Condo vs. House: Which Is Right For You?

Choosing between a condo and a house can stir up a whirlwind of questions. But here’s the reality: the perfect choice rests on your unique needs. Your lifestyle, finances, and future aspirations play a significant role in determining the right fit.

To help you unpack the condo vs. house conundrum, we reached out to a pair of top real estate agents who specialize in condominiums.

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First, what is a condo?

A condo, or condominium, represents a private residential unit within a larger structure or complex. It resembles an apartment that you own. Along with your unit, you share ownership of common spaces with fellow residents. These communal areas could encompass gardens, gyms, pools, or even a rooftop terrace. According to the National Association of Realtors, condos represent roughly 10% of home sales in the U.S., a figure that continues to rise as urban living grows in popularity.

“When comparing the differences between a single-family home and a condo, they are like different food groups,” says MaryBeth Harrison, a top Dallas real estate agent with 34 years of experience. “Is owning a single-family property better than a condo? Not necessarily. It all depends on your lifestyle and your needs at the time of purchase.”

Condo vs. House: Who owns what?

Ownership of a condo and a house varies significantly, and this distinction fundamentally impacts your responsibilities and rights as a homeowner — as well as your decisions about which property to purchase.

“When owning a single-family home, which includes a townhome, you own the ground below you and the air above you,” Harrison explains. “Owning a condo, you only own the walls once you enter the unit. The ownership of the entire building is often split by a percentage of owners, as is the common area.”

With a condo, the exterior walls, garden, parking areas, hallways, roof, and any amenities come under shared ownership with the other owners in your complex. This shared space is managed by a Homeowners Association (HOA), a board composed of unit owners elected by fellow residents. The HOA sets rules for the community and oversees maintenance of shared spaces. A condo owner contributes to a communal fund, commonly known as the HOA fees or condo fees, to cover these costs.

On the other hand, owning a house means you hold the rights to the entire building structure and the land it stands on.

“Owning a single-family home is the highest form of property ownership,” Harrison says. “You own any minerals, water, etc., that might run under your property. You also own the air above you, so if a neighboring property needs to bring in a crane for construction, and it will pass over your property, they must compensate you for that right.”

This ownership includes the front yard, backyard, and anything in between. As a homeowner, you assume complete responsibility for maintaining the property, from mowing the lawn to fixing a leaky roof. There’s no HOA to lean on for these tasks unless you live in a planned community with its own association.

Condo vs. House: Both can have HOA fees and rules

“Do not be confused if your single-family home or townhome is located in an owner’s association, and it often is, you still have full ownership,” Harrison explains. “Townhomes are usually in a HOA due to common areas. Homes located in a planned community with a public pool, clubhouse, playground, etc., are usually charged a fee to maintain the common areas. They are also in a HOA.”

The difference? How much you pay and what you’re paying for.

“With a condominium, you’re likely going to be paying a larger HOA fee, or condo fee,” says Kim Alden, a HomeLight Elite agent in Illinois with nearly 20 years of experience. “The HOA is going to take care of the exterior. They’re going to take care of the roof. They’re going to maintain the hallways in the foyer. So, you’re going to have less maintenance to worry about because you’re really only taking care of the space from the drywall into your unit versus from the drywall and outside.”

Alden advises condo shoppers to take a good look at the HOA fees. “How is the HOA fee on a condo going to play into your monthly payment? Normally, HOA fees on condos are a lot higher than an HOA fee on a single-family home. Sometimes, the condo fees weaken your buying power, but take away the need and expense of having to do maintenance.”

Condo vs. House: How do you decide?

Alden says, condo fees are one of the biggest balancing points of the condo vs. house decision.

“If you go with a single-family home, you might get something a little bit bigger with a smaller HOA fee. That’s the biggest topic — how much more it’s costing you a month with the larger HOA fees and a condo versus a single-family home. And then you need to balance that with desirability. Do you want to take on the maintenance? Do you want someone else to take care of it? So, it comes down to asking, ‘What do you want for your money?’”

Let’s look at the benefits and drawbacks of a condo vs. a house so you have more facts to place on your decision scale.

Pros of living in a condo

Less maintenance: Condos are perfect for those who prefer a low-maintenance lifestyle. The HOA manages external repairs, landscaping, and amenities, leaving owners to handle only their unit interiors.

“A condo owner is going to have a lot less maintenance. The single-family homeowner is going to have to maintain the lawn, the trees, the landscaping, the snow removal, and they’re probably going to have to pay for their trash removal,” Alden says, adding that “Someone who is single or a little bit older might want the luxury of not having to worry about maintenance.”

Amenities: Many condos offer access to shared amenities like pools, fitness centers, and recreational rooms, which could significantly enhance your living experience.

Alden says that, compared to most single-family homes, the amenities offered in many condominium communities are a scale-tipping factor. “Normally, there’s really no comparison because there are often a lot more amenities in a condo. They’ll have a workout room, they’ll have a recreation center. They may or may not have a pool. Those amenities can be very desirable to people.”

