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Condos and houses both make great places to live and solid long-term investments. But the two types of homes have some key differences that are important to understand before buying. You'll want to compare factors like cost and maintenance, plus more subjective qualities, such as privacy and autonomy. Here's a closer look at how condos and houses compare.
What Is the Difference Between a Condo and a House?
Condos and houses have some key differences that are important to understand when you're buying a home.
A condo is an individually owned unit within a larger development, like a condo complex or building. Some condo owners may also own a percentage interest in the common areas, land the property is built on or amenities. Residents typically have access to some shared amenities, such as a pool area or parking garage.
Many condos are private residences that are attached or semi-attached to other units. But condos can also be freestanding, depending on the type of development. A single-family house, on the other hand, is considered a standalone property. And when you buy a house, you also buy the land the house sits on.
Here's a quick look at some of the key differences between a condo versus a house:
| Condo | House | |
|---|---|---|
| Ownership | Individual condo unit and sometimes a percentage of the land and shared amenities | Entire structure and land it sits on |
| Structure | Attached, semi attached or freestanding | Freestanding (considered standalone property) |
| Owners association | Yes; condo owners association (COA) or homeowners association (HOA) | May have an HOA, especially in newer developments |
| Shared amenities | Yes; typical amenities include a gym, pool, playground, parking and security | No |
Pros of a Condo vs. a House
Owning a condo can come with many upsides. From cost savings to everyday conveniences and luxuries, here is a closer look at some of the pros of a condo versus a house.
More Affordable
In many markets, average condo prices are lower than single-family home prices. This may be especially attractive for first-time homebuyers saving up for a down payment. And if you use a mortgage to finance the condo purchase, you may also have a cheaper monthly payment since you likely won't need to borrow as much to cover the total cost.
Modern Amenities
Condos typically offer owners access to shared amenities, such as gyms, playgrounds, tennis courts and event spaces. Newer or more upscale complexes may also have dog runs, dog washes, co-working areas, WiFi, outdoor grilling areas and other shared spaces. Some condos also come with added convenience options like concierge services, round-the-clock security and package delivery lockers.
Less Maintenance
Condo owners are typically only responsible for maintenance and cosmetic updates inside the unit, while the condo association takes care of any shared spaces. You likely won't have to mow your lawn, handle snow removal or clean the pool. Condo owners also don't have to worry about general upkeep in common areas or upgrades, like new siding or parking lot repaving.
Insurance May Cost Less
Condos often cost less to insure than single-family homes. Most condo associations require condo owners to carry their own condo insurance, but policies are usually more affordable than standard homeowners insurance.
Cons of a Condo vs. a House
Condos can come with some downsides that may be dealbreakers. Consider these cons of owning a condo compared to a house.
Condo Fees
While condos are generally cheaper to buy than a house, they almost always come with mandatory fees. Fees must be paid to the condo or homeowners association every month. And they can be steep. Fees typically cover maintenance, repairs, amenities, shared utilities and insurance for the complex. And if the condo association's reserve lacks funds, you may also have to pay special assessments to help pay for major repairs.
Lack of Privacy
Condos often have less privacy than you'd find with most single-family homes. Depending on the layout of the complex or unit, you could have to share a wall, parking structure, hallway, elevators or a laundry room. Amenities such as pools and gyms are also communal, and access to outdoor spaces, like community gardens, grilling areas and patios, may also be shared with neighbors.
Smaller Footprint
Condos tend to have less square footage than many single-family family homes. You may not have a basement, attic or garage, and you usually can't build an addition to expand square footage. Personal outdoor space may also be limited to a small patio or balcony. The lack of space could feel limiting if you need more space for your family, pets and storage.
Condo Association Rules
Most condo associations have community rules all condo owners must follow. Rules may apply to pets, noise, parking, the activities you can do in your yard and even the way you decorate your front door. Shared amenities, like pools and gyms, also usually come with their own set of rules, such as set hours or limits on the numbers of guests you bring. And if you want to renovate your condo, you may need to run your plans by the association first.
