Are condos THAT bad of a value?

[mshan]

This comment is from distant memory of something I read on internet, so not sure if exact figure is correct, but I think mortgage lenders will require 30% equity in current rental if you want to get mortgage for single family home.

Reason is that people were gaming the system, renting their currently hopelessly underwater home at high mortgage rate they can't refi, then buying a better home, at lower purchase price and mortgage rate, and then when everything is approved, they have title and have moved in, suddenly decide to strategically default on the old home they just turned into a rental.

Would apply to new home or resale you buy now, but I think you might need to sell, even at a loss, if you want to late move up to single family home with a new mortgage.

Mortgage lending standards may ease in future, but this guy says "tight" mortgage lending standards now are what was considered normal maybe 5 years ago before bubble really took off: http://video.cnbc.com/gallery/?video=3000064256

 

[mmntech]

The condos around here are expensive enough as is. But the maintenance fees are almost as much as a mortgage payment. They're far out of the price range of most single income earners around here. At least not without going into significant debt. They're not the good deal they used to be, but with average home prices above half a million now, it's all a lot of people can afford.

I thought about buying a condo but I just don't have the money. Will take me years to get a big enough down payment to balance out the maintenance fees. Even rental rates are upwards of $1000/mo, and that doesn't always guarantee a clean, safe and well maintained building. There's definitely a housing bubble here in Ontario.

 

[ShawnD1]

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.

You should come to Edmonton. Our houses are a great value! For example, here's a beautiful high quality 2 bedroom house for the low price of $130,000
http://www.edmontonrealestate.pro/listing/e3294712-11824-54-st-edmonton-ab-t5w-3m7/

There are some meth heads living in the basement but you can just vent car exhaust through the basement window and it'll take care of that problem.

 

[Lifted]

A condo in NYC is a rare find, and most command a good premium over coops, which make up > 95% the units for sale. Coops on the very high end command their own premiums though.

Most people prefer coops though. Keeps the riffraff out.

 

[lothar]

Coops?

 

[lothar]

Condo is cheaper than owning a house because the dues cover new roofs, paint, and landscaping. Paying all of that yourself costs a lot more

Sounds to me you've never owned a house before.
All that isn't worth paying $500+/month extra in HOA fees.

 

[Red Squirrel]

Condos are basically glorified apartments, but the nice thing is you own it and can sell it like a house or pay it off and have one less monthly expense. But you have walls and possibly floor/ceilings with neighbors. You can't watch movies or listen to music loudy, or do other things that make noise. There's usually rules like what you can and cannot have/do in your yard if you're lucky enough to even have one.

In big cities where houses are rediculously expensive, condos are the next best thing though. Or if you don't care about having to maintain the outside or shoveling then that's an advantage too, they usually do it for you. The fees are negligible as with a house you have to pay taxes anyway which is often more than what condo fees will be.

I actually considered a condo for my first house and even made an offer on one, though I'm glad I waited. it's not a HUGE deal, but I like actually owning the whole building I'm in and not worry about making noise. I can use a skill saw at 4:00am if I really want to or watch a movie with loud bass etc.

 

[ussfletcher]

Eh, I'm moving away from West Bloomfield in a couple days, but knowing how terrible our housing market is in this area, you could get a decent house for that price and you would be likely to make a big profit off of it in the short-midterm. Apparently you and I don't share housing preferences though, I do like a yard with a fence and such, so I'd be looking more towards Walled Lake or Waterford. Though that may not be optimal for freeway access.

 

[kaerflog]

Just say NO to condos. HOA fees............
I briefly looked at condos and all the HOA fees are like $200+ to $350.
And they can only go up. Never down.
I freakin hate HOA fees with a passion.
I'll take care of my own shit.
I live in a old neighborhood now. All the houses were built in the 80s but I pay like $150 HOA fee for the entire year.
All they really do is take care of our subdivison entrance which is fine by me.
I will be looking for a newer house soon and I refuse to pay more than $600 HOA for a year.

 

[Red Squirrel]

Just say NO to condos. HOA fees............
I briefly looked at condos and all the HOA fees are like $200+ to $350.
And they can only go up. Never down.
I freakin hate HOA fees with a passion.
I'll take care of my own shit.
I live in a old neighborhood now. All the houses were built in the 80s but I pay like $150 HOA fee for the entire year.
All they really do is take care of our subdivison entrance which is fine by me.
I will be looking for a newer house soon and I refuse to pay more than $600 HOA for a year.

Still less that taxes though... or do you still pay taxes with a condo? I don't think you do though... But HOA alone is enough to say no.

