Are condos a good first-time homebuyer choice?

[Coronet]

In the next 6 months I will hopefully own my first home! I've been saving, have my 20% downpayment and am looking at my first home in the price range of $150-180k. I'm pretty excited!

I was wondering what everyone's thoughts on condominiums are. I was thinking of the benefits including having someone else manage my yard, possibly having an onsite gym/pool, etc. and was wondering in the future when I decide to sell my condo if it will be a good investment in the long run. Do people tend to prefer single homes instead of condos?

[MonkeyMama]

Yes, people tend to prefer single family homes.

The wisdom of purchasing a condo probably varies widely from city to city. In the current city I live in, I couldn't see investing in a condo because housing is inexpensive. I'd maybe consider it because I like the condo lifestyle, but a small home with practically no yard may be a better investment. & there is an abundance of those type homes here -very inexpensive.

That said, we bought our first home in a big city. I am talking about where you couldn't even find a condo for under $200k. Condos were very popular because so few people could afford actual homes. For the time that we owned (2 years) condos appreciated faster than single family homes. In those cases, condos are great investments (there will generally always be buyers). For example, I think my SIL had 100 solid offers when she sold her condo. We picked a bad time to sell ours, so didn't have 100 offers, but it did take 5 minutes to sell with many offers. You just wouldn't get that kind of interest in a house there because the pool of buyers is smaller. But very few markets are as wild as that one.

Personally, I don't want to invest several hundred thousand dollars in an asset I can't sell. So I would consider resale carefully.

[BuckyBadger]

It all depends on what you want. As a single graduate student I got a condo. I knew I didn't have the time for the upkeep that a house requireds. I had a no-frills conso with a very low HOA fee. Now, though, I have a husband and two dogs and a house in the suburbs.

Some people will only ever live in conds, some people will only ever live in single family houses. Some people will go back and forth. A lot has to do with where you live. In a lot of cities you don't really have a lot of choice.

So if you want to own your own home but don't have the time or inclination to do a lot of upkeep, then a condo might be just the thing for you. So you can't really let "is a condo a worse investment than a single family house" make your decision.

Buy which ever one is more suitable for you. Put enough money down and don't overextend yourself on the loan. If, when you finally sell, you've made money? Great! If you only break even? Well, at least you were essentially paying rent to yourselfand you have the equity you've built up in the home.

[Coronet]

Originally Posted by BuckyBadger

Buy which ever one is more suitable for you. Put enough money down and don't overextend yourself on the loan. If, when you finally sell, you've made money? Great! If you only break even? Well, at least you were essentially paying rent to yourselfand you have the equity you've built up in the home.

Yes, that's exactly the way I'm looking at it!

I currently live near Philadelphia and I'm 23 years old. Philadelphia has a very expensive housing market and the only things I can really afford are condos (most are quite nice), and some starter homes that are a bit older (40-50 years old). I'm just debating between the two.

[BuckyBadger]

Originally Posted by Coronet

Yes, that's exactly the way I'm looking at it!

I currently live near Philadelphia and I'm 23 years old. Philadelphia has a very expensive housing market and the only things I can really afford are condos (most are quite nice), and some starter homes that are a bit older (40-50 years old). I'm just debating between the two.

If I were in your shoes I'd go condo. Honestly, if not for the two huge dogs that we now own, my husband and I probably would have stayed in the condo a lot longer. It suited us just fine until the second dog came along and then we decided that not having a yard was no longer an option!

[disneysteve]

Both condos and single family homes have a place in the market and appeal to different demographics. Singles and seniors tend to prefer condos. Families tend to prefer SFHs. There are advantages and disadvantages to each. I see nothing at all wrong with buying a condo as far as future resale prospects are concerned.

[JoshuaHeckathorn]

I bought my first place at 24, and it was a condo. Now I'm married with a child, and I still live in a condo. We love condo living (except the HODs really eat away at me), and will probably never own a SFH even if we have a few more kids. It just doesn't appeal to us. At 23, I think you'll be very happy with a condo in Philly- much more so than you will be with a 50 year old beater that you'll spend every weekend fixing up. I happen to think it's a great time to buy this year, so your timing is good too. Make sure your FICO scores are in good shape before approaching lenders!

[mdcrim]

My main concern about condos are the monthly maintenance fees. Sometimes, by the time you add in the fees, you realize you can actually afford much more than the asking price. In my area, by the time fees are factored in, most people who are looking at condos can afford townhomes...

[Coronet]

Yes, the home owner's assocation fees are anywhere from $190-295/month here near Philadelphia. I've tried to consider the price I'll pay overall with my mortage+HOA fees before I buy.

Thanks all!

[bjl584]

It depends what you want. Personally, the condo life isn't for me. I like my space too much to be that close to my neighbors. I'd rather have a yard that I can landscape and care for as well. You just need to weigh the pros and cons of each and decide what you want.

[littleroc02us]

It's all personal preference. I enjoy the single home family where we can do yard work, mow the lawn and make changes to the exterior. With a condo, depending on the type you get, you may have shared walls, high HOA fees and no right to change anything on the exterior.

[LivingAlmostLarge]

I hate where I live, and have owned a condo, now a townhouse. I'm so done, but financially it's made a lot of sense. What we can afford in a location where homes were out of our price range.

[thomsoad]

My first home was a condo. Has its good and bad side just like a single family. In your case I would recommend the condo. Yeah HOA fees are a PITA expense. But then again so is seeding and mowing the yard when you have a term paper due on Monday.

House is alot of work to maintain for a single individual. Personally, I cant put a pricetag on free weekends.

[Coronet]

Originally Posted by thomsoad

House is alot of work to maintain for a single individual. Personally, I cant put a pricetag on free weekends.

