Are condos THAT bad of a value?

[rcpratt]

Disclaimer: I am a house/condo virgin.

We (i.e., my girlfriend and I) have started the process of house-hunting for a house or condo for when my apartment lease expires in October. We have only seen a handful of properties in person so far, but everything we've seen both in person and online seems like a condo fits "our style" better.

Before we go any further, here's some location-relevant examples in our price range.

Condo (the one we really, really like, actually)
House 1
House 2

I guess you could define "our style" as: needing as little upkeep as possible, needing little to no work to make it look presentable, no short-term upgrades needed. I think it's pretty easy to favor a condo for those reasons - the suburban condos in our area tend to be relatively recent builds, whereas the houses in our price ranges tend to be 20-50 years old, look like they could use $20k of work, etc. We vastly prefer a more modern, well-built, move in as-is property in lieu of one with an extra few hundred square feet.

None of the major drawbacks to condos (small yard, shared walls, etc.) really bother us. The only thing I'm worried about is the value of the property. Everything I've read seems to say that condos both appreciate and depreciate slower than houses. But we believe that the many advantages of the condo outweigh that. The condo I linked is for a new build, which allows us to customize exactly how we want it, which is very appealing. The fact that things like stainless steel appliances, wood floors and granite in kitchen, etc., come standard is also very appealing.

So...tl;dr...how much "risk" in property value are we exposing ourselves to? Is everyone's worry about condo value slightly overblown? It's something that we plan on staying in for the a decent amount of time (5 years at the minimum, I'd guess), but we're certainly not going to find our dream house in this budget.

 

[purbeast0]

i'm a noob too when it comes to this but my wife and i are also looking at purchasing. we would like a house or townhouse but we may also get a condo for location purposes.

the thing i've heard about condo resale values is that 1br condos are just tough to sell in general. but that is about all i've really heard about it.

 

[rcpratt]

Definitely wouldn't be a 1BR. Minimum 2. At the place we love we have a choice between 2 or 3, leaning towards 2 because with 3 the non-master bedrooms are just too small to be useful.

 

[Exterous]

Novi! You are closer to me than I thought. Be sure to let me know which one you get so I can vandali....visit

As for your actual question - the biggest issue with condos is resale. I don't know how it was in Novi but around here you basically had to give your condo away to have any chance of selling it. Condos that were selling for $160,000 were going for $50,000. Housing is cheap in MI and people don't want to share walls so the buyer pool for condos is small.

It might not be as bad of a risk now if their value has already sunk low enough or you plan to spend a long time there but it is definitely something to be aware of

 

[MixMasterTang]

It is probably very area dependent, but the monthly fees for Condo's and lofts here in the Kansas City metro area tend to be a bit pricey, along the lines of $0.25 per squarefoot per month.

 

[rcpratt]

It is probably very area dependent, but the monthly fees for Condo's and lofts here in the Kansas City metro area tend to be a bit pricey, along the lines of $0.25 per squarefoot per month.

Forgot to mention that - for the condo we like, we're looking at $144/mo for the association fees...which I think is pretty reasonable. Not sure what the norm is around here yet.

The other issue that I forgot to mention is that since this is a new development, that would obviously cap the value of our property for a year or two until they finish developing this complex. We do plan on being there longer than that, though.

 

[IndyColtsFan]

My wife had a condo that she owned before we were married and we managed to finally sell it last year (she messed around and didn't put it up for sale until last year, either). IIRC, it was on the market for 5 or 6 months and at the end of the day, she lost money on it. She had a 2 BR, 2 BA condo and she did a great job fixing it up. I hear you on not wanting to do yard work, etc, but personally, I wouldn't buy a condo if I could avoid it and I definitely would not go under 3 BR.

EDIT: Yeah, just saw another post about monthly fees. For the monthly fees many of these places charge, you could pay neighborhood kids to do your lawn and still save money.

 

[BlahBlahYouToo]

Wtf so cheap?
My condos down payment is the same as the cost of your houses there.

 

[Corporate Thug]

between me and my roommate, we couldn't afford a house so we bought a condo. I pay $600 a month inclusive off expenses for my mortgage/HOA/all utilities for my share. Most of my friends are paying $800 for rent alone for comparable places in the same area. So considering the alternative, I think it's a solid idea.

 

[IndyColtsFan]

Also, I am kind of surprised at those house prices in your links. Shop around and I bet you can get a bigger house for those prices.

 

[sunzt]

It's a about the location.

Some of the condos around here are 350k for a 1 BR.... with a 3 or 400/month HOA fee.

IMO HOA fees are fking retarded. Screw that and the HOA. Get a house and hire some mexicans to do your yard work.

 

[Sheep]

It is probably very area dependent, but the monthly fees for Condo's and lofts here in the Kansas City metro area tend to be a bit pricey, along the lines of $0.25 per squarefoot per month.

It is VERY area dependent. Personally I don't think a condo is the suburbs is worth it, but in a densely-populated urban area it might be all you can afford in a good neighborhood.

 

[rcpratt]

Also, I am kind of surprised at those house prices in your links. Shop around and I bet you can get a bigger house for those prices.

