If you are a first time homebuyer, getting into the real estate market is exciting but the new responsibilities may seem overwhelming at first. You will have a new financial commitment, as well as new duties to maintain your property inside and out.
Renting a home or an apartment surely seems a little easier but you are only throwing you money away and helping your landlords financial situation – not your own.
Sometimes first time buyers choose a condo over a home as they figure it is the best of both worlds. A condo still requires the financial commitment to a monthly payment but less responsibility, such as mowing the lawn, shoveling snow etc.
There are both pros and cons of purchasing a condo. Ultimately it will depend on where you are in life and what your preferences are.
Pros of Buying a Condo for Your First Home
Condos are More Affordable than Homes
According to the National Association of Realtors (NAR), the median existing house price was $241,700, as of January, 2018. The NAR also reported the median existing condo price was $231,600, also as of January, 2018. That’s a difference of only $10,000, but the gap is much wider in a lot of markets.
No Repairs or Maintenance Required for Exterior
One perk of renting is that when the hot water heater breaks, you pick up the phone and call the landlord. You don’t have to pay for any unexpected repairs. The landlord also takes care of maintenance responsibilities like raking the leaves, lawn care and painting.
With a condo, the exterior owned and maintained by the homeowner’s association (HOA). The owner is responsible however for the interior.
A Condo Prepares You for Owning a Home
Buying a condo might make a nice transition from renter to homeowner. A condo allows you keep some of the perks of renting yet acquire some new responsibilities – just not as many responsibilities as owning a home. Owning a condo will help you manage your money better and you will feel what it is like to decorate and care for a living space that is your own.
Cons of Buying a Condo for Your First Home
Condo Association Fees
As mentioned, the homeowner’s association is responsible for maintenance and repairs to the exterior of the property. But that comes at a cost, which is paid every month in association fees. So although it is nice not having any outside duties, there will be an additional expense which can range from $100 to several hundred dollars depending on the community you live in.
Typically Less Land
One of the great things about owning a home is having a backyard to enjoy. But with many condos, the outdoor space is limited to a balcony. Or if, there is a yard, it is typically much smaller than a yard you would find with a home. So if you are a pet owner, love entertaining outdoors or simply place a lot of value on your outdoor space, you may be better off purchasing a home.
Condos Can Be Harder to Sell
Condos can be harder to sell than single family homes for a a number reasons.
First, there are the association fees that are beyond your control. Buyers will take this into account as part of their monthly payment. And if your association has a higher fee compared to other properties in the area, it could be tough to sell.
Then there is the uniqueness of a home that a condo just cannot compete with. Even though a home requires additional outdoor maintenance, it still allows homeowners to be creative and customize things like landscaping and exterior paint.
But there will still be a market for condos, as long as there are first time buyers, empty nesters and busy professionals that don’t want the fuss of maintenance. Just keep in mind that selling a condo may not be as easy as selling a home – especially in certain market conditions.
Shopping for a Condo or a Home in Metro Detroit?
Julie Krumholz is a Metro Detroit mortgage lender that serves the entire state of Michigan. She has over 30 years in the mortgage industry and brings a wealth of experience to her clients.