If you’re in the market to buy your first home, have you thought about which type of property best suits your needs?
For many new buyers, a single-family home with a yard seems like the first-step in homeownership—it’s a great place to have a family, and it’s not hard to envision yourself playing catch or planting flowers in your new home.
But do you have the time, money, and energy to handle all that comes with a single-family property?
According to the National Association of Realtors, as of November 2017, over 5 million existing single-family homes and 720,000 existing condos have sold in the past year. Condos continue to be popular with first-time buyers because they allow you to own a place with all of the amenities you’d want, without having to worry about every little thing that goes wrong. However, you will be giving up benefits like a yard and your own plot of land—so is it worth it?
If you’ve asked yourself whether you should buy a single-family home or a condo, consider the pros and cons of each; what you find out may surprise you.
Looking for your own trees and a yard? A single-family home may be the right choice.
Location And Lifestyle
What is your ideal location? Depending on where you are, you may not have much choice between home types—good luck finding a single-family home in the city, or a condo development in a rural area. When deciding on a location, factor in things like:
- Proximity to restaurants, entertainment, and shopping
- Commute time
- School options
You also need to ask yourself what kind of lifestyle you want. Are you looking for space or are you looking for convenience? Are you averse to cleaning your own yard of leaves or snow—and can you afford to pay someone else to do it?
Maintenance And Association Fees
When you own a single-family property, you and you alone are responsible for maintenance and upkeep. That means if something breaks, you need to have the resources to fix it or to find someone who can.
In a condo, you’ll need to pay maintenance fees, which will cover the cost of upkeep and repair; in a single-family home, you’ll need to set aside this money yourself. Condo fees will help cover, at a minimum, cleaning of common areas, exterior repair, plumbing, landscaping, and support staff. However, it’s important to keep in mind that condo fees vary and typically range from $100 to $700—although higher-priced locations can see fees upwards of $1,000.
One thing to know about condo association fees is that they are pooled so that if another owner doesn’t pay their share, you and other responsible owners could end up making up the difference. Always find out as much as you can about association finances when looking at properties, including how many owners regularly pay dues.
In a single-family home, you set the rules for the entire property, although you may be subject to city codes or a homeowner’s association, depending on location. In a condo, on the other hand, you’ll need to abide by the association rules. Some of the most common regulations you’ll find include:
- Parking limitations
- Barbecuing bans outdoors or on balconies
- Noise restrictions
- Pet limitations
If you want convenience and amenities, take a look at condos.
A significant benefit of buying a condo as a first-time buyer is that they’ll typically be cheaper than a single-family home—the National Association of Realtors’ November 2017 report shows the median single-family home price in the US at $248,880, while the median price for a condo is $242,500. However, condos often also come with higher interest rates, as lenders need to review owners associations to ensure that the property is financially stable. No lender wants to finance a unit in a building that could potentially have financial problems down the road.
When it comes time to sell your property, it’s important to know that condos don’t always appreciate in the same way that single-family homes do. If you and several of your neighbors all sell at once, you could easily get into a bidding war where your price drops lower than you’d like.
One way to protect yourself against this scenario with a condo is to purchase a unit that offers something more attractive than other units—like a better view or a better location in the building.
When considering whether a single-family home or condo is right for you, start by getting preapproved for a loan so you can find the best mortgage rates, see what you can afford, and ultimately, find the right deal. Answer a few questions here, and a home lending expert will contact you with loan options available.