 

[rcpratt]

Eh, I'm moving away from West Bloomfield in a couple days, but knowing how terrible our housing market is in this area, you could get a decent house for that price and you would be likely to make a big profit off of it in the short-midterm. Apparently you and I don't share housing preferences though, I do like a yard with a fence and such, so I'd be looking more towards Walled Lake or Waterford. Though that may not be optimal for freeway access.

Yeah, I'd love to move somewhere cheaper, but anything farther than Novi is just not going to work for our commutes.

 

[Puppies04]

Are condos THAT bad of a value?

Not really, when you consider the cost of raising a child from birth until around the age of 5 or 6 when it can fully look after itself then condos make a lot of sense even if they are uncomfortable!

 

[PingSpike]

Still less that taxes though... or do you still pay taxes with a condo? I don't think you do though... But HOA alone is enough to say no.

Well, a condo is still a piece of property...even if you don't actually own any land. So yeah, you also pay property taxes.

 

[CraigRT]

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.

Yup. My condo is very affordable even with fees, but building equity beats renting hands down.

 

[notposting]

Yeah, I'd love to move somewhere cheaper, but anything farther than Novi is just not going to work for our commutes.

Where do you need to commute to? Are you heading towards downtown?

 

[dbk]

In NOVA, most HOA fees for townhomes are like $75-$100 whereas condos are 3x as much usually $300~$400 per month.

 

[ShawnD1]

Still less that taxes though... or do you still pay taxes with a condo? I don't think you do though... But HOA alone is enough to say no.

You still pay taxes on a condo, but the taxes are far less than that of a house. The heating and cooling costs are much lower as well. You don't realize how expensive heat is until you try heating a house when it's -30. Fucking $100/mo just for heat. Then there's another $100 for electricity and another $100 for water. Fucking houses man. Expensive.

 

[BTA]

This comment is from distant memory of something I read on internet, so not sure if exact figure is correct, but I think mortgage lenders will require 30% equity in current rental if you want to get mortgage for single family home.

Reason is that people were gaming the system, renting their currently hopelessly underwater home at high mortgage rate they can't refi, then buying a better home, at lower purchase price and mortgage rate, and then when everything is approved, they have title and have moved in, suddenly decide to strategically default on the old home they just turned into a rental.

Would apply to new home or resale you buy now, but I think you might need to sell, even at a loss, if you want to late move up to single family home with a new mortgage.

Mortgage lending standards may ease in future, but this guy says "tight" mortgage lending standards now are what was considered normal maybe 5 years ago before bubble really took off: http://video.cnbc.com/gallery/?video=3000064256

I actually just bought another house with a new mortgage, while still having a mortgage on the current house. My current house is under water and it wasn't an issue. However we were required to sign forms that we intended to rent out our current property, which we do plan to do. We are however able to carry both mortgages with relative ease so that probably had a lot to do why it wasn't a big problem.

I was looking into Condo purchases as income property and talking with lenders. It sounds like condo mortgages are very very very strict now though with a lot of rules. They got hit the hardest and lenders aren't real keen on them. Most people buying condos are working with cash.

 

[Chiropteran]

I had to make this decision about a year ago when I bought my home, but after a short bit of searching it really became obvious which option was better for me, and I bought my condo. This was due to my ideal location though, I wouldn't necessarily pick a condo if the location was different.

As far as condo fees, yeah sure, everyone hates paying money. To be fair, you must compare apples to apples. Look at the total picture, condo fees+mortgage+tax+utilities vs home mortgage+tax+utilities+land maintencance costs. In *my* ideal location, condo wins hands down by far. I pay a $270/month condo fee, but the cheapest livable houses in my area would cost me more than $1000 more per month in mortgage and taxes. So the choice was obvious, given my income. Also important to consider is that heating and cooling a condo will almost always be cheaper than doing the same for a free standing home, there are advantages to sharing walls. In addition to all of the above, buying a single family home doesn't guarantee you avoid paying a fee. Many free standing homes are in communities controlled by a homeowners association, which charges a monthly or quarterly fee. Typically these are far less than the equivalent from a condo, but the benefits are less as well. When I consider the benefits of living in a condo I don't really have a problem with the $270/month- free pool and exercise room (would cost me and my GF $70/month EACH to join a local gym), trash pickup (would be an extra expense), plowed roads in snow, lawn and tree maintenance, free dog poop bags, a front office for receiving deliveries, a club house I can reserve for FREE for parties and such, free gas grills, controlled access building much safer than a house, never any worry about outside building maintenance, roofing, gutters, etc.

Then there is your commute. It is often easier to buy a condo closer to the city, and if the condo means you save 30 minutes a day on your commute and you save 1 gallon a day on gas, that can add up to $140 in gas and 15 hours at whatever you value your time at. This was a key factor in my home decision, I'd rather pay an extra $200 a month if it meant I had an extra hour every day for myself.

