A few decades ago, one could safely assume that the universal “American Dream” was still intact. That virtually everyone would love a nice quiet place in the ‘burbs with the white picket fence, the Golden Retriever, and the kids playing out in the yard.
These days, that’s hardly the case anymore.
You have freelance professionals who travel virtually year-round while working remotely … you have thrillseekers who opt for a smaller apartment in LA so they can afford a vacation condo near the Vegas Strip—it just takes all kinds these days, and you can never tell what’s really going to be right for someone.
For buyers, it’s important to be aware of all the available options so you don’t end up getting railroaded by your agent’s personal incentives. For agents, it’s important to leave your clients feeling like they got everything they could’ve hoped for out of the transaction.
So let’s look at the major deciding factors and see how the alternatives stack up … and whether your particular first-time buyer should be looking for a house, a condo, or perhaps a townhouse …
Factor #1: Getting the Most Bang for your Buck
Historically speaking, condos tend to be cheaper than single-family homes by the square foot. And these days that’s as true as it’s ever been …
With the housing market not adding any new volume—even occasionally stalling in some markets—home sellers are not really competing in the same way that most condo developers are. That means in most neighborhoods, you can get a nice, spacious home for your family for somewhere just under $300,000.
Meanwhile, that same money buys you a luxury condo within about 25 miles of Miami’s tropical paradise.
Granted, many of those luxury condos have some pretty strict association rules and stiff fees, but you’re never going to get stuck mowing the yard at those places. You’re not going to buy and maintain a shed full of tools, then spend every Saturday out slaving away in the yard.
This is a bigger deal than many new buyers realize. It’s real peace-of-mind for bachelors and busy professionals, and as long as you’re careful to work with the right condo associations, the price will always be right.
Which leads us to—
Factor #2: Community … or Freedom
Living in a condo doesn’t just mean paying your association fees on time; it also means participating in an intimate community and obeying all the rules of that community.
Sure, you’re free to come and go as you please … but you’ll probably get a fine if you park in your neighbor’s spot again, and you definitely aren’t allowed to repaint the terrace of your condo.
Meanwhile, the homeowner enjoys a much different kind of freedom … the freedom of privacy. Of living in a quiet neighborhood and walking around in the living room in his birthday suit if the mood strikes him. He can landscape the lawn and re-paint his home (as long as it doesn’t violate HOA covenants) and lead a bit of a noisier, more secluded existence.
Again, this comes with a price. The homeowner is often going to be facing a longer commute. He’s not going to be able to stroll downstairs and walk out into downtown for a quick show or a bite to eat. So the trade-off between community and privacy is one more people should consider.
Factor #3: Going off the Beaten Path
Buyers these days are more open-minded than ever when it comes to home alternatives. They’ll consider condos
, townhomes—some are even attracted to the idea of living in shipping containers.
But that doesn’t mean the lenders and the associations feel the same way.
Because as a rule, the lenders generally charge a higher interest rate on loans for condos & townhomes than they do for the “normal” single-family home loan. Furthermore, they can be picky when it comes to the condo associations as well—sometimes even more picky than your average buyer.
Especially for first-time homebuyers trying to get into something with a down payment of less than 20%, lenders will demand a “Full Review” of the building’s condo association, its practices and history. Even with a standard down payment, they’ll still demand a limited review of the association.
Factor #4: The Right Kind of Compromise
So we have plenty of major trade-offs when it comes to buying your first home.
We have a sense of thriving community versus the freedom of having your own backyard and an extra bedroom. We have the difference in location and price expectations … and we also have a relatively perfect compromise right in between …
The townhouse is a great choice for new homebuyers and new retirees alike, often providing the best of both worlds—with charming local amenities and spacious, excellent locations and well-priced floorplans.
Especially for a young couple where he is price-conscious with an urban job but she wants a traditional home, a townhouse makes perfect sense. It can be the perfect home for raising kids or winding down a career, and townhouses categorically have some of the best resale value and fewest days on market in most communities.
So what about you? Are you a single family home, a townhouse or a condo?
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