Why a Condo Might Actually Be the Answer to My Millennial Home-Buying Woes

published Mar 19, 2019
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(Image credit: Esteban Cortez)

I’ve got big dreams to own a Craftsman home one day, with a backyard big enough for a barbecue grill, an inflatable pool, and a big dog. But the median asking price for houses in Los Angeles is a hefty $694,200 and there are no signs of an impending cool down. So is that backyard looking more like a balcony and a shared courtyard with neighbors? Is that house realistically… a condo?

A condo (short for condominium) is basically an apartment that you own. Everything inside your space is yours, and everything outside of it—like the walkways, fences, pools, any kind of landscaping, hallways, stairs, and laundry room—is owned and taken care of by a homeowners association (the HOA). The HOA is an elected board of unit owners who oversee the community’s management. They budget resident funds and establish rules to keep the community clean, orderly, updated, and aesthetically appealing in order to benefit each homeowner’s property value.

So, what’s the appeal of condos? And conversely, what are their drawbacks? I wanted to better understand the experience of owning a condo before writing the idea off completely. Could owning a condo actually be better suited for me, a millennial living in an expensive city? Or do my needs and wants warrant owning a house? (I’m living in a pretend world in which I can afford either, by the way.) Here’s what I found (with some expert help):

Pro: Condos are cheaper to purchase

According to The National Association of Realtors, the median U.S. home price for January 2018 was $241,700, whereas the median condo price was only $231,600. Though prices in big cities for both single family homes and condos are higher than the national median, you’ll often save more money choosing a condo. For example, according to the Los Angeles Almanac, the median condo price for 2018 ($529,000) was $102,300 lower the median single family home price ($631,300).

Granted, there are luxury condos, too, like this three-bed, four-bath condo in Santa Monica on the market for almost $3 million.

Con: But have high monthly costs on top of your mortgage

Though the home itself may be cheaper, your mortgage doesn’t include something called an HOA due. These fees can cost anywhere between $100 and $700 per month, according to Investopedia.

Looking at what’s currently listed in L.A. on Redfin, I found HOA dues varied greatly—anywhere from $275/month for a two-bed, two-bath in El Sereno to $426/month for a two-bed, two-bath in Sherman Oaks.

While HOA fees are pricey, Beatrice de Jong, director of residential sales at Open Listings in Los Angeles, California, says that condos are almost always less expensive than a single family home. While they require exterior maintenance and repairs just like any other building, the costs are split among residents.

Pro: You have less responsibility as a homeowner

Aside from making exterior maintenance and repairs cheaper for you, HOAs also actually complete those tasks on your behalf. You don’t even have to hire anyone to mow your lawn or paint your home’s exterior.

Though condo owners need to supply their own homeowner’s insurance for the interior, your HOA fee also usually includes insurance that will cover exterior damage from natural disasters, like floods or earthquakes.

And depending on your dues, sometimes the HOA will even cover trash pickup, water, cable, and internet.

Pro: You can get more amenities

A lot of condos come with community pools, parking garages, gyms, and tennis courts. Some even have cafes, coffee shops, and grocery stores. For example, Luxury condos close to employment centers have transformed Downtown Los Angeles into a “live, work, play” area for young professionals. The Metropolis Los Angeles Tower II includes amenities such as a four-lane swimming pool and spa, areas for volleyball, yoga, cycling, a dog park, and a playground for kids, while the TEN50 offers a gym, entertainment rooms, and a drone landing pad, which is developed for drone deliveries.

Con: But you’ll have to pay for them

Sadly, these upgrades don’t come cheap. The more amenities, the higher your monthly HOA fee will be, since there are more aspects that require maintenance says De Jong. Some condos employ an on-site building manager, too, which means your HOA fee contributes to their salary.

Con: You have less control over price increases

Your HOA fee may also pay for things you might not decide to install on your own if you owned a single family home, like security cameras, which are usually included in condos and covered by fees.

My sister-in-law, who owned and leased out a condo in Minnesota with my brother, told me that HOA fees increase over time to cover future expenses the board plans ahead for (such as repainting the exterior every certain amount of years). According to Realtor.com, this portion of your fees goes into something called a “reserve fund,” which is money socked away for major maintenance projects, like re-roofing, replacing water heaters, and redesign of the building, as voted upon by the HOA board throughout the year.

