OT: House Question

[Nooch]

Fact or Myth: A townhouse/condo will likely sell easier as a first time purchase than a Single Family.

Thanks!

[Ralph]

So many variables. Price, location, demand, local economy, etc. But generally I would say a house.

[ultraman6970]

Some people like townhomes and no matter if its the 1st or the last home they will get that. Some people like single homes and they will get a single home as 1st house also.

Same happens with cars, but in the case of cars there is more like a utility factor that many people follows, but that doesn't mean that some guys get the wrong car.

[Ken Robb]

Fact or Myth: A townhouse/condo will likely sell easier as a first time purchase than a Single Family.

Thanks!

I don't know what you are asking. Are you thinking of buying something or selling something to a first time buyer?

Because a townhouse by definition sits on a smaller piece of land than a house it usually sells for less than a house with similar square footage. The lower land cost usually allows a townhouse to be sold for a lower price than a house. This often makes them more affordable for first-time (younger?) buyers.

[rnhood]

I would say "myth" as a general rule....but I'm not an expert in the housing market.

[Nooch]

To be more specific, buying.

My wife and I have finally seen the light regarding our current rental situation and are in the market -- we're considering a townhouse for the general affordability and we've been told, ease of resale. The other thought is not knowing exactly where we want to put the roots down (we can't really afford to put them where we want to put them) so it's being viewed as a legit first time, out of it in X-amount of years sort of purchase.

[josephr]

location, location, location.....can't say this enough. Some places (like Detroit) are littered with nice houses/townhomes in ok neighborhoods, there's just no one willing to take the real estate gamble. Over the past year, houses in my neighborhood have gone from 50+ days to contact on the market to less than 2 weeks to contract on average. Its been nuts, really.

not really sure where you live, but if you can catch a good deal on a growth neighborhood, the investment will pay off. I think long-term you're better off in a house, but that also depends if you're in metropolitan areas in the northeast, where townhomes in urban settings are more commonplace.

[Netdewt]

I have seen several friends in the midwest have trouble reselling townhouses/condos period. I would always say house is better for resale, but I'm sure it depends on your market.

[tiretrax]

Too many variables, but I'll say that's a myth. I'd look for a house in a market that is on the upswing - a few, but not too many houses replaced with new construction or total renovation.

[yoshirider]

Here's are some other things to consider when choosing between a SF vs condo/townhome.

I don't know about other locations, but in SoCal buying a condo is nice because there are HOAs and with it you get stuff like insurance on the exterior of the home, community amenities, maintenance, etc. So if you don't want to have to have to deal all that stuff the condo is the way to go. Some of the SFs around here also have to pay HOA fees, but they don't get the same benefits. Of course, the HOA fees on a condo are a lot higher. We pay $360/month in HOA fees vs the SFs in this area only pay around $140/month.

We wanted a SF, but they cost $70k more than our townhome and the SF was smaller too!

[EDS]

Isn't the issue with townhouses that they tend to cater to either (i) lower-income, (ii) luxury/high-end market or (iii) senior market, so if making money on your home was a goal your opportunities are limited outside of the area in general gaining in popularity/interest since your upgrade opportunities are limited to interior? That seems to be the case in the NYC metropolitan region at least based on my very modestly informed perspective.

I guess the exception may be in vacation destinations where there are condos and such aimed at more of the middle-income brackets.

[Scooper]

Personally, I would never buy a condo again. Ever! With shared walls, if you have a noisy neighbor - either the owner or a renter that's renting from an absentee owner - you're pretty much stuck with them. It can become a chronic migraine if they like to host late night parties with loud music and the HOA can't or won't resolve the disruptions. There are also the CC&Rs requiring assessments for major work on common areas and monthly HOA dues.

In a single family house on its own lot, you're generally much more control over your expenses and are more insulated from thoughtless neighbors.

I own my own single family home now and could never live anywhere there are common walls again unless I'm in hospice in a coma and ready to kick the bucket.

It's well worth the premium to get a SF home on its own lot IMHO.

[Ralph]

Here's are some other things to consider when choosing between a SF vs condo/townhome.

I don't know about other locations, but in SoCal buying a condo is nice because there are HOAs and with it you get stuff like insurance on the exterior of the home, community amenities, maintenance, etc. So if you don't want to have to have to deal all that stuff the condo is the way to go. Some of the SFs around here also have to pay HOA fees, but they don't get the same benefits. Of course, the HOA fees on a condo are a lot higher. We pay $360/month in HOA fees vs the SFs in this area only pay around $140/month.

