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Not everyone may see being close to neighbors as being a bad thing. When people are not just temporary tenants, you have more of an opportunity to have a "community" than if were an apartment building, and arguably more than a "house with land" as well. Plus you could equally have the chance of having a "fun" neighbor in a house with land--loud, disrespectful of your land, poor upkeep of their property--but without the recourse of an condo association for potential redress.
Generally, yes, condos do no appreciate as fast as single-family houses. But this is also market-dependent. In many higher-value and higher-density areas, condos appreciate just as fast- if not faster- than single family.
Association fees cut both ways. An additional expense, yes, but not one that you don't necessarily pay as a single-family owner (maintenance and upkeep, etc). For those that may not want to have to worry about the upkeep of a single-family dwelling, a condo could be a could choice.
And while association rules may limit your ability to express your individuality, they also prevent neighbors from doing the same. You won't see any lawn gnomes or pink houses in a condo building.
Here in NYC if you want to live in the city and not have to commute you don't exactly have a choice but prices do increase as much or if not more than single family homes because of location.
As for single family homes the disadvantages apply as well. Back in Reno where I grew up all the newer homes are development communities so you're forced to join the HOA, pay the dues and follow the rules. Not being able to paint outside the unit or hang a small flag is nothing compared to an HOA fining you for not having your front lawn or backyard landscaped to their liking or your car not being expensive enough to be parked in your own driveway.
And there are condo perks for us - we've met more of our neighbors than we even did in the suburbs. For us personally, we wanted an area of increased population density because resources are being used more efficiently. We didn't want the maintenance a home requires (our first house had huge HOA dues because they HOA maintained our landscaping and fence). Our utility bills are lower per square foot because the shared walls offer better energy efficiency. We downsized our house by almost 50% because it was important to only use the space we needed and houses don't seem to come small anymore. And we were able to become a one-car family and only use one 9-gallon tank of gas a month because of our prime location. Different strokes for different folks. :)
The point being - no two properties or regions or situations are alike. Which is also why news stories about a tanking economy and a "buyer's market" are fairly useless on a national scale.
However, given this depressed market and the fact that rents haven't come down, it might be a decent time to buy a condo as an investment to rent out. It would depend on the association fees and the local economy though.
First, in our part of the country, many condos are basically duplexes, if not fully detached. Many that are attached are well-designed and only the garages touch the adjoining unit.
As far as the association fee, that cuts both ways. Again in our neck, they are typically $50-200/mo on $200-400K condos, and they cover all exterior maintenance including roof, windows, and exterior walls, in addition to lawn and landscaping care. If somebody offered to cover all that on our current single family home for $150/mo, I would likely take them up in a heartbeat. I wonder if those who rant about dues increases stretched their budget so thin that small increases pose serious budget concerns?
As far as rules go, in many parts of the country nicer subdivisions have similar rules. For example, in our nice but not luxurious subdivision, any exterior modification requires HOA approval. This includes planting vegetation, painting, and lighting. Fences along the property line are also forbidden.
Obvious if one considers a high-rise condo in Manhattan the situation above changes drastically.
If you own a house, you need to pay for external maintenance directly. If you own a condo, you do so through condo-fees. In a well-run condo association, the latter will be more cost-effective. (In a poorly run association, that's the least of your troubles) If you don't want to hear kids screaming, then don't get a condo in a building with a lot of kids. My building has just one-bedroom condos in it. Thus, people with kids have no desire to live here.
If you live in a condo, then you can actually be in an area that's walkable/livable, rather than one where you need a car to get ANYWHERE. I've found that the quality-of-life is much higher when you can go about your daily/weekly business without NEEDING a car. Having tasted the car-free life, I absolutely REFUSE to move back to somewhere where it's necessary, or nearly so, to own a car. So for me, "Lifestyle" goes in favor of condo.
As for condo association rules-- these vary greatly. Definitely something that needs to be gone over with a fine-tooth comb before putting in an offer. I love the way the outside of our building looks, so it doesn't bother me that none of us can do anything to change the outside of the building without a vote. And I can do whatever I like with the inside of the condo (the one caveat being that structural changes need to be approved by an architect to ensure that I'm not knocking out a load-bearing wall or something.) We have a cat.
The appreciates-less thing doesn't bother me, because I'd rather live in a place I love and have the value rise less than to live in a place I loathe and have the value rise more. Also, I think that walkable areas are going to increase in demand in coming years. Sure, price of gas will probably go down for the short-term at one point, but in the long-term, the price of a finite resource can only keep going up.
Everyone's MMV, of course. But all this article tells me is that we have very, very different preferences about where and how we want to live, since none of your reasons make a lot of sense to me.
(And if most people would rather live in a house than a condo, then why are the condos in walkable areas priced the same as houses three times their size in non-walkable areas? I can understand wanting to live in a rural area, and I can understand wanting to live in the city, but I'm unable to comprehend the suburbs, and why some people (very few that I know, but there must be some) actually see the suburbs as desirable.
Another plus for condos: the smaller size. Our 1br gives us plenty of room to work, play, and entertain small groups, but is far easier to furnish, clean, heat, cool, etc than a full-size house (or one of those ungodly McMansions-- I've never met anyone who would WANT to live in one of those things, but whatever floats your boat, I suppose.)
