Townhouse vs. Condo, Why the Difference Matters
Townhouses and condos are undeniably some of the most sought-after properties by homebuyers. The fact that you can find townhouses and condos in urban areas, rural areas, and the suburbs makes them appealing to a diverse set of buyers looking for practical housing solutions that meets their needs.
Although townhouses and condominiums share many similarities, they have subtle but unique distinctions that can make all the difference. Deciding between the two homes boils down to your own unique preferences, lifestyle, budget, and family size, among many other things. In this piece, we shall discuss the similarities and differences between a condo and a townhouse, feature comparisons, and the pros and cons of each home.
Let’s dive right in. Shall we?
What’s the difference between a townhouse and a condominium?
The primary difference between a townhouse and a condo has everything to do with ownership and fees. Undeniably, there is a considerable difference between what you own, your maintenance responsibilities, and the living space you have to share.
- Condominium: A condominium is a type of housing that is part of a larger property. It is similar to an apartment within a complex where the homeowner privately owns the home while condo residents communally own all other connecting areas. They vary in size and style and can range from individual homes to high rises, but all typically share walls with adjacent units. Unlike apartments, each resident owns and maintains the interior of their home. A condominium association maintains the exterior of the home and all other shared spaces.
- Townhouse: A townhouse is a multi-floor home that shares one to two walls with adjacent properties but with its own entrances. There are several categories of townhouses, with some operating like condos. Other townhouses operate more like traditional houses where the resident owns the interior and exterior of the unit while the building is owned by a condominium corporation and maintained by the homeowners association (HOA). In such a situation, the resident owns both the interior and exterior of the unit, the roof, and the land. Residents are also responsible for insurance and maintenance of the home and the property it sits on.
Townhouse vs. condo: Key differences in features
Condo ownership: With a condo, you personally own your individual unit while sharing joint ownership of the building with other residents. The joint ownership comprises the building structure, airspace, and common areas like the pool, gym, and grounds.
Townhouse ownership: Townhouse ownership is more focused on a detached single-family home. The buyer owns the structure and the land it sits on, including any front and backyard area that goes with the residence. They also own the hone’s exteriors.
One of the critical things that differentiate these two properties is homeowners’ associations (HOAs). When you buy a condo or a townhouse, you are required to be a member of an HOA and pay monthly fees to the association. The HOAs are typically run by an elected HOA board that handles the day-to-day maintenance of the shared spaces. The HOAs create rules for all tenants and oversees the maintenance of the shared property.
- HOA’s in condos: In condos, the HOA manages the building, its grounds, and its common interior spaces.
- HOA’s on townhouses: The HOA manages common areas, including general grounds, roofs, and exteriors of the structures.
It is essential to review the HOA rules and fees when choosing between condos and townhouses since these variables vary widely from one property to another.
Condos and townhouses are great options for anyone on a budget. Generally, owning a condo or a townhouse is much more affordable than a single-family house, even when you factor in the monthly HOA fees. However, there is also a difference in terms of condo vs. townhouse purchase prices.
- Condos: Condos are usually cheaper to purchase than townhouses because you are not investing in any land. However, condo HOAs fees are typically higher due to the many jointly-owned spaces. Other variables that can push up condo overall prices include property taxes, home insurance, and home inspection costs.
- Townhouses: Judging by square footage, townhomes would be more expensive, but the actual purchase price is often based on the location and other related factors.
When it comes to location, there are smaller condo units situated in high-end centers that can be just as costly or even costlier than townhouses. When comparing the two based on the purchase price, it may be advisable to start with the location first before comparing and contrasting their prices.
Condos and townhouses share the same resale values depending on how well a unit has been maintained. However, when it comes to condos, the homebuyer is only responsible for interior maintenance and upkeep of their space. Townhouse owners have more control since they can maintain their property’s exterior and interior spaces. For example, a townhome owner has greater control over maintaining their property’s curbside appeal, while a condo owner solely depends on their HOA.
Both condos and townhouses have some privacy factors involved due to the fact that both share at least one wall with a neighbor. However, there are subtle differences regarding privacy between the two:
- Townhouses: A townhouse will typically provide more privacy as they closely resemble a detached home. Townhouses usually share one or two walls with neighbors but never below or above them. Besides, they also feature private enterprises.
- Condos: Condos by design belong to a building or larger complex. Condo owners typically share larger volumes with neighbors than townhouses. A condo owner may share walls with neighbors in all directions, including upstairs and downstairs. This means condos are not ideal for anyone looking for more privacy.
In the US and Canada, condos are governed by specific federal and local laws. As for the townhouses, they are typically governed by the same laws that apply to detached homes, including single-family homes.
The type and number of rules to abide by are primarily determined by the HOA of the community. By nature, condos have tighter restrictions because they have more shared areas with higher volumes of tenants. This ultimately calls for more oversight to ensure minimal conflict, damage, and nuisances.
Townhouses usually have specific amenities within the community, including pools and clubhouses. However, most of the amenities reside in condos. High-end condo buildings provide luxury amenities like retail spaces, exercise studios, coffee shops, concierge services, and rooftop decks. Keep in mind that the higher the quantity and the better the quality of amenities, the higher the prices of your HOA fees.
Homeowners insurance differences
For condos, your homeowner’s insurance only covers the unit’s interior. For example, if you need roof repairs following a bad storm, your HOA’s building insurance will cover it. What if you accidentally start a kitchen fire in your condo? You better have homeowners insurance coverage in place.
For townhouses, homeowners insurance provides coverage for both the exterior and interior of the home plus the land it sits on. Homeowners’ insurance for townhouses is more expensive as they require more coverage compared to condos.
The pros and cons of condos and townhouses for owners
Now that you can differentiate a condo from a townhouse, we will look at the pros and cons of condos and townhouses for owners:
Buying a townhouse
- Cost: A townhouse sharing walls with other townhouses can be cheaper to buy than a detached single-family home in the same location, even if they have equal square footage. This can be a cost-effective way to get a lot of space close to the cities while avoiding the cost of the acreage of the yard of a single-family home.
- Maintenance: A townhouse requires less maintenance owing to its smaller size. If there is an HOA, they may also take care of the exterior maintenance of the property.
- Amenities: Townhouses designed and built as part of development could feature specific amenities such as a clubhouse or pool.
- Outdoor space: Townhouses usually offer access to some amount of outdoor space, such as a patio or a private garage.
- HOA restrictions: There are several restrictions put in place by HOA, including rules of colors to paint your condo and the types of windows you are allowed to install. HOAs also charge monthly fees, which could push your budget up.
- Noise pollution: You might have to deal with noise pollution since you will likely live close to other neighbors. You will also likely encounter higher traffic than in a detached single-family