Which should you buy: Condo or house?

It’s the modern riddle for today’s urban dwellers — should you buy a condo or go with the traditional house?

Condo or house. Of course, there are pros and cons for each option. These include the practical side of things (think maintenance and floor plans) versus the financial considerations. So, what would tempt a buyer to pick one over the other?

Condos: The practical pros & cons

The popularity of condos continues to rise in Winnipeg and across the country, with almost two million Canadian households living in these convenient homes. The biggest attraction of condos is their affordability. Units typically cost less than the average house, and when you compare the easy-maintenance lifestyle that goes with them, it can be pretty appealing.

For starters, you won’t need to shovel snow, mow the lawn or trim the hedges. With a condo, it’s all done for you, offering a less stressful, lock-and-leave lifestyle. (Keep in mind you will be paying maintenance fees for the luxury of those services.)

Downtown condos, in particular, are also close to businesses, entertainment and restaurants. Many of them also offer great amenities such as swimming pools, hot tubs, gyms and party rooms. But with more amenities comes higher condo fees, since there is additional maintenance for cleaning, repairs and general upkeep on those high-traffic areas of the building.

With condos, keep in mind you’ll have to give up some freedom since building rules and bylaws can restrict your behaviour. While many of them make sense (no loud music after a certain time), others can be an obstacle to homeowners and larger families such as no pets, a limit on the number of kids allowed, the number of patio chairs you can have and even the size of your flowerpots. Since condo board rules differ from building to building, be aware of the potential restrictions that could impact your lifestyle before buying.

Also on the downside, some condo owners complain of hearing their neighbours much more easily. So if footsteps above you and the occasional loud movie marathon can get on your nerves, you might want to keep searching.

Houses: The practical pros & cons

Houses generally win the battle when it comes to overall square footage and flexibility of space. Outdoor areas including patios and back yards can be an obvious bonus. But don’t forget other rooms that condo owners might salivate over the thought of — hallway closets, storage rooms, a place for a deep freezer, a mudroom and even a proper dining area. You’ve got a considerable leg up here.

Next, factor in your parking situation. Houses often come with parking spots or a garage — another big bonus compared to most condos, which may only come with one expensive parking space.

Standalone properties are also less noisy since you aren’t sharing walls with neighbours, and that extra privacy can go a long way in making your house feel like a home.

You do need to put much more effort into the maintenance, however. You’ll need to shovel snow, often at awkward times of the day, and gardening can take up much of your spare time over the summer. Other outdoor tasks like cleaning your eavestrough and maintaining the garage, as well as plumbing issues, air-con breakdowns and a leaking roof are all your responsibility. A lot more can go wrong with a house and you’ll have to deal with all the repairs.

Condos: The financial side

Condo or house: Couple looking at financials of buying a condo

You can usually buy a small condo for considerably less than you would pay for a small house. Utility costs are often lower (since smaller units typically need less energy to heat and cool, plus they are insulated by their many neighbours), as is home insurance (building insurance is included in condo fees).

On the other hand, your condo fees are a downside. Even though they often include water, costs to maintain the building, keep it clean and an all-important reserve fund, which pays for emergency repairs and upkeep. Fees typically rise annually and often above inflation. Depending on the condo building and unit size, fees can range from $250 to $600+ per month.

Owning a condo also involves paying property taxes, which are on average less than owning a house due to the difference in price points.

In the event of unexpected major repairs, the reserve fund may not be able to cover all the expense. In those situations, a special assessment can come into play. This is a payment that the condo board demands of each unit owner and can be in the thousands of dollars.

All this to say that before putting in an offer, it pays to have your realtor and/or your real estate lawyer check the condo corporation’s operating budget and financial statements, including the amount of the reserve fund and clarify if the condo unit has had a special assessment imposed on it.

Houses: The financial side

While houses are usually more expensive than condos, when you take into account condo fees, the monthly payments can be similar. For example, if you had a condo with a mortgage of $180,000 and condo fees of $440, that would cost around $1,339 per month in fees and mortgage payments. A house with a mortgage of $266,000 would cost $1,328 in monthly mortgage payments (based on a 25-year amortization and mortgage interest rate of 3.5%).

In fact, many houses are considerably cheaper per square foot than condos — especially once you include basements.

However, houses are typically more expensive to maintain, including heating costs and home insurance, which are typically higher than condos.

How should I decide?

The best choice for you right now will depend on the stage of life you’re in and your financial situation. If you have a family or are looking to start one and can afford it, a house would probably be your best option. If you’re the kind of person who likes plenty of indoor and outdoor space, a house will also be your best bet. You don’t have to follow all of the condo rules and you may get more peace and privacy.

If you are on a fixed income or in a job with little earning growth potential, the cost of rising condo fees (above and beyond the rate of inflation) should be taken into account when deciding between a condo and a house.

However, if you’re young and looking to get on the property ladder — or have grown-up kids who have moved out of the family home — a smaller place like a condo apartment might be the way to go. Likewise, if you want to live right downtown or want a smaller place that takes little effort to maintain, a condo is usually your best choice. And remember, you can always move if your lifestyle or preferences change in the future.

It can be tricky deciding on whether a condo or house is your best option. An ACU advisor can help you come to a decision and find the best mortgage to finance it. Call or email us today to set up an appointment.

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About James Burns

James Burns is a freelance writer and copywriter. With a background in journalism, financial services and marketing, he writes for a wide range of companies across the financial services spectrum. His articles and blogs provide financial advice and insights to both consumers and businesses.

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