We wanted a SF, but they cost $70k more than our townhome and the SF was smaller too!

I don't look at HOA fees that way. We live in a single family home neighborhood. I figure our RE taxes, insurance, all maintenance and replacement of things over time, etc.....average about $10,000 per year. Our HOA fees are only $300 per year.

Local folks in a nice condo of same value as our home, might pay $500-600 per month in Condo fees, but that includes (and they escrow for) all the things I have to maintain myself, roof, walls, fences, yard, driveway, sprinkler system, pool, painting, insurance, cable systems, on and on etc. So add in their taxes and insurance, and our over all living costs are about the same. It costs a lot of money to keep a home up....condo or S/F.

I'm actually thinking about going the other way. Selling our nice home (no mortgage), giving myself a 4% return off the money, then renting a luxury apartment with garage for $1500-1800/month. No taxes, no maintainence, just insurance on contents, electric bill cut in half, no $90 water bill, no lawn man, no yard spraying for bugs, no $25,000 roof repairs, no solar system to maintain, no busted driveways, no $2000-3000 per year or so tree trimming, and on and on and on. And.....I would still have the money from my house sale. My kids are grown and I think I would be money ahead. Maybe buy something later simple when I see it. Being on a nice bike trail (like we are now) that gets me out to good riding is also very important to me. While being in a good school zone, good shopping, convenient to work, etc, might be main goals, don't forget the riding.

My point is weigh this all very carefully. Sure....you'll likely sell the place for more than you paid for it, but that doesn't mean you made money on it after cost of owning. Main thing if I were in your position is find a nice place to raise my family. Where they play with good kids, safe, etc.

[vqdriver]

if a condo or townhouse is what's realistic for you, by all means take the leap. but a home purchase is a big deal, and the first one is a big step for sure. so definitely do your own due diligence, not just what your agent tells you. walk the neighborhood at day and at night. week days and weekends.
meet the neighbors. i cannot stress this enough. meet the neighbors. if you get a friendly vibe you can probe them for insight as to how the hoa is run and if they're generally happy there or not. your immediate neighbors in condos and townhomes are vital for the reasons mentioned above. they will have a large impact on your experience there.

it's a fun time. happy hunting

[RonW87]

To bring in a little bike content, seems to me buying real estate (that you will actually live in - as opposed to an investment property) with a concern being how easily you can sell it again would be like buying a bicycle because of the ease of resale. Shouldn't the main concern be how much you like to ride it?

[tmf]

One thing to keep in mind when you are moving into buying a home or condo/townhouse that usually isn't explained or obvious up front - in order to break even when you sell it, the house/condo needs to appreciate enough to cover the real estate sales commission when you sell (typically 5-7% of the sales price depending on region - higher cost areas can have a lower commission and vice versa). There are additional complexities depending on a specific situation, but that was a surprise for me that I hadn't thought about when I bought my first house. I don't know about you, but my hope when I've sold my houses is to at least break even (future sales price - commission > purchase price)! You also factor in things like equity that you can build, any tax benefit you might get, etc.

My first two purchases were in the SF Bay area. When I was single I bought a 1 bedroom condo, and when I got married we bought a 2bd townhome. Unless you live in an area where condos/townhomes are highly desired, you might find that they appreciate more slowly than single homes. I would advise doing some research to see if you can find out comparisons of condo vs. single home appreciation in your area. I don't know where to look for that, but it's probably available. A good & honest real estate agent should be able to help (that might be a good way to evaluate them!). The factor you can't control is what the market will be like when the time comes to sell it (I got burned twice - once on the townhome and once on a single home, but did very well another time).

Another possible factor that affects condos/townhomes is if there is a lawsuit against the HOA. That is something important to research when you're buying, and another thing that can bite you when you go to sell.

I'm definitely not saying to avoid buying a condo, but wanted to offer some points that I had to find out the hard way. Spend a lot of time researching and looking into it - don't make a decision to buy because you feel you "have to".

[jds108]

That's a very difficult question to answer, particularly when it's put in such a generic fashion.

One thing to keep in mind - typically a SFR is sitting on a larger piece of land. While the value and condition of the structure may deteriorate over time, the land has a smaller chance of doing so. It's very easy to take the the counter side to this statement however. Often times the increases in valuation over time are due to the land moreso than the structure.