The suburb that I prefer is not a particularly cheap one to live in.

between me and my roommate, we couldn't afford a house so we bought a condo. I pay $600 a month inclusive off expenses for my mortgage/HOA/all utilities for my share. Most of my friends are paying $800 for rent alone for comparable places in the same area. So considering the alternative, I think it's a solid idea.

I have also had thoughts along these lines. The number one reason why I want to buy something is to get out of my crappy apartment. A condo accomplishes that, and as long as the condo doesn't depreciate dramatically, I'm better off...

 

[Chess]

It's a about the location.

Some of the condos around here are 350k for a 1 BR.... with a 3 or 400/month HOA fee.

IMO HOA fees are fking retarded. Screw that and the HOA. Get a house and hire some mexicans to do your yard work.

I agree with this...

I bought a 3 story townhouse and its in a great neighborhood, top schools in the state etc..... The resell value is perfect, and I can rent it out to military family....

Down fall like sunzt said is the HOA fee... I pay $960 in HOA fees, it covers trash, cleaning of the roads, maintenance, snow removal etc... Pisses me off because the HOA thing is such a joke, but other than that...

For me I bought over 3 years ago, and I was single at the time, now my g/f moved in almost a year ago, and its still not bad. My plan is to build a house in about 5-6 years.....

 

[MichaelD]

I'll be the killjoy and ask the question nobody else has.

Whose name is this proposed condo going to be under? Living with the GF is great until the relationship blows up. Example: Years ago, I found out the hard way that the furniture, TV, stereo, dishes, sheets and silverwhere I bought and put in HER APT became ALL HER STUFF the second it passed over the threshhold. I moved out and got nothing back. Cops told me to shut up, get a lawyer and sue her for it. Which I never did.

If the condo is in both your names and you break up, one of you will have to buy the other one out or you sell it and both move out. Ugly, either way.

I'm definitely not asking "Why aren't you married, you evil young person?" What I'm saying is that moving in with your fiancee (ring on finger, wedding plans in the works) is a lot more stable than moving in with a GF. She's a woman, and subject to long bouts of random irrationality...unless she's wearing a ring, in which case she will be so stable you'll nickname her "Gibraltar". Until a week after the wedding when what I stated above will commence.

 

[IndyColtsFan]

I'll be the killjoy and ask the question nobody else has.

Whose name is this proposed condo going to be under? Living with the GF is great until the relationship blows up. Example: Years ago, I found out the hard way that the furniture, TV, stereo, dishes, sheets and silverwhere I bought and put in HER APT became ALL HER STUFF the second it passed over the threshhold. I moved out and got nothing back. Cops told me to shut up, get a lawyer and sue her for it. Which I never did.

If the condo is in both your names and you break up, one of you will have to buy the other one out or you sell it and both move out. Ugly, either way.

I'm definitely not asking "Why aren't you married, you evil young person?" What I'm saying is that moving in with your fiancee (ring on finger, wedding plans in the works) is a lot more stable than moving in with a GF. She's a woman, and subject to long bouts of random irrationality...unless she's wearing a ring, in which case she will be so stable you'll nickname her "Gibraltar". Until a week after the wedding when what I stated above will commence.

Good point.

 

[RockinZ28]

I'm kinda in the same spot.

Shithole houses around Los Angeles in my area seem to be 200k minimum for a pos 1-2bd/1-2bth under 1000sqft, built in the 60s or earlier in a ghetto neighborhood. I think 280k would be the least $$ to get something halfway decent.

Condos though seem to be pretty pimp. I'm renting now, 2 master bdrm, 2.5bth 1350 sqft in a decent area and they sell for 150-190k in the same complex. All the condos I look at are like this. Built in the 80s+.

I'd prefer a house but just doesn't seem worth it around here, unless I move 30 minutes further away from work.

 

[MichaelD]

I'm kinda in the same spot.

....unless I move 30 minutes further away from work.

That's what I did. I'm not in your hood though...or state. I have a 45-minute each way commute and that's assuming light traffic. Plenty of housing near my work, but the description of said housing mirrors yours.

With the cost of gas it really diminishes the benefit, but living in a nice place and not having to worry about driveby's or my family getting carjacked in our driveway is worth the money.

 

[jagec]

I'll be the killjoy and ask the question nobody else has.

Whose name is this proposed condo going to be under? Living with the GF is great until the relationship blows up. Example: Years ago, I found out the hard way that the furniture, TV, stereo, dishes, sheets and silverwhere I bought and put in HER APT became ALL HER STUFF the second it passed over the threshhold. I moved out and got nothing back. Cops told me to shut up, get a lawyer and sue her for it. Which I never did.

If the condo is in both your names and you break up, one of you will have to buy the other one out or you sell it and both move out. Ugly, either way.

I'm definitely not asking "Why aren't you married, you evil young person?" What I'm saying is that moving in with your fiancee (ring on finger, wedding plans in the works) is a lot more stable than moving in with a GF. She's a woman, and subject to long bouts of random irrationality...unless she's wearing a ring, in which case she will be so stable you'll nickname her "Gibraltar". Until a week after the wedding when what I stated above will commence.

