The words condo and townhouse are often used interchangeably; but is that correct? People looking to make an investment in their future, emotional stability, and financial security often make the choice to purchase real estate, and condos/townhomes are a huge slice of that real estate pie! There are advantages and disadvantages to a multiple family dwelling versus a single family home, so let’s take the time and do our due diligence to understand the difference between the term condo and townhome as it relates to real estate. Then, you will be equipped with the knowledge to make the right real estate investment choice for you and your family.
Does it matter?
Housing choices are personal and significant, impacting daily living and financial health. For those considering property ownership within shared communities, condominiums (condos) and townhomes (townhouses) are popular options. While they may appear similar at first glance, key differences in ownership, structure, and lifestyle can significantly influence your decision and your future happiness with that decision. Let's explore these distinctions to help you make an informed choice.
Ownership Structure
Condos: When you buy a condo, you're purchasing the individual unit. This includes the interior space and some of the finishes within the walls. The rest of the property, including the building's exterior and shared amenities, are collectively owned by all the condo unit owners. Homeowners' associations (HOAs) manage these shared spaces and charge fees for their upkeep. When calculating how much home you can afford to purchase, make sure to calculate the HOA fee in that and keep in mind that the fee has the potential to increase on an annual basis and sometimes special assessments may come into play. So, as opposed to having to pay 100% of the cost to replace something like a roof on a single family home, you’ll now split that cost between the owners who share the roof. So, although special assessments can sound scary and present dreaded financial surprises, at the root they are the cost of homeownership and should be expected to occur to minimize the negative effect they have on your economic situation.
Townhomes: Townhome ownership typically includes the unit's interior, exterior, and the land it sits on. This means you're responsible for the maintenance of your home's exterior and possibly the small yard or garden area. HOAs might still play a role in managing community amenities and common areas, but their influence is usually less extensive than in condo communities. Still, homeowners' associations (HOAs) manage these shared spaces and charge fees for their upkeep. Depending on the structure of the townhome, our previous example about the roof can still apply so keep in mind that the fee has the potential to increase on an annual basis and sometimes special assessments may come into play. So, as opposed to having to pay 100% of the cost if you own a single family home, some of that expense may be split between those who share your roof.
NOTE regarding Homeowner’s Associations (HOA): What expenses does the HOA cover? What do HOA fees cover? Can I make changes to my property with an HOA? How often do special assessments arise in an HOA? What are the ages of the major systems and features that you will share responsibility in paying for? These are things to fully understand prior to concluding the inspection period of your home purchase. This does not need to be a scary deep-dive, but rather just think of it as wisely exercising due diligence to understand the expenses involved in condo or townhouse ownership. These rules often create a beautiful environment that can be enjoyed by all residents, but they should be understood to minimize the risk of frustration in the future. Of course, this is in addition to other rules and restrictions within the HOA that may conflict with your lifestyle. For example, some HOA’s do not allow overnight street parking, so do you have sufficient parking? Each HOA is different and has its unique set of legally enforceable rules of use, restrictions, and covenants that it would be wise to read and understand prior to committing yourself to live under those rules. In a future blog article, we will address some of the most commonly asked questions about HOA's.
Living Space and Design
Condos: A condominium (or condo) is typically designed as part of a larger residential building or complex, often resembling an apartment structure. Some condos are setup like a duplex with a shared wall but no one living above you, while others are stacked units with neighbor(s) above/below and/or beside you. Each unit within the condominium is independently owned, providing privacy and personal space. Condo units vary in size and layout but generally include one or more bedrooms, a living area, a kitchen, and bathroom(s). Common design features in condos include open floor plans, windows for natural light, and balconies or terraces for outdoor space. The overall aesthetic is often modern and efficient, with shared amenities such as gyms, swimming pools, and communal recreational areas enhancing the living experience. The building's exterior and common areas, including hallways and lobbies, are maintained by a homeowners' association (HOA), ensuring a cohesive and well-kept environment.
Townhomes: Townhomes, also known as townhouses, are designed to provide a balance between the compactness of condominiums and the spaciousness of single-family homes. Often constructed as multi-story units, townhomes can feature private entrances, garages, and small front or back yards, courtyards, and other features that give them a more individual home-like feel. The interior design of townhomes can vary widely, but they generally include multiple levels, with living areas, kitchens, and dining spaces on the main floor, and bedrooms on the upper floors. This layout maximizes space and provides a sense of privacy and separation of living areas. The architecture can range from modern to traditional, depending on the development and location. Townhomes in urban areas might emphasize contemporary, sleek designs with open floor plans, while those in suburban settings might feature more classic styles with cozy, family-oriented layouts. The variety in design allows townhomes to cater to different lifestyles and preferences, making them a versatile housing option. Sometimes the building's exterior and common areas are maintained by a homeowners' association (HOA), ensuring a cohesive and well-kept environment. Other times the exterior and yard fall to the homeowner to care for. These are things you will want to understand prior to the end of the inspection period if you have made an offer on a townhome.
Lifestyle and Amenities
Condos: Condo communities often offer amenities like swimming pools, fitness centers, and communal recreational areas. Living in a condo can provide a more maintenance-free lifestyle since the HOA handles many exterior and shared space responsibilities. This can be appealing to busy professionals or those who travel frequently.
Townhomes: While townhome communities might also offer amenities, they typically emphasize more personal space and privacy. Townhome living can feel more like living in a single-family home, with the added benefit of shared community resources. Residents might have more control over their property's exterior and landscaping.
Cost Considerations
Condos: Generally, condos may have a lower purchase price compared to townhomes, especially in urban areas. However, condo owners must budget for HOA fees which can vary greatly between neighborhoods and communities.
Townhomes: The cost of a townhome can be higher due to the additional space and land ownership. While HOA fees might be lower than those for condos, townhome owners should be prepared for potential exterior maintenance costs and the responsibilities that come with owning land.
Resale Value
Condos: As with all real estate, the resale value of condos can vary widely depending on location, market conditions, and the attractiveness of the amenities offered. High HOA fees can sometimes deter buyers.
Townhomes: Townhomes often hold their value well, particularly in areas where space is at a premium. The appeal of having more personal and outdoor space can be a strong selling point. As with all real estate, the resale value can vary depending on location, market conditions, and the attractiveness of the amenities offered. High HOA fees can sometimes narrow the pool of buyers who are interested in the property.
Making the Choice
Your decision between a condo and a townhouse ultimately hinges on your lifestyle preferences, budget, and the level of responsibility you're willing to take on. Condos can be ideal for those seeking a low-maintenance lifestyle with access to community amenities, while townhomes offer more space and a semblance of single-family living.
Remember, whether you choose a condo or a townhome, both options provide the benefits of homeownership with the added perks of community living. Evaluating your priorities and visiting various properties will help ensure you find the perfect fit for your needs. If you are interested in beginning the hunt for a condo or townhome/townhouse, or still have questions about whether a condo or townhome is right for you, just call Jeff Barchi with RE/MAX Fine Properties at 602-558-5200. No matter what stage of the process you are in, he has the tools and experience to help you be successful when buying a condo or townhome in Scottsdale and the surrounding areas.
Happy townhome (or condo) hunting!
