When looking for your first (or subsequent) home, you have one big decision to make before you look further: "Should I get a condo, or should I get a house?" The decision depends on where you are in life, and what you are looking to get out of your new home.
Condos have become all of the rage lately. Many developers have come out with advertisements stating “why rent, when you could own?”, and the argument does seem compelling with low interest rates, although housing prices in Canada are currently quite high.
First, let’s look at the advantages and disadvantages of living in a condominium versus an apartment, since these are the two most easily comparable.
A condominium versus an apartment
- Most of the apartment stock is old, whereas most condominiums are relatively new. In general, the apartment will be rather ghetto in comparison.
- For many condos, the total expenses – mortgage principal payments can be comparable to or less than renting a comparable apartment.
- Presumably, you will be less likely to have troublesome neighbours (troublesome here meaning perpetual drunk, drug addict, etc…) since they would not be able to purchase a condo.
- It’s much easier to move out of an apartment and find something else, because you have no obligations beyond the lease, and no real estate agent eating away 6% of your capital.
- You can rent many apartments for a lot less than what a condo would cost, even if you subtract the principal repayments. These apartments will necessarily be located further away or be of lower quality, but you will save money on the rent nonetheless.
- If housing prices collapse, you are pretty much stuck with your condo, unless you want to sell at a loss.
What about houses?
There is something about owning a plot of land, having space to lounge about and play, and a place to grow your own garden. With a house, you can have a nice, private space, all to yourself, and you can also be close to nature. The drawbacks can be increased maintenance as well as commute times. Let’s do a toss-up of houses versus condominiums:
Advantages of a house
- You don’t have to be right up against your neighbours. You can crank up the music, have dogs and other animals as pets, grow your own garden, have your own pool, and more, with less disturbance to others.
- A house generally offers much more space than a condo, giving you room to grow.
- A house is usually located in a much quieter location than a condo, which is a plus if you like peace and being close to nature.
- No condo fees, or unexpected assessments!
- No need to go up a bunch of stairs or wait for an elevator.
Advantages of a condominium
- There is basically no maintenance to do of the unit itself. Well-managed condo complexes set aside a portion of the condo fees to deal with maintenance of the building, so that there is lowered risk of a special assessment, where you would have to pay extra.
- You can be located much closer to the city center and to mass transit for less than what you would spend on a house (if houses are even available close in to the core), thus drastically reducing commute times and transportation expenses.
- So what if you don’t have your own pool… many larger condo projects have their own indoor pools, as well as a sauna, gym, and recreational room.
- Instead of selling, you can rent the unit out and get passive income. You can do this with a house, too, but you have access to a wider pool of tenants if you are located in a decent location close to employment and higher education.
- No HOAs (home-owner’s associations) telling you how often to cut your grass, what color to paint your door, or fining you for forgetting to close your garage door!
So, what do you think? In the end, I believe that it really comes down to personal preference, and it is hard to say that one type is better than the other. Each choice involves trade-offs of one type or another. What is the choice, for you?