My prior home in CA cost me 640k. 3 bed 2 bath 1600 sq ft and built in the '50s. The county thought the land was work 500k and the structure 140k. That lot was typical of the neighborhood, under 1/4 acre.

If you're thinking/hoping/betting that prices are going up, SFRs typically go up more because of the value of the land. But of course there are so many other things that can impact the price...

When I bought my first place I went townhome because the only homes available at my low-budget price point were falling apart. If I had the time and knowledge to renovate a SFR back then, I would have made more money when the time came to sell, even after factoring in the costs to renovate. But that was the late '90s and prices were going up every year (in Seattle)

[93legendti]

So many variables. Price, location, demand, local economy, etc. But generally I would say a house.

Not to mention number of bedrooms and bathrooms...

[Ken Robb]

I was a real estate broker for 36 years. My first home was a condo/townhouse and my last home is one as well. My HOA fees have always been bargains compared to what my SFR cost to maintain. OTOH if you want to do your own gardening, repairs, etc. an SFR might be close to a break-even comparison for you.

HOAs have regulations about what you and your neighbors can do to your homes. If you are happy with the rules and the way the complex looks you're good and the HOA will prevent your neighbors from messing things up. I once had a lovely historic SFR listed that I never could sell because the guy across the street painted his house a NASTY mix of purple w/pink trim. Several would-be buyers told me they just couldn't stand looking at that every time they went out their front door.

You can get some noise through common walls but SFRs on small lots with10-20 feet between them can be worse unless you have dual-glazed windows and keep them closed. Most HOAs will address noisy neighbors where the police may be powerless.

Be sure to review all HOA documents during your due diligence period. You can usually get at least a year's worth of HOA meeting minutes and budgets. In CA. HOAs are required to have an expert survey of all structures and common areas and report on the life expectancy of all systems. If you compare this report with the financial reports you should be able to spot trouble spots and whether there are adequate cash reserves to address them.

Read the rules!!! You don't want to be the guy who moves in with 4 dogs because he didn't 't read that only 2 pets are allowed per unit. You don't want to be a car nut who is dismayed to find after closing that you can't work on your cars in the driveway or even in your own garage in some areas.

[unterhausen]

owning a home is a real gamble nowadays. Especially if you live in a high priced market, which we fortunately do not. We bought our house for $150k, and we paid it off and we could probably get around $250k out of it, so that's the kind of gamble I would take without worrying too much. We are looking around now, and the kind of houses we are interested in are $500k. I think that's a sucker's bet. The market for houses like that is dead flat here. If my kids were gone I'd move into a nice apartment in a heartbeat. I don't need a second job keeping up a house and yard.

I need to sell my mom's house, she spent almost $150k on it in 2010 and we need to get $116k out of it. I'm worried about that in the market it is in. That's the kind of loss that I could live with, but I'd regret it. Think about losing a couple hundered k$, and that would be something I wouldn't want to risk

[Climb01742]

I would add this...it is probably easier to add value to a house via home improvements.

[93legendti]

If you're buying a house as an investment, it could be a gamble, depending upon your knowledge. I've bought 6 houses in the last 18 months. The first two have doubled in value since purchased...I painted, redid the kitchen floor, changed counter top and added carpet.
The last one was rented 3 weeks to the day I bought it and the tenant wanted to pay up front for the year. Some gamble. 1/3 my "investment" already made back.

If you're buying your house to be a home and view it as an investment, you need to have some real estate knowledge. Homes and houses are 2 different things - to me.

If someone bought a house 4 years ago and can't break even or make a profit on it now, they either overpaid or let the house condition go south. Values are going up, at least in this regional market.

Nice inside paint, kitchen updates (don't have to be pricey) clean lawn and shrubbery go along way. Ymmv.

[jlwdm]

owning a home is a real gamble nowadays. Especially if you live in a high priced market, which we fortunately do not. We bought our house for $150k, and we paid it off and we could probably get around $250k out of it, so that's the kind of gamble I would take without worrying too much. We are looking around now, and the kind of houses we are interested in are $500k. I think that's a sucker's bet. The market for houses like that is dead flat here. If my kids were gone I'd move into a nice apartment in a heartbeat. I don't need a second job keeping up a house and yard.

I need to sell my mom's house, she spent almost $150k on it in 2010 and we need to get $116k out of it. I'm worried about that in the market it is in. That's the kind of loss that I could live with, but I'd regret it. Think about losing a couple hundered k$, and that would be something I wouldn't want to risk

I guess you are talking about some tough markets. In lots of areas in DFW any house at $500k would have multiple offers in a few days.

