Single-family home vs. condo: Which should you buy?

In the fast-growing real estate market, many aspiring homeowners opt for condominiums because they’re affordable, low maintenance, and might provide nice perks like shared pools.

But the traditional single-family home still has its devotees. Your inclination toward one or the other could change after you review our answers to common single family-home vs. condo FAQs.

What’s the difference between a condo and a house?

The most significant difference between a condo and a house is that a condo is an individual residential unit within a multi-unit building. Houses, on the other hand, are usually stand-alone structures, separated from neighboring residences by private property.

Condos typically share walls with neighboring units, as well as some common areas connecting the units and building amenities (like a gym). Condo owners own their individual unit, but not the building it’s situated in or the property on which it’s built. Traditional homeowners own both the building they live in and the property it’s built on.

Are condos cheaper than houses?

Condos are typically less expensive than homes, though the difference in price varies by geography. This breakdown from Zillow shows that the median sale price for single-family homes consistently outpaced condos in 2019 and 2020. A condo can be a more realistic path to homeownership in a higher-cost market.

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Tip: Not all condo developments are approved for loans from the Federal Housing Administration (FHA). For an FHA loan to be insured, the development should have at least 50% of units occupied by owners (or 30% for new developments). Learn more about FHA loan requirements for condos.

Do condos appreciate in value faster than houses?

While most condos do generally appreciate in value over time, the same Zillow study referenced above shows that condos don’t appreciate in value at the same rate homes do — or at least, they didn’t during the two-year period in which Zillow conducted its research (January 2019 to January 2021). 

Are condos hard to sell compared to houses?

If your neighbors are also trying to sell their condo, similarity from one unit to the next can make it difficult to set your condo apart. 

One way to improve your condo’s chances of selling is to look for a condo with an attractive location within the building. In general, the more bedrooms your unit has, the easier it will be to sell.

Another tip: Renting out the condo could be an option if you’re having trouble selling. But keep in mind that some developments place restrictions on renting.

Do condos take less maintenance than houses?

Landscaping and snowplowing and roof repairs. Oh my! The time and money required to maintain a house can add up in a way that surprises first-time homeowners.

Utility bills are higher in a single-family home than in a condo, too, since you’re responsible for more space.

In condos, like apartments, residents outsource the heavy maintenance work. You’ll pay a fee, but you won’t have to shovel the drive or clear off fallen branches after a storm. But minor maintenance fixes in your condo unit may be up to you, so find out which expenses are your responsibility.

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Tip: A good condo investment is one where the annual increase in the monthly maintenance fee hasn’t gone above the general rate of inflation (about 3%). Otherwise, you may be paying for more repairs than you bargained for.

How much are condo fees? Are they higher than standard HOA fees?

The downside of outsourcing building maintenance? What you save in time, you spend in money.

Condos charge association fees outside of monthly mortgage payments. As a condo owner, you’re part of a community — think of the fees as membership dues. Ballpark, they can run from $100 to $1,000 a month.

Owners of a single-family home may also have to pay fees to a homeowner association (HOA) to cover the costs of shared amenities and services. But condo fees are typically higher than regular HOA fees, as condo owners collectively pay for the repair and maintenance of their entire building. Owners of single-family homes maintain their own homes, keeping shared costs in an HOA down. And while virtually all condo owners must pay condo association fees, only 53% of homeowners belong to HOAs.

Another important thing to keep in mind about condo association fees: You pay extra if other community members don’t pay their dues. To avoid subsidizing delinquent neighbors, find out how many condos the association manages, and how many residents pay on time. If at least 97% of residents are current with payments, that’s good news for your investment. And more condos mean more owners shouldering their share.

Tip 1: Ask how much money is in the association’s reserve fund, or repair fund. The association should have plenty budgeted for unforeseen expenses. In general, a healthy reserve fund is 10% of the annual revenue budget — up to 25% in an older neighborhood where repairs are more frequent.

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Tip 2: Before you buy, make sure at least 90% of condos in the development are owner-occupied. A solid occupancy rate means a well-run association (and more residents chipping in for fees). 

Are condos more urban than houses?

Because condos take up less space than traditional houses, they tend to be located in more urban areas. And urban living isn’t just trendy — it’s often quite practical. If you work in a city and prefer a short commute, or if you just want to live affordably near urban hot spots like shops, restaurants, and train stations, a convenient condo’s easier to find than a house.

Some urban-planning experts predict that most of us will be migrating to cities in the future as the population booms. So for a long-term investment, city property isn’t a bad idea.

Tip: Parking can be a dilemma for condo owners with cars. Find out if the development you’re considering offers parking exclusive to residents, and if there’s an extra cost. Some developments have first-come-first-serve parking areas; others may grant spots to reside


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About the Author: Tung Chi