Everyone dreams of living in their perfect home, but buying one is a significant and challenging decision. As someone who has guided many clients through this process, I know firsthand the importance of considering various factors like neighborhoods, housing styles, surrounding amenities, and cost.
Contrary to what some might think, condos often sell faster than single-family homes due to their affordability, smaller size, and lower maintenance needs. However, condos also come with unique selling points and challenges that you should be aware of before listing.
In this post, we’ll discuss the general aspects of condo ownership and how it compares to owning a single-family home. We'll explore what makes condos so popular and what factors influence how quickly a unit sells.
Let’s dive in.
Quick Summary
- Condos are often more affordable than single-family homes, making them an attractive option for first-time buyers and young professionals.
- One of the biggest advantages of owning a condo is the low maintenance and access to amenities like gyms, pools, and common areas.
- Condos typically spend about 30-45 days on the market before selling, which is often faster compared to single-family homes that can take 60-90 days.
Is Owning Condos Different from Owning Single-Family Homes?
The amount of condo ownership you acquire when purchasing a unit vs. a single-family house is the fundamental distinction. A single-family home is separate, whereas a condominium is typically joined to other units of a similar type by shared walls [1].
For instance, fewer shared walls mean that three walls of a condo unit may be privately owned while the fourth is shared, which might prevent you from doing anything as simple as erecting a shelf without permission.
Typically, condos are less costly than single-family residences. Condos have substantially smaller interior bedrooms and storage space, and because you simply have to maintain the inside, there are fewer maintenance demands. The roof, the external walls, and the outdoor space are all taken care of. These are handled by the condo associations or homeowner's associations.
But who is the HOA that handles the condo? A homeowners' association (HOA) composed of representatives from the condo owners oversees each condominium complex and lives in a condo development. Every condo owner pays a monthly fee to the HOA in order to use the common amenities. Homeowners' association fees may include costs for upkeep, utilities, security, insurance, and capital projects.
Another thing to know is that condo developments mean that the property on which the units are located is owned by the developer. Ownership of the unit is transferred to the buyer after a renter buys it.
Condo vs. Single-Family Home Comparison
| Factor | Condos | Single-Family Homes |
|---|---|---|
| Average Days on Market | 30-45 days | 60-90 days |
| Ownership Structure | Unit interior + shared common areas | Full property ownership |
| Maintenance Responsibility | Interior only | Entire property |
| Monthly Fees | HOA fees ($200-$800+) | None (unless in HOA community) |
| Privacy Level | Shared walls, closer neighbors | More privacy, standalone structure |
| Amenities | Shared facilities (gym, pool, etc.) | Private amenities only |
| Financing Requirements | 10% down (conventional), 3.5% (FHA) | 5% down (conventional), 3.5% (FHA) |
| Target Buyers | First-time buyers, young professionals | Families, long-term residents |
| Appreciation Potential | Moderate | Generally higher |
| Resale Flexibility | More restrictions due to HOA rules | Greater flexibility |
What Makes a Condo Popular?
Condo life has access to amenities like a fitness centre, pool, in-unit washers, a dog park, a different unit stand, or a parking garage, which may be available, depending on the property.
You can take advantage of these common amenities without having to maintain them yourself because the HOA normally takes care of that.
This is an affordable choice in areas where single-family homes have skyrocketed in price.
The condo is an affordable housing option for recently divorced people to stay in their existing neighbourhood.
It is a means of taking the first step up the property ladder for first-time purchasers.
It is the nearby buildings where it gives convenient access to entertainment malls, shopping malls, and public transit lines.
How Are the Condo Prices Decided in the Condo Market?
According to a real estate agent, it's crucial to establish your target price and your bottom line price when choosing the property price for your apartment.
If your property values are too high, it won't be as simple to sell, whether it's an apartment or a house. This is when a real estate agent is required to ensure that the work is done in less than a third of the cost you have incurred.
When selecting whether or not to buy a condo, there are a few key elements to take into account that have an impact on the condo's market value.
The unit's location inside the building
The higher floor units for a condo are the best. The only exception is if the condo is in some walk-up buildings, the top-floor unit is less desirable.
Corner units are more in demand since they feature more windows and fewer common walls.
Nobody wants to glance out of their window and see into neighbouring units, a smelly trash room, or have any other unsightly eyesore, even though the view doesn't fall under the sort of jaw-dropping vistas.
Fewer buyers prefer the apartments close to the elevator because they might see more activity and noise as a result of people coming and leaving all day and night.
Facilities in the individual condo and within the building of condo owners
Generally speaking, the more bedrooms your condo has, the more desirable it will be. The condo with two or more bedrooms comes in a high-demand location as per the buyers. A separate bathroom will add an advantage to the condo.