As far as investment value, I think it's all BS. If a condo is a poor investment because it won't be worth as much in 10 years, then wouldn't that mean you should be able to find a bunch of under-priced 10 year old condos? The whole system is a zero sum game, if condos sell poorly then that would mean you could buy them cheaply, and if they are overpriced when you buy them that means they could be sold above apparent value as well. I think a lot of the anecdotal stories in this thread are simply based on the housing market as a whole being in a huge slump right now, and not really directly related to condos specifically.

 

[BTA]

Just say NO to condos. HOA fees............
I briefly looked at condos and all the HOA fees are like $200+ to $350.
And they can only go up. Never down.
I freakin hate HOA fees with a passion.
I'll take care of my own shit.
I live in a old neighborhood now. All the houses were built in the 80s but I pay like $150 HOA fee for the entire year.
All they really do is take care of our subdivison entrance which is fine by me.
I will be looking for a newer house soon and I refuse to pay more than $600 HOA for a year.

HOA's are a deal killer for me when house shopping. It's not worth it to be told what to do with your own property by some old asshats with nothing better to do than get mad that your lawn is too long or you have a basketball hoop. They are almost always crooked as hell, siphoning money to themselves or their friends by paying way too much for lawn upkeep, etc. Then when your neighborhood needs roads resurfaced or new mailboxes because they require them to all be the same, the HOA will hit you with an extra fee cause heaven forbid they save up all those dues they've been collecting for 15 years.

Also keep in mind with Condo/townhome complexes, most of them their HOA fees have skyrocketed because so many people have walked from their property, there are less people to pay HOA dues and therefore they have to raise them to crazy levels. And you can bet your ass they wont lower them when the condos start to fill up again.

And to anyone who is thinking "well I have a vote and I'll make sure they don't pull shit", take a look at the HOA documents before even considering purchasing in that neighborhood. Many of the rules dictate that board members' votes count for 2 to 3 times as much as a normal homeowner's vote. Meaning you'll need the a huge majority in any voting situations to override the board's decision.

Scumbags, all of them.

 

[rcpratt]

Where do you need to commute to? Are you heading towards downtown?

Downtown for me, Birmingham for her.

Thanks for the thoughts, all. Keep them coming.

 

[ViviTheMage]

I bought a condo 4~ years ago, I did not want to rent...and the condo mates we have are pretty cool. We have a 11 unit complex, and everyone gets along better now that the one weirdo foreclosed.

I like it, very little work on my end, sometimes I do stuff around the condo so we can save money ... we also do our own landscaping and stuff, 5-6 people doing it on a sunday saves us a few hundred, keeps our assoc. dues down.

Sounds like you're looking at townhouses too? I assume they are similiar...but value wise, I would try to stay inner city, because from what i've seen condo's in the burbs have dropped like rocks in prices..but I guess that's not so bad if you're buying right now!

Our association covers everything but electricity and TV...we have a 50MB cable link that I manage for the complex too that is part of our association dues.

 

[Lifted]

Coops?

Cooperatives are a bit like HOAs on steriods.

Most non-NYC'ers here would probably rather die than have to go through getting into a typical coop in NYC, which consists of an interview with the board, all bank statements made available, explination of income, etc., down to political views, social circles, types of music you listen too, sleeping hours... basically anything they want to ask that they feel may have an effect on the building or how they and others will get along with you. Madonna was turned down by several coop boards due to noise and privacy concerns. Not all coop boards are demanding though, and some simply don't care - if you can get a mortgage you're in.

It's a different legal structure as well. The coop owns the building, and you own a share in the building based on the sq ft of your apartment. Taxes are therefore include in monthly common charges. This is the major reason most coops dig through your finances... they don't want to get stuck paying your taxes if you flake out on them. They usually require a minimum 20% down payment and 50% of the purchase price in some sort of savings.

They will also have rules on if and for how long you are able to sublet, and the subleter must be approved by the board. It's often something like a single sublet, for 1 or 2 years max, per 10 years.

All new constructions in the city are condos, and you can end up with 50% of purchases being investments, so the buildings end up turning into apartment buildings. This is what coops try to avoid. They don't want people moving in and out endless, and not caring about or being invested in the building and their neighbors.

NYC really has apartment living down to a science.

 

[ViviTheMage]

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.

If it is a new development, expect that to go up...new developments keep those low, but once the association is established they almost always put the price up, because the dev's just wanted to get the place sold with low association rates.

 

[ViviTheMage]

Reading this thread, people who pay HoA that are pissed off own town houses it sounds like ... do they not cover water/heat/garbage as well as just the lawn care and road maint.?