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Buy a Condo Townhome Now or Hold Out for a Single Family Home: 8 Things to Consider

Is it better to buy a condo now or keep renting while you save up for a single-family home? Here's 8 things to consider.

March 25, 2022
March 25, 2022
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Let’s not sugar-coat it: buying a home has gotten harder for most people in 2022, especially first-time buyers. Prices are climbing and so are mortgage rates, and there are far more buyers than available homes.

But is the added difficulty worth tabling your buying efforts for a few years? Or is it worthwhile to find an alternate route into homeownership, even if it means compromising on your wishlist?

This is conversation happening on the /RealEstate subreddit after u/gracefuldork asked “Buy a condo or keep renting?”

Note: Some responses have been edited for length and clarity.

Here’s the post that sparked the conversation:

My husband and I are on the cusp of being priced out of single-family homes (SFHs) in our market. With the rate hikes, our top budget is basically just over what SFHs start at nowadays. So it's not ‘impossible’ but highly improbable.

There's a fair amount of townhomes/condos in our area that pop onto the market. We were planning on waiting until 3-6 more months of failed SFH searching before notching down, but we are considering it now just because how crazy things have gotten in the past month.

For reference we are in southern California.

So the dilemma boils down to continuing renting while trying to save up for a single-family home, or “notching down” for a condo/townhome get into homeownership sooner.

Luckily, the good people of the /RealEstate subreddit had some eggs of knowledge to crack.

1.    A condo or townhome can feel and appreciate like a single-family home

“First house was a townhome. Corner unit. Loved only sharing one wall. Park right in front, 1 car garage. Felt completely house-like, just a tinier backyard.

We got in at $285k on our townhome and comps are going for $500k now. With inflation the way it is, if you stay put 5-10 years, short of a Detroit-level implosion, not much is going to tank your equity. Your money is better off in a 4.x% mortgage, giving you a place to live, than the stock market and certainly any savings account.”


2.    Condos are low-maintenance, but space may be tight

"Condo can be good and bad. Good, is that you won’t have to do much, if any maintenance of the yard, outside etc. cons is that it may be tight, the walls may be thin, and parking may be limited of non existent. The HOA fees is something to take into consideration and also bylaws.

At my market, condos/townhomes are in hot demand due to the easy management and lack of SFH, or affordable SFH."


3.    Buying a condo/townhome now can mean rental income later on

“I enjoy living in condos because I don’t have to do anything and have more amenities than an apartment. From an investment standpoint, they aren’t great. They won’t appreciate anywhere near the rate of a standalone single family home (not single family condos).

They do make pretty good rental properties as well if you outgrow it and want a bigger house. I’m never selling mine because it really wouldn’t make me any money but I could rent it out for $700 profit.”


"They do make pretty good rental properties as well if you outgrow it and want a bigger house. I’m never selling mine because it really wouldn’t make me any money but I could rent it out for $700 profit."


4.    Renting a single-family home puts you at the mercy of a landlord

“Are you renting in a building or considering renting a SFH? One thing to worry about with renting SFHs is that when the market is hot (like these last couple of years), you might find yourself not being able to renew your lease (owners might want to sell their property instead of continuing to rent it out). It’s pretty stressful in that situation, especially with kids in the mix.”


5.    Who knows how high rent will go

“My husband and I are in (Southern California) and had to make the exact same decision. Ultimately decided on a condo (more like a townhouse) in the next county over. It’ll be a bit more expensive than what we are paying for rent right now. But this area is insane and who knows what rent will be in a few years. Our 2bed/2 bath apartment we rented for 2400 last year is going for 3200 now.

The thought of starting a family and having to find a new place to rent, that also takes pets, was a big driving factor.

Edit: I just got a Zillow notification for a rental that meets our specs. It’s been up for 2 hours and they already have 9 applications lol.”


6.    Condos can make good practice homes with less risk for major expenses

“My first (and current) home is a condo. It was great when I bought it since I didn’t know much about home ownership and was able to split big expenses with the other owners. We needed a new roof and some other things here and there. It was great at the time, but looking for a SFH now that we need space for a growing family and a better school district. I would recommend it!”


Related reading: How to Find FHA-Approved Condos And Why Not All HOAs Have It

7.    Condo and townhome HOAs have their downsides…

“Rent until you can afford something with no HOA. If its a townhome/rowhome, make sure it doesnt have an HOA.

HOAs are a huge risk -- you literally cannot do what you want with your own home, and they can assess you at basically any time, and you have to pay.

A home with no HOA, you want to leave and rent it out? no problem. A home with an HOA? gotta check the caps, gotta check the regs, gotta submit the lease to them, etc.

A home with no HOA, but you think you want to replace the roof/windows? No problem. With an HOA? Other owners may not want to replace till its completely failed, might want to replace it with cheap quality, etc. or other other way around -- you might be paying to replace carpet that you think is completely fine and working.

Just not a good situation."


8.    And HOAs have their upsides…

“HOA guidelines keep housing prices up and the neighborhood looking great and free of riffraff. Our house valued 5-7% higher than the non-HOA single-family homes in the area. Assessments are extremely rare and when they do happen, they first use the HOA’s surplus before passing the assessment fees on to the HOA residents. Even if you have to pay, it’s usually a small fee quarterly.”


Start your condo or single-family home search here

Whether you decide on a condo or a single-family home, it’s likely going to be better for you long-term than renting.

Get started now so you’re ready to buy when you find the right property.

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