Affordability: Generally, condos are more affordable than houses, making them an appealing option for first-time buyers, those on a budget, and those wishing to downsize.

“Some people’s first purchase is a condo because they’re looking for something a little bit smaller and a little easier to manage than a house,” Alden says. “It often comes down to expense; it’s typically more expensive to hold onto a single-family home than it is a condo — in regards to maintenance on the outside.”

Community: Living in close proximity to your neighbors can foster a strong sense of community, particularly in condos that host social events or have communal facilities.

“You may like having more people living around you versus a single-family home,” Alden suggests.

Cons of living in a condo

HOA fees: The perks of condo living come at a cost. As noted above, HOA fees can be steep, and they’re an ongoing expense that can increase over time.

“There will be monthly dues that pay for common area maintenance, the management company, and common utilities, such as outdoor lighting and water,” Harrison says.

Less privacy: Given the close living quarters, privacy can be a concern in condos. You might hear your neighbors or bump into them in shared spaces frequently.

Potential for special assessments: If the HOA’s reserve fund falls short for a significant repair or improvement, you might face a special assessment, which is an additional cost on top of your regular HOA fees.

Limited control over property changes: Want to paint your front door a different color? In a condo, you’ll need the HOA’s approval for changes that affect the building’s exterior or common areas. Other rules can include noise control, banning outdoor storage, pet limitations, tenant behaviors, community cohesion, and even restricting your right to rent out your condo.

“The homeowners association governs these rules and regulations,” Harrison says, adding that, for some people, this loss of autonomy can be challenging. “Sometimes, the entire building is owned by an entity, and you only have ownership and control of the shell of your condo unit.”

Pros of living in a house

More control over property: As a homeowner, you have the freedom to make changes to your property without needing approval from an HOA.

Increased privacy: A house generally offers more privacy than a condo, given the increased space between you and your neighbors.

Potential for personal customization: With a house, you can embark on a range of home improvement projects to make the space truly yours.

No HOA fees: Unless your house is part of a subdivision with an HOA, you won’t need to worry about these monthly fees.

Cons of living in a house

Maintenance and repair responsibility: When you own a house, you bear the responsibility for all maintenance and repairs, which can be time-consuming and costly.

“With a single-family home, you need to put aside a little bit more money for maintenance because you’re maintaining the exterior,” Alden says. “You’re not going to have to do that in a condo.”

Potentially higher initial costs: Houses typically cost more than condos upfront, which could stretch your budget.

Less communal feel: Depending on the neighborhood, living in a house might lack the close-knit community often found in condo complexes.

Higher utility costs: Houses, especially larger ones, generally come with higher utility costs than condos. With a house, you’re responsible for all utility expenses, including heating, cooling, water, electricity, and sometimes sewer and trash services.

Using data from the U.S. Bureau of Labor Statistics, Forbes reports that Americans spend an average of $5,152 per year on utilities. In contrast, the bureau estimates the average utility cost for people living in condos is only about $1,700 annually. These costs can vary widely based on numerous factors, including local utility rates, the size and efficiency of the home, and individual consumption habits.

At a glance comparison

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Condo vs. House: Finances and property values

When contemplating the choice between a condo or a house, it’s important to grasp the financial implications of each choice. A thorough understanding of both upfront and long-term costs, the role of HOA fees, property taxes, mortgage differences, and investment potential can guide you toward making a wise decision that aligns with your financial capability and goals.

Upfront and long-term costs

In general, houses tend to cost more upfront than condos. The National Association of Realtors reported in 2023 that the median sales price for single-family homes was $374,900, while condos stood at $273,300. However, the initial purchase price doesn’t paint the whole picture.

While condos usually have a lower purchase price, as noted above, they often come with monthly HOA fees to cover maintenance and amenities. These fees can range from a modest $200 to a hefty $500 or more per month, depending on the location and the range of amenities provided. In contrast, houses typically don’t have these recurring fees unless they’re in a planned community with an HOA.

Over the long term, the cost of living in a house may increase due to maintenance and repairs. A rule of thumb from financial experts suggests setting aside 1% of the purchase price of your home each year for ongoing maintenance.

Understanding the impact of HOA fees

While HOA fees in condos cover amenities and maintenance, it’s essential to remember that these are ongoing expenses that you’ll pay for as long as you own the property. Additionally, the HOA might levy special assessments for significant upgrades or unexpected expenses, which can add to your costs.

Property taxes

Whether you own a condo or a house, you’ll be responsible for paying property taxes. The tax amount varies by location and is usually a percentage of the assessed value of the property. In some areas, condos have lower assessed values than houses, leading to lower property taxes. However, this isn’t always the case and depends heavily on local tax laws.

Mortgage differences

While the process of getting a mortgage for a condo or a house is similar, lenders might have stricter requirements for condos. For instance, they may require a higher down payment or have rules about the percentage of units that must be owner-occupied.

Appreciation rates

Most condos appreciate in value but at a slower rate than single-family homes. For example, a condo might appreciate at 3% year-over-year, while a single-family home might appreciate 5% in the same timeframe.

