Condominiums have been increasingly popular with many homebuyers over the past decades. In 2003, they made up roughly 13% of existing home sales, up from 10% in 1993.
Their lure is that they offer some clear advantages over single-family homes. For starters, they've historically been less expensive, appealing to young homebuyers or those of more limited means. Even fiscally robust sorts might opt for less expensive condos than they could otherwise buy, enabling them to beef up their stock portfolios. Condos also typically require little maintenance, so they appeal to older homebuyers or those without the handiness gene.
But condos also come with some disadvantages and risks. For example:
- While nationally the prices of single-family homes have pretty much always gone up over time, that isn't true of condos. In fact, single-family homes can fall in value in some regions at certain times. The condo market is simply more volatile.
- When it's time to sell, there are usually some other units in your condo complex also on the market. This means that the home you're selling isn't so unique and you may lose a little bargaining power.
- The homeowner himself might not have to do much maintenance, but he will have to pay maintenance fees to get it done by someone else.
- Condos are often rented out, and if a complex you move into has a lot of renters, you'll likely find that they don't respect and care for their homes like owners would.
- Not all complexes are alike. Older, more established ones can be in better financial shape, with more experienced and healthier homeowners' associations. Look into such things before buying. Also, try to learn what you can and cannot do to your home. If you want to paint your garage door red or install some funky outdoor lights, you may not be allowed to do so.
Also, know that condo prices have been rising. According to the National Association of Realtors, the average price of an existing condo recently rang in at $174,700, compared with $171,600 for the average single-family home. This is due to more luxury condos being built in recent years.
So what should you do? Buy what you really want and what makes sense for you in your situation. Just make sure you examine each of your options from lots of angles. You might end up opting to buy a less expensive single-family home instead of a condo -- or perhaps you'll get that condo after all, making sure to budget enough money for fees.
Learn more about the ins and outs of buying or selling a home in our Home Center, which also features special mortgage rates. Also, visit our Buying or Selling a Home and Building/Maintaining a Home discussion boards to get some great insights and tips from fellow Fools.