Likewise, the larger the condo's square footage, the more likely people to prefer it. You could be buying a fantastic property, or you might be getting a lemon if all of the condominiums in the building are 2,000 square feet each, and you purchase the top unit, which is one condo with 14,000 square feet total.
In addition, make sure the apartment has a split floor plan that makes the most of the area. Bonus rooms, hallways, and closet columns reduce usable space. Some local real estate agents create irregularly shaped rooms or room dividers. They significantly make the furniture placement difficult.
It is very difficult to find street parking. Hence, people always opt for gated parking. This is the reason condos with a guaranteed parking area are big selling points.
Talking about the facilities within the building. Even when it comes to amenities in a building, more doesn't always equate to better. You can increase your housing association fees by an additional dollar for each and every amenity in the building.
Think about the amenities from the perspective of future potential buyers. For instance, a state-of-the-art fitness centre, sauna, and gym in-unit amenities might not be the most desirable feature to prospective retiree buyers. But, only higher condo association fees make it difficult to sell a condo.
In many buildings, elevators are a necessity, although their upkeep is more expensive than that of stairs.
Consequently, an elevator can be considered a luxury if the building is small and popular with inhabitants who are active.
Why Does it Become Difficult for a Condo Owner to Sell a Condo?
Condominiums continue to be more difficult to acquire and sell, in large part due to financing requirements. The entire complex must now be FHA-certified in order to qualify for FHA financing. It currently only requires a 3.5 percent down payment (which may be a gift). Further, it includes a lower credit score and a larger debt-to-income ratio.
You no longer have permission for single-unit spot approvals. Additionally, FHA financing permits sellers to cover up to 6% of the buyer's closing costs. For cash-strapped homeowners, the FHA is the preferred (or required) source of financing. Nevertheless, they cannot purchase condos unless the complex is FHA-approved.
Contrary to the normal minimum 5 percent down payment requirement for houses and townhouses, conventional financing now typically needs a minimum 10 percent down payment for condos.
Typically, the buyer must provide at least 5% of the down payment. However, the FHA permits the down payment to encompass gifts. It allows a maximum 3 percent seller contribution to buyer closing costs under conventional financing. You can have the association fees figured into the monthly installments for which a buyer has the authority for both condos and townhomes. The condo fees are more than half of the townhomes.
FAQs
1. How do condo sales compare to single-family home sales in today's market?
Condo sales typically move faster than single-family homes, often selling within 30-45 days compared to 60-90 days for single-family homes. This is primarily due to their affordability and appeal to first-time buyers and young professionals. However, local market dynamics can significantly influence these timelines, with hot markets seeing even faster condo sales.
2. What factors should I consider when setting an asking price for my condo?
When determining your asking price, analyze comparable units in your building and neighborhood, consider your unit's location within the building (higher floors and corner units command premium prices), and factor in unique amenities. Local market dynamics play a crucial role, so work with a real estate agent who understands current pricing trends and can help you set a competitive asking price that attracts potential condo buyers.
3. How do condo association's rules affect selling a condo?
Condo association's rules can significantly impact the selling process by restricting certain modifications, limiting rental options, or requiring specific approval processes for sales. Some associations have right-of-first-refusal clauses, pet restrictions, or guest limitations that may deter potential condo buyers. Review your condo association's rules thoroughly before listing to understand any selling restrictions.
4. What makes condos more challenging to finance compared to single-family homes?
Condos often require higher down payments (10% for conventional loans vs. 5% for single-family homes) and additional FHA certification for the entire complex. The condo association's financial health, insurance coverage, and percentage of owner-occupied units all affect financing approval. These financing hurdles can limit the pool of potential buyers but shouldn't discourage selling a condo with proper preparation.
5. How do HOA fees impact the appeal to condo buyers?
HOA fees directly affect affordability for condo buyers, as lenders include these monthly costs when calculating debt-to-income ratios. While fees cover valuable services like maintenance and amenities, excessive fees can price out some buyers. Clearly communicate what's included in HOA fees and how they compare to the costs of maintaining single-family homes to help justify the value.
6. What unit features are most important to potential condo buyers?
Potential condo buyers prioritize units with multiple bedrooms, dedicated parking spaces, good natural light, and desirable locations within the building (higher floors, corner units, away from elevators). Storage space, in-unit laundry, and modern appliances also significantly influence buyer interest. Understanding what appeals to your target demographic helps position your unit effectively.
See Precondo for more information on pre-construction condo properties for sale.
References:
- https://www.bankrate.com/real-estate/condo-vs-house/
