard, or playgrounds nearby. Thirdly is the cost as you will most likely have to pay more for a single family home than for a condo in the same neighborhood.  Lastly, it is not as social of an environment if you actually are a “people-person.”

So the choice is really up to you, there is no “right or wrong answer”.   Perhaps you should make your own personal list of needs and lifestyle wishes, and see what fits you best.  Whatever you decide contact me, Dennis Beckwith at Southland Properties and I can help you navigate your way to the home of YOUR dreams!