Many first time buyers start their home-hunting unsure about whether they should be investing in a single family house/ townhouse, or a condo. These options offer completely different styles of homeownership, with different lifestyle implications, costs, risks and benefits.
The average single family home tends to cost more upfront than the average condo, because of the increase in square footage. For first time buyers on a tight budget, it could be that condos are the only affordable option. When you look at the long term, however, condos will cost you more per month in recurring costs. Condo fees are tacked onto your mortgage costs and include maintenance, cleaning, and reserve funds. These costs are also subject to increases and special assessments, potentially causing a cost burden over time. On the plus side, large and unexpected costs such as roof repairs are shared amongst all the tenants in the building. Insurance costs are also always lower for condos than for single family homes.
Historically, single family homes have shown greater appreciation rates than condos. Condos, being typically found in more dynamic urban areas, are generally more susceptible to year-by-year market conditions such as the number of new developments in the area. That being said, condos are considered an easy and low maintenance investment option, potentially more profitable if kept for 10+ years as owner occupied units or rental properties.
Condos offer amenities and homes offer space. Most new condo developments come with gyms, pools, saunas, rooftop terraces and lounges. For people who like living close to work and with all their recreational options at their fingertips, condos are the better move. Young occupants who want to network and branch out will find that the common areas of condo projects offer an opportunity to do so.
On the other hand, single family homes offer different types of lifestyle benefits- the extra space gained means more comfort for occupants with children or pets. Though they require more day to day maintenance, detached homes also provide the benefit of being able to truly customize, refurbish, and plan out your own living space. With few to no rules to adhere to, homeowners are free make home improvements that match their own lifestyles, such as planting gardens, building sheds, or customizing their home’s facade.
If you need to sell your condo within 5 years of its purchase, you risk making a loss on your investment. The best returns on the condo market are made in long term “buy and hold” strategies. Meanwhile the risks of family homes lie more in the unexpected repairs and maintenance costs- fixing a roof, dealing with mould or foundational problems, or redoing a lawn. While family homes allow you to skip out on condo fees, you will also be expected to single handedly cover repair costs when needed.
All in all:
A family home is suitable if:
1. You can afford the higher upfront cost.
2. Space is important to you.
3. You want to customize and refurbish your home.
4. You’re comfortable with constant DIY and home-maintenance work.
5. Location (proximity to downtown) is not very important to you.
A condo is a good choice if:
1. You prefer investing in an easy, low-maintenance real estate option.
2. You travel often and don’t want to worry about your property while you’re away.
3. You hate mowing the lawn and don’t have kids who can do it for you.
4. You have enough money in your reserve fund to cover maintenance and condo fees.
5. You enjoy being in constant interaction with your neighbours.