This is great information!


Also should the age of the condo come into consideration? For the price range I'm considering there are condos that are 40 years old in a very good location and newer, 10-15 year old condos in a less desirable location for the same price. Are 40+ year old condos wise or should I go with something newer? I'm not sure how repairs can be made to a building versus to a stand alone home.

[MonkeyMama]

Originally Posted by Coronet

This is great information!


Also should the age of the condo come into consideration? For the price range I'm considering there are condos that are 40 years old in a very good location and newer, 10-15 year old condos in a less desirable location for the same price. Are 40+ year old condos wise or should I go with something newer? I'm not sure how repairs can be made to a building versus to a stand alone home.

I'd inquire to the state of disrepair.

Also, when looking at condos, look at the financial statements for the HOA. Do they have ample cash reserved for repairs? Are there any repairs on the horizon that might require a special assessment?

I would think anything in the 10-40 year old range is probably better than something newer, for the most part. The newer communities have had few years to build up any reserves, and many are plagued with foreclosures or not filled to capacity. Which means inability to collect dues and build reserves for repairs.

The community I live in is only 10 years old, but planned ahead and had enough good dues collection years to have ample cash reserves. (Not condo - but there is a HOA). It's been interesting because our dues continue to go down though there is a huge foreclosure and dues collection problem here. All that said, they planned ahead and thought long-term. I can't say that would help if our community was only 5 years old, though. Because we'd have had no good collection years and high vacancy, probably.

For us, the condo we did buy (our last home) was about 40 years old. It had been completely updated - all new appliances, new roof, recently painted. Basically, there were no repairs on the horizon. Our realtor had a good idea about which condo communities had issues and potential assessments. A good realtor can save you a fortune, in this regard.

I prefer to buy homes that are not due for large repairs. This is one reason why a condo is nice. You really don't have much to maintain, usually. The roof walls, balconies, etc. usually are the responsibility of the HOA. We found a 40-year-old condo could easily fit the "low maintenance" profile.

We actually have a new home now and I have come prefer to energy efficiency and insulation, etc. Our big house is far more energy efficient than our little condo ever was, for one (LOWER utility bills). BUT, I am impressed with the soundproofing on our 40-year-old condo. We only shared one wall, but we NEVER heard our neighbors. I suppose you could find substantial utility savings if you go on the newer side. 10 years old can be pretty impressive on the energy savings front. But older condos can have good insulation and soundproofing.

[khosta]

Originally Posted by Coronet

Yes, that's exactly the way I'm looking at it!

I currently live near Philadelphia and I'm 23 years old. Philadelphia has a very expensive housing market and the only things I can really afford are condos (most are quite nice), and some starter homes that are a bit older (40-50 years old). I'm just debating between the two.

At your age I would def go with the condo!! And if you're in the city or near the city that makes it even more perfect!!! Don't buy a 40 yr old house... eww! That equals lots of maintenance and up keep and I don't think you want that!!! Plus, it will be so fun for you to decorate a cute condo and have friends over!! And tehn one day when you want to sell you could take that money a buy a newer home or build one your self!!

[Scanner]

I didn't read all of the replies but I came pretty close to buying a condo after my divorce.

The thing I always seem to find is that the condo assn. fees don't seem to make sense. You would think that because a bunch of condo's are sharing on roof repairs, snow removal, landscaping, that it would make sense on a scale of economies.

But it just never seems to work out that way.

[thomsoad]

Originally Posted by Coronet

This is great information!


Also should the age of the condo come into consideration? For the price range I'm considering there are condos that are 40 years old in a very good location and newer, 10-15 year old condos in a less desirable location for the same price. Are 40+ year old condos wise or should I go with something newer? I'm not sure how repairs can be made to a building versus to a stand alone home.

Age of the condo building itself really shouldnt be a consideration. Your HOA fees goes towards regular maintanance and upkeep. And on average an HOA would be more reliable to inspect their property then an individual home owner. Remember the funds are designed just for this purpose. Unlike an individual who may forgo yearly maintanence so they can buy a car or go on a vacation. So the roof and overall stability of the building should be just fine.

Also, just as an FYI. In many regards older buildings are more stable and reliable then newer buildings. Back in the day everything was quality materials. Building a home today with the materials used back then would be outragously more expensive. How many homes today use copper pipes and heavy duty iron nails?

Your condo itself depends on whether the person upgraded to unit recently or not. If not then just see what you can do about Seller paid Closing Cost Credit for renovations.

[NolaP]

I'd say if you can, talk to other people living in the building and ask them about pros and cons of living there before you buy. All condo buildings are not created equally. We have a condo in the DC area that is in a fantastic location though it's a bit older, and you can't get a hot shower between 9 a.m. and 3 p.m. It is ridiculous. We have complained about it many times and they says they are working on it but it's been years. If you can get some insider info you will be ahead of the game. Good luck!

[BuckyBadger]

Originally Posted by NolaP

I'd say if you can, talk to other people living in the building and ask them about pros and cons of living there before you buy. All condo buildings are not created equally. We have a condo in the DC area that is in a fantastic location though it's a bit older, and you can't get a hot shower between 9 a.m. and 3 p.m. It is ridiculous. We have complained about it many times and they says they are working on it but it's been years. If you can get some insider info you will be ahead of the game. Good luck!

Good point -- these things can vary. My condo had its own water heater. Actually, I didn't realize that they all didn't. I was in a townhouse-style condo with a basement; maybe the apartment-style condos are different.

I paid my own utilities (gas, electric, water). But some HOA fees include certain utilities in addition to the usual upkeep/landscaping/snow removal stuff. My HOA fee was only about a hundred bucks a month.