Consider a Condo
If you're considering a change of lifestyle, nothing can make more difference than a new kind of housing.
Approximately 80 percent of homes sold are detached, according to the National Association of REALTORS. People like the privacy, space, and amenities of a single-family home, including large yards, multiple garages, and bonus rooms.
But there’s another way to live that might suit your situation even better. While a home is a castle, you can have a lot more freedom if you share at least one wall with others.
The price? More people around, and a few rules to obey, but hey - that could be fun.
Spend time traveling instead of mowing the lawn. Kids gone? Downsize instead of dusting stuff you don’t use. Want an in-house pool or exercise room? Share the cost with your fellow homeowners, instead of shouldering the costs yourself.
Make life simple.
In 2008, condos accounted for 11.5% of transactions, while townhomes and rowhouses were 8% of transactions. Yet, only 48% of home buyers have children under the age of 18, one of the most compelling reasons to purchase a single-family home.
Young singles are busy building careers and waiting until their mid-to-late 20s to marry and form families. And the largest population – the baby boomers – are now empty nesters. That means that the market for attached homes – condos, townhomes, row houses may be growing, constituting a good buy.
Contrary to popular belief, you can enjoy all the benefits of single-family ownership in an attached home. For example, you buy a fee simple townhome or rowhome in which you own the building and the grounds, but you may still be subject to homeowner association (HOA) rules that prevent you from painting your front door purple when everyone else’s is red.
In condominiums, homeowners own individual units of a building or property such as an apartment within a high-rise, or a single-family townhome in a community. They also jointly own common parts of the property such as the grounds, parking lot and the building itself.
Because of shared ownership and responsibility, condos are frequently managed by a property management company hired by the homeowners association.
Homeowners pay dues, usually one to four times a year, to fund the upkeep of the building and grounds, and pay employees such as bellmen, porters, and guards. Dues include payment toward immediate expenses and escrows for future maintenance such as roof replacement, so that owners can avoid expensive special assessments.
In the past, when home buyers were dominated by married couples with children, condos and townhomes weren't the preferred home for families, unless they were located in highly populated areas where shared wall housing is dominant. Condos and townhomes were also preferred as second homes or vacation homes where occupancy periods would be brief.
Some home buyers may be skeptical about condominiums and townhomes because of their strong appeal to speculators and investors. Like you, they don’t want maintenance and prefer homes with amenities to attract renters and buyers.
And that’s the downside potential. Condominiums and townhomes can be considered greater risks than single-family homes. Banks won't loan money to home buyers in buildings where there are too many rentals. Worse, when a housing market falls, condos tend to fall harder and faster in value than single-family homes, causing desperate owners to rent their units, thereby justifying lenders' and Realtors' worst fears that condos are a poor investment.
But things change. Attitudes change.
Homebuyer demographics are changing, no one's making any more land, and many homebuyers prefer multifamily home environments.
According to a 2006 study by the Mortgage Bankers Association, most condos are in single-family structures like townhomes, they're in the suburbs, and they're more than two thirds occupied by owners, not renters.
There's more. Consider the following:
- In 2006, the number of married households fell to 48 percent, according to the U.S. Census, making more singles and non-traditional households the majority of housing consumers.
- Households are increasingly headed by singles. Young people are delaying marriage. The Census Bureau says that women today marry after age 26, while women in 1960 married at age 20. Half of marriages end in divorce.
- Single female and single male home buyers make up nearly a third of the housing market. Single females make up 42 percent of condo buyers. Single males make up 20 percent, while married couples constitute 30 percent of condo buyers.
- The Tax Relief Act of 1997 introduced unprecedented liquidity and mobility to the housing market, making it possible for more people to own a home, occupy it for a minimum of two years, and move out in two years without taking a tax hit.
- Condo buyers (median age: 43) are older than single-family home buyers (median age 41.) The median age of condo buyers skews older because condos attract the bookends of the housing market -- first-time buyers, and empty-nesters (boomers) and retirees.
- Condominium buildings offer products not easily found in single-family homes such as one-bedroom, one-bath configurations which appeal to singles and first-time homebuyers.
- One out of ten homeowners owns a second home, often a condominium in the city or a favorite vacation spot.
- Investors are 1/5 of the market.
- Multi-family construction is down further than single-family, positioning attached homes for a potential boom.
- The tenure in condos is shorter (4 years in buildings with 5 or more units), while the median for detached single family homes is 6 years, making it the ideal product between renting and owning a single-family home.
All of the above suggest a strong future for condos, as long as they aren’t overbuilt. Attached homes aren't about buying something smaller and cheaper. They're about lifestyle.
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