Also, I couldn't afford a house, and renting a place costs far more than my mortgage and condo fee combined.
I have owned homes that have HOA and that was AWFUL. We couldn't even plant a bush without prior approval, and couldn't remove one without approval. We had a gardener and we still got fined about once a month for our grass being too long, and one time we got a patch of little white flower weeds and got fined. We couldn't even park in our driveway!!! We ended up having t measure our SUVs and prove that they wouldn't fit in the garage. Once I cleaned out the garage for 2 days and parked my little car in the driveway. I got fined. My Mom visited for a week and brought a car...we got fined. It was evil. however, our house also astronomically skyrocketed in value because it was a great neighborhood.
Pluses and cons to everything. Next house will probably be a condo, but a townhouse style. Minimal yard, but still a sense of being separate from the neighbors.
Both my wife and I purchased condos right out of college (prior to when we married). In the 3 years we owned the condos mine appreciated $70K and her's appreciated $40K. This more then helped with the downpayment of our home when we went to sold. At 22 years old, I had neither the time dedication or the money to purchase a home. We are now MUCH better off having purchased the condos vs renting.
Just my 2 cents
In any dense metropolis - even ones that do have houses too (like SF) condo and home prices will be locked together as far as general appreciation goes.
I could not agree with you more. I bought a single family home thinking I would love it, but not so much. I hate doing maintenance on the yard, bushes, weeds, roof, gutters, the list goes on and on. I am kind of stuck at the moment, but when the market picks back up a bit I am seriously considering moving into a Condo. I found a condo development close to where all my friends live, easily accessable to the city and my job. Plus it has underground parking and a clubhouse with gym, poker tables, etc...I will take the condo fees for all those ammeneties. If you add a gym membership onto hiring someone to upkeep your yard, shovel snow, etc... for you like I do, it makes the fees not so bad. So while I agree with most of this post, there are some positives for people living in a condo. I would trade the equity from the land for a somewhat carefree lifestyle any day.
I really don't like the idea of homes as money-makers. Sure, it's nice if the value goes up and you make a pretty penny, as long as you're moving to a much less expensive area. Otherwise, you'll be in the same boat as you were, and people just starting out won't have a chance. That's what happened where I lived--the bubble grew to the point where people who made decent money and saved still couldn't afford to buy their own homes (without some ridiculous mortgages, which some people went for and others didn't). I'm glad I was able to buy when I did--had I waited two years, this condo would have been out of my price range.
I say we got lucky, because we have fantastic neighbors on both sides who are nice and don't bother us one bit. And we got lucky because our management company is super responsive and very competent, which I've learned isn't the case everywhere. Also, our monthly HOA fees are very reasonable. We bought several years ago, so the combination of our mortgage payment and HOA fees is less than what we would be paying in rent for a comparable place. I haven't crunched the numbers but I'd bet that would be the case even if I factored in our condo and earthquake insurance policies.
Condo living might not be for everyone, but I wouldn't rule it out just yet if I were you. Unless you dream of maintaining a yard.
It has worked out for me - I bought something I could pay off quickly. Everyone's situation is different and you just make the best decision you can at the time.
I purchased a condo in order to pay the same in mortgage as I was paying in rent. Sure, the downpayment took time to generate, but when I had it, I was then able to purchase a 2 bedroom, rent out one room, and paid less in mortgage than I was in rent. Once I was married, I lived there for 2 more years and eventually we bought a house. Now we rent out the condo. After 19 years, it's almost paid off, and the rent far outstrips the monthly payments. In addition, the value is now 3X what I paid for it.
In my area, if you want to truly live *downtown*, you must buy a condo... and you pay dearly.
You can only build so many condos downtown, so they are limited in supply keeping their value up.
They offer a great lifestyle, no parking problems, and the ability to use the car less often.
If you are talking about joe-blow condos that are scattered around town, then I agree that they are questionable.
Another value of condos is that utilities are lower. Your neighbors act as insulators! I have noticed this when I lived in an apartment... much lower utilities.
This offsets some of the condo fees.
I would also bet that home ownership is FAR more expensive in terms of maintenance as well. I live in a small home, and yet I pay far more in utilities and home maintenance than someone might for a condo fee... so that condo fee is probably cheaper.... and maybe quite a bit cheaper!
Consider the price and maintenance of all your home/garden equipment!... and then the labor of actually using the darn things on hot sticky summer days. Lovely. Then consider having to pay the handyman for various things.
Imagine being able to spend your time engaging in activities of your own choosing rather than having your home dictate what you will do: mow the lawn! clean my gutter! fix my siding! Get those weeds! Remove the dead tree!
So condos may be a great value AND time saver!
If downtown condos drop in price, I'm all over it.
I feel so hopeless! Not a nice way to live. :(
I have owned a single family home and am considering a condo. A condo would allow me to live in a much more interesting, edgy part of town where I could not afford to buy a house. The house was great, but it cost a mint to heat it, etc. I think that the bills we paid were larger than the HOAs I expect to pay.
That said, it is all a question of the lifestyle you want. I like both arrangements for different reasons. If you don't live in New York, The Bay Area, etc, buying a single family home probably makes more sense.
It pays for heat, cable, water, garbage,everything except phone and electric. Nice. way less work (staff do that) more time for vacation! Unit safe while we are gone too!