If the condo is fully in his name AND he can afford the payments by himself, that makes it a bit less of a concern.

I bought a house while I was dating my GF, who moved in with me, but 100% of the financial side of it was on me, and I made sure that I could afford the payments by myself. Currently she pays expenses and does some of the chores, and we're both comfortable with the arrangement.

Of course, she is now my fiancee, so...

 

[MichaelD]

If the condo is fully in his name AND he can afford the payments by himself, that makes it a bit less of a concern.

I bought a house while I was dating my GF, who moved in with me, but 100% of the financial side of it was on me, and I made sure that I could afford the payments by myself. Currently she pays expenses and does some of the chores, and we're both comfortable with the arrangement.

Of course, she is now my fiancee, so...

You are obviously intelligent and believe in covering your ass. Not all of us were so smart. :'( If it goes south, you lose nothing...assuming she doesn't go all crazy and pile your clothes in the tub and pours a gallon of bleach on them.

I have had a similar living arrangement in the past. It was my apt, I paid all the bills, she bought all the food and paid (most of the time) when we went out. Whatever works for you, as long as YOU are covered.

 

[OlafSicky]

Forgot to mention that - for the condo we like, we're looking at $144/mo for the association fees...which I think is pretty .

New condos always have low fees than they jump up and 4 years from now you will be paying $500 or $600

 

[mshan]

New York Times Rent vs. Buy Calculator: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

New York Times Rent Ratios articles: http://www.google.com/search?client=safari&rls=en&q=new+york+times+rent+ratio&ie=UTF-8&oe=UTF-8


If there is reasonable competition among new home builders for condos in your area, I bet that their sales prices are very competitive, both vs. resales and possibly even replacement cost if commodity prices really flare up several years down the road. Google for Pulte earnings conference calls and you can probably get some good insights on how they are doing in different regions of the country and also what level of incentives are pretty much a given if your realtor knows local market and can negotiate well.


Also look at your local economy and think about whether are businesses growing (e. g. are you in region where renaissance in U. S. manufacturing is supposed to occur?) and are good jobs increasing and likely to increase over next 5 years? (if this is distant surburb of Detoit and tough commute, also research if the area is like Atlanta Metro (http://blog.redfin.com/atlanta/) which is still an overbuilt mess, because I think there was so much land to build on and few regulations restricting new builds. And compare that to Phoenix and factors for it's resurgence: http://www.realestateconsulting.com/content/LBMI-201204_2)


Unless those old homes are on land that is irreplaceable (all land developed and no more undeveloped land remains that is quick and easy commute to area where all the jobs are) and prime location in your community (convenient to shopping, restaurants, amenities of community), plus great school district, I would feel uncomfortable that they are potentially endless money pits.


Ultimately, though, I would look at rent vs buy more from point of view of what do you get for your money (enjoyment of condo, convenient location to work and amenities you and your girlfriend use in community) vs. as purely an investment that you want to make money on or just renting and not having all of that money tied up in an illiquid investment that may have large unforeseen maintenance and repair costs down the road.


Good Luck!




P. S. - also note that new home builder may be subsidizing HOA until community is complete and they leave, so you could see a significant jump in monthly fees at that point.

 

[God Mode]

Hell no on duplex, coops and condos etc.. Not sharing walls with neighbors is one of the biggest reasons to buy your home in the first place. That entire 4 unit building will be sharing the same vibrations and other utility noises due to its partitioned box design.

 

[PingSpike]

Personally I don't see the point of buying a condo. I can understand the desire for condo living, but if you want to live in one I say you just rent one. Its basically the same thing only you can move at the drop of a hat for any reason and if the water heater breaks you don't have to pay for it. I might feel differently if all condos and townhouses didn't seem to be built with a sheet of cardboard as the separating wall.

I also don't believe in starter houses. While its true that you'll often end up moving because you didn't know what you wanted or needs changed...the idea that you can buy a house and then use the 'proceeds' later on to buy your dream house sounds dubious to me in this market.

 

[rcpratt]

I'll be the killjoy and ask the question nobody else has.

Whose name is this proposed condo going to be under? Living with the GF is great until the relationship blows up. Example: Years ago, I found out the hard way that the furniture, TV, stereo, dishes, sheets and silverwhere I bought and put in HER APT became ALL HER STUFF the second it passed over the threshhold. I moved out and got nothing back. Cops told me to shut up, get a lawyer and sue her for it. Which I never did.

If the condo is in both your names and you break up, one of you will have to buy the other one out or you sell it and both move out. Ugly, either way.

I'm definitely not asking "Why aren't you married, you evil young person?" What I'm saying is that moving in with your fiancee (ring on finger, wedding plans in the works) is a lot more stable than moving in with a GF. She's a woman, and subject to long bouts of random irrationality...unless she's wearing a ring, in which case she will be so stable you'll nickname her "Gibraltar". Until a week after the wedding when what I stated above will commence.

It will be under my name only. That wasn't the point of the post, but I'll explain the whole situation when I get home from work.