But just like any home, appreciation rates are influenced by factors like location, walkability, amenities, market demand, population growth, and how well the property is maintained.

However, while value growth rates may differ between houses and condos, condos typically hold their own. In a recent data review, the average condo values grew from $244,800 in May 2018 to $338,440 in May 2023, a commendable boost of 38.25%.

Financing

“There is not a big difference in the financing process,” Alden says. “If the buyer wants to do an FHA loan, you just have to make sure that the building is FHA approved because not all condo developments are FHA approved. And FHA is a very popular loan product. You just have to do your due diligence on the front end and check with the management company to see if they can use your loan.”

Condo vs. House: Lifestyle and vision

Choosing between a condo and a house isn’t solely a financial decision; your lifestyle plays an equally pivotal role.

“I have a questionnaire that I give to my clients,” Alden says. “I ask, ‘What are you looking for in your home? What do you see yourself doing? Do you see yourself sitting in a hammock in the backyard? Do you see yourself mowing the grass or tinkering in a garden?’ You need to picture what you want your lifestyle to be. That can help you decide where you might find the best fit — what you want to be doing outside at your home.”

Comparing the two lifestyles, considering the importance of location, family needs, community engagement, and security and privacy nuances can help shape a clearer vision of what to expect.

Smaller space living

Condo living often resembles a blend of home ownership and apartment living. It’s a lifestyle that favors convenience and community engagement over space and privacy. If you enjoy being at the heart of the action, relish shared amenities, and prefer minimal maintenance, condo living may suit you well.

On the other hand, houses offer more privacy, control, and space. If you value a sizable yard for gardening, appreciate the flexibility to personalize your living space extensively, or crave the peace that comes with larger living spaces, a house can be your ideal choice.

Importance of location

Location weighs heavily in your decision. Condos are frequently found in urban areas, close to shops, restaurants, and entertainment venues. On the flip side, houses are typically located in suburban areas, where you can enjoy more space and a quieter environment. The best fit for you depends on your preferred surroundings and proximity to amenities.

Family considerations

Your current or anticipated family needs influence the decision between a condo and a house. Houses often provide more space for growing families and can be more accommodating for pets. On the other hand, condos might suit singles, couples, or retirees who require less space and desire a community-oriented environment.

Community engagement

Condo living often fosters a stronger sense of community because of shared spaces and communal activities. Regular interactions with neighbors are commonplace. However, if you prefer less frequent social engagement or require more privacy, a house might be the better option.

Security and privacy

Condos often provide a higher level of security with features like keycard access, doormen, and close neighbors. However, this comes at the expense of privacy due to shared spaces. In contrast, houses offer more privacy, but security measures are typically the homeowner’s responsibility.

Ultimately, the choice between a condo and a house heavily depends on your lifestyle, values, and personal preferences. Taking time to reflect on these lifestyle considerations will lead you closer to a decision that feels like home.

Condo vs. House: Rules and responsibilities

When you buy a condo, you automatically become part of a condo association, usually organized as a Homeowners Association (HOA). This organization is responsible for managing the shared spaces, setting and enforcing rules, and collecting dues to cover common expenses. HOA’s legal authority over the condo complex and its residents is bound by its Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

Houses, unless they’re part of a planned community, typically don’t come with an association. However, if a house is part of a subdivision with an HOA, similar rules apply, but they usually have less control over your individual property compared to condo associations.

From colors to pets

As mentioned in our cons list above, condo living comes with a set of rules laid out by the condo association. These can dictate everything from the color of your window treatments to the types and sizes of pets allowed. Violating these rules can lead to fines or legal action from the association.

In contrast, houses usually have fewer restrictions unless they’re part of a subdivision with an HOA. As a homeowner, you generally have more freedom to modify your property as you wish.

The role of insurance

Insurance is an essential legal consideration for both condo and house ownership. For condos, the association typically carries a master policy covering the exterior of the building and common areas. However, condo owners must also hold their own insurance policy, known as an HO-6 policy, to cover the interior of their unit and personal belongings.

For houses, homeowners must carry a policy (usually an HO-3) that covers the entire structure of the home and their personal belongings. Remember that insurance policies vary, and it’s important to understand what your policy covers.

Condo vs. House: Making your big decision

When it comes to choosing between a condo or a house, the decision isn’t a one-size-fits-all situation. It requires a careful evaluation of your personal needs and preferences, financial readiness, and other nuanced factors. The guidance of a real estate agent can be invaluable during this process.

“It all comes down to what your vision is and what your house is going to mean to you,” Alden summarizes. “Do you want to be outside in your own yard? Do they want to plant a garden? Do you want to cut grass? Or do you want a pool and other amenities you don’t have to take care of? What is your vision of how you are going to live in your house?”

At HomeLight, we can connect you with top-performing real estate agents in your area who understand the ins and outs of buying a condo or a house. You don’t have to navigate the condo vs. house conundrum alone. You can team up with a highly-rated expert on your quest for the perfect home.