According to Kiplinger’s magazine, condo property values dropped an average of 41% when the housing bubble burst, which can be compared to a 30% loss of value in the overall housing market . But the market appears to be rebounding in some areas, and some potential homebuyers may be wondering if a single-family home or a condo might be a better choice for them.
“When people buy a home, I advise them to save about 3% of the cost of the house for maintenance repairs, but condos are virtually maintenance free beyond the interior,” explains Mac Hibbett, a REALTOR from Franklin, Tennessee. “If you don’t want to maintain gutters, manage a lawn or fix a leaky roof, or if you just prefer living in a downtown area, a condo might provide a viable alternative to a house that requires the owner take care of outside maintenance.
While condos may have maintenance perks, they aren’t castles in the sky. Condo ownership comes with restrictions, typically in terms of homeowner association (HOA) policies and fees—expenses that aren’t as often expected when purchasing a single family home. Fees are typically paid monthly and can vary greatly, but these usually cover maintenance of lawn and outdoor buildings, and upkeep for such amenities as swimming pools and workout facilities. Fees in some facilities may also include utilities.
HOA policies are designed to create a harmonious atmosphere between neighbors in a condo/townhouse development. These might include rules like a no- or one-pet policy, caps on noise levels, vehicle and parking limitations, restrictions on outdoor structures—such as garden sculptures, birdhouses, clotheslines—and more. Some homeowners may see these restrictions as a sign that a single-family dwelling is more appropriate for their needs.
“I recommend buyers dig into the covenants and restrictions in HOA policies before they decide to purchase a condo,” Hibbett says. “A lot of people find it helpful to sit down with people on the HOA board and talk about common issues.”
Another suggestion—ask about the HOA’s reserves. Better yet, request an annual meeting packet with the association’s cash, investments and expenses spelled out. It’s a quick way to learn how financially healthy the association is—another consideration for homebuyers leaning toward a condo.
Whether you’re looking for a detached house or a condo, you may want to consider applying for a home loan. Get started now.
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Source(s): Kiplinger.com, November 2012; Money.CNN.com, June 2011; Forbes.com, June 2012; Foxbusiness.com, November 2012