For most big alterations, the board needs to put the change up to vote. The majority of the owners must agree in order for that decision to go through; however, if you’re in the minority, you will have to pay for whatever everyone successfully votes for, whether that’s an update in landscaping, or getting new carpet for the hallway.

And if there’s issue that needs to be solved immediately, homeowners will need to pay their share of the fix (on top of their monthly HOA fee) upfront. My sister says that at one point, she and her fellow condo owners had to pay thousands of dollars each to get a roof replaced right away. Thankfully, the city allowed them to add that payment to their tax bill as a special assessment, but it was still a big cash expense.

Pro: They retain value

“Since the value of homes is most often determined by comparable sales close by, condos typically maintain a strong value since they are compared to other units in the same building,” de Jong says.

This means that whenever a unit in the building sells for a higher price, your unit will also increase in price and potentially becomes more profitable.

While the value of single family homes is determined the same way—through what real estate agents refer to “comps,” or comparable properties that recently sold—the price can vary wildly if there is a cheap sale on a distressed home or an overinflated purchase on an unmaintained one nearby.

Con: You can’t really be a kooky homeowner

“While some condominiums are relaxed, there are usually strict rules to follow,” de Jong says. “In order to keep the building looking neat, there may be guidelines around paint, mailboxes, or decorations outside or visible to neighbors.”

Since usually the goal of the HOA is to keep the buildings looking cohesive and retain value, you won’t be allowed to, say, paint your balcony a different color from your neighbor’s. Even with decorations like holiday lights—you’ll most likely be ordered to take them down if they’re still hanging after New Year’s Day.

This isn’t limited to condos, though. Many neighborhoods and subdivisions have HOAs, too: You can usually tell if the neighborhood has houses with similar architecture and landscaping. The rules are less strict, but they’re in place to prevent the homeowner from deviating too far from the community’s look and feel (i.e, letting your lawn grow out to epic jungle proportions, or painting your house traffic-cone orange). Like condos, some homes that are part of an HOA come with shared amenities like a pool, gym, or club house.

Con: You may not be able to have a pet

Just like apartment buildings, some condos have rigid rules about pets, either the number you own, the types, or their sizes. While a cat or small dog might be okay, a German Shepherd could be a no-no, considering its size and tendency to bark and bother neighbors. Since your neighbors are technically paying for a peaceful atmosphere, the HOA has the right to decide whether or not the community is pet-friendly or not.

Con: You’re sharing with neighbors

Speaking of noise: Remember, condos are multi-family properties, so you’re essentially living in an apartment or a townhouse—you just own it. So though you’re now a property owner, you’re still sharing a wall (and walkways, hallways, stairs, a parking garage, etc.) with other residents. And like I said above: You’ll have to vote on upgrades and repairs, so some condos do end up having HOA drama. If you don’t like being beholden to other people’s decisions, I wouldn’t recommend buying a condo.

Con: Your “sharing” options are usually restricted

Say you’re going away for the summer. You probably want to rent it out to a tenant or use your condo as an Airbnb, but depending on your HOA restrictions and rules, you may not be allowed to do so. Some HOAs even have restrictions on allowing guests over for more than a certain number of nights (which may not be good for people who love to let friends and friends crash with them!)

The verdict:

As someone who lives in a city and has an hour commute to work, the amenities condos offer are huge selling points. That Craftsman is starting to look less appealing when I think about the time I’ll save with a grocery store in my building or down the street and a fitness center (that I would normally pay $100/month for) a couple hundred steps away.

However, having lived in numerous apartments and now that I’m living in a house, I’m growing more and more attached to the privacy it offers. It’s actually weird thinking about going back to a space in which I have to be considerate of others. And vice-versa: Going back to apartment-living means getting annoyed from time-to-time when my neighbor is blasting AC/DC at 10 p.m. and I’m more in a “sheet mask and chill” mood. Ultimately, living in a house means I have more control… but is it worth the cost?

Thankfully, condo vs. home is not a decision I have to make right at this moment—but if it is one you’re currently making, I hope my research was helpful!

Condo owners, what do you love (and hate?) about the condo lifestyle?