Costs of a Condo vs. a House
The overall costs of owning a condo versus a house can vary widely, so it's important to consider more than the purchase price. Here's a closer look at how costs compare.
| Cost | Condo | House |
|---|---|---|
| Purchase price | Condo prices are usually lower than single-family homes. | House prices are generally higher than condos. |
| Association fees | Condo owners association (COA) fees average about $300 a month, but can vary widely. | No fees unless the house is part of a homeowners association (HOA). |
| Maintenance | Condo owners usually only need to pay for maintenance costs inside the unit. Maintenance costs in shared spaces are typically covered by the condo association. | Homeowners are responsible for all maintenance costs. |
| Insurance | Condo insurance policy rates are typically lower than standard homeowners insurance. | Homeowners insurance is usually more expensive than condo insurance. |
| Property taxes | Condo property taxes may be lower since the value of a condo is usually less than a house. | Property taxes for houses are usually higher due to the total value of the home and land. |
Should I Buy a Condo or a House?
The decision whether to buy a condo or house is often highly personal and depends on numerous factors, from your budget to lifestyle.
If you're looking for a home that's generally more affordable to buy, requires little to no maintenance and offers shared amenities and conveniences, a condo might be the best choice. Condos may also be a good fit for first-time homebuyers or buyers looking to downsize from a larger home.
Houses are generally more expensive to buy, insure and maintain. But a single-family home might be a better option for buyers that want more privacy and don't want to worry about condo association rules or regulations. Buyers looking for more space or a larger yard may also want to consider a house over a condo.
Learn more: Should Your First House Be a Condo?
How to Prepare Your Credit Before Buying a Condo or a House
Your credit can affect the types of financing you may qualify for and your rates when buying a condo or house. It can also impact how much you pay for insurance.
These tips can help you prepare your credit before buying a condo or house:
- Check your credit report and scores. Most mortgages have minimum credit score requirements, so it's a good idea to know where you stand. Carefully check your credit report for accuracy; you have the right to dispute items on your credit report that you feel are inaccurate. You can get your free credit report and FICO® Score☉ Θ from Experian or credit reports from all three credit bureaus (Experian, TransUnion and Equifax) from AnnualCreditReport.com.
- Work on your credit health. Improving your credit may help you qualify for better mortgage rates and terms. To strengthen your credit, start by always making on-time payments and paying down credit card balances.
- Avoid taking on new debt. New debt can increase the amount of your gross monthly income that goes toward debt payments, known as your debt-to-income ratio (DTI). Aiming for a DTI of less than 50% is a good rule of thumb, but the lower the number the better. Applying for new credit can also result in a hard credit inquiry that temporarily lowers your credit score by a few points. So if you're in the market for a condo or house, it's best to avoid financing a new vehicle, buying a large purchase on credit or getting a new credit card.
- Keep old accounts open. Closing paid-off credit card accounts may sound like a good idea, but it could reduce your average age of accounts and your available credit, both of which could hurt your credit scores.
Frequently Asked Questions
Do Condos Appreciate Like Houses?
Condos may appreciate like single-family houses, but houses typically appreciate faster. Additionally, factors like market trends, location, amenities and the quality of the HOA can affect a condo's appreciation.
Are Condos Easier to Maintain Than Houses?
Condos are generally easier to maintain than houses because you only have to maintain the inside of your individual unit. You typically won't have to worry about maintaining the outside of the structure. Plus, landscaping, snow removal and other maintenance issues are usually handled by the condo association.
Do You Permanently Own a Condo?
When you buy a condo, you permanently own your individual unit that's inside a larger residential structure like a condo complex or building. But you don't own the land or the building.
The Bottom Line
Choosing to buy a condo or a house is a big decision and a large investment. Before buying, weigh the pros and cons carefully, along with your budget and lifestyle.
Do you plan on keeping the property for decades or just a few years? Will you need more space down the line for a family or pets? Are you hoping to downsize? If you're not sure which option is best, a real estate agent can offer local market knowledge and help you find the best fit for preferences and budget.