I am purchasing a house now and plan to spend $240k on improvements and end up with a value of $300k to $500k more than the house cost plus improvements.

Jeff

[Ken Robb]

I would add this...it is probably easier to add value to a house via home improvements.

Maybe, but several studies have shown that you rarely recover the cost of the improvements if you have to pay others to do the work.

I grew up in rented homes and it sucked. I want to control my environment as much as I can. Rental houses get sold to folks who want to live in them so the tenants have to move. In many areas even old apartment buildings have been converted to condos and renters had to move or buy. I want to pick my decor, have a work bench in my garage, etc. You get it. :banana:

For most people it's a mistake to decide on a living environment based too much on financial considerations. OTOH folks who are at a place in their careers where job-related moves are likely have to consider the cost of buying/selling more than those of us who were able to plant deep roots. :)

[veloduffer]

Given where we live in the Northeast, townhouses can be more expensive than a single family dwelling. With the exception of seniors looking to downsize and minimize maintenance, I think single family houses appeal to a broader spectrum of folks. In general where I live, you get more living space in single family and it's cheaper. I guess convenience has a higher priority.

[Nooch]

Leafing through the responses I suppose there's some need to get more detailed.

We currently live in Bergen County NJ, where home prices and taxes are just ludicrous. My wife and I have rented for the better part of the last 8 years, spending upward of $20k/year in rent. While I can rest assured knowing that if something goes wrong, it's not my problem, I can't stomach that fact that we're pissing away $20k every year that there will never be an opportunity to recuperate.

We're a young family with 2 year and 5-month old daughters, so schools and family oriented areas are important. We have daycare in the form of retired grandparents, all of whom live in Rockland County, NJ. Currently, my wife treks out from our place to her mother's every morning, and then doubles back to go to work -- total commute time about an hour.

That said, we're starting to look at property up in Orange County, NY. School loan debt skews our mortgage numbers, so we don't necessarily have all the buying power we should, but we have enough to get into something up there -- commute time for my wife would be about the same, just without backtracking. My commute will get annihilated, as we currently live 3 miles from my office, but I've got some car pooling options.

At any rate, we're looking at this first time purchase as a means to stop the bleeding of renting, with the goal of breaking even at the end of 5 or so years, and building our savings and equity to buy something more permanent, hopefully a little closer. Knowing that we're getting into this with the intention that it's not our 'Forever Home' is making me question the resale down the line, and whether or not it will work for or against us, weighing the pros and cons of single families vs. condo/townhomes.

Hope that helps clarify the mindset!

[dekindy]

Question for local realtor(s). There is probably someone that specializes in condos/townhomes.

[Mr. Pink]

A condo is easier to rent if you can't sell (which is, of course, an issue these days). Easier to put on the market and succeed with the transaction, and easier to be a landlord of, because, of course, all or most of the maintenance is taken care of by the association. Which, makes it easier to live in as an owner, too. I just bought a condo. I like to spend my free time biking and such, not cutting grass.

[batman1425]

Depends on where you are. We bought our first house 18 months ago, a Town home. We considered noth TH and SF and found that we could get a much nicer place (finishes, amenities, and square footage) for the money going with a townhome vs. SF. The SF homes we could afford typically needed big reno. work and were older homes that had money time bombs ticking away in the HVAC systems, roofs, foundations, etc. Our savings couldn't absorb big projects like that so we opted for a newer townhome with an HOA that would provide some security for the big structural/exterior stuff. Our house already had a some nice upgrades that set it apart from the crowd. That gave us a good starting point to do a few small projects to suit our tastes (some bathroom tile, kitchen counter tops, and appliances) and get a solid return when we leave. Considering that renting something similar to what we bought in our area will cost more than our mortgage, we can lose up to 40K when we sell the house and still have made the right financial decision.

We also won't be in this area for long (3-4 years in total) and wanted something that would be appealing to the local market re: easy to sell. We live in a predominately blue collar area with a lot of distribution and manufacturing jobs that turn over frequently. As a result the demand for turn key, well cared for, low maintenance, easy to turn over places is steady, making a town home a better choice for us given our timeline.

My advice is see what is in demand in your area and decide how much work you want to do during the X years you will be in the place and what your savings will allow you to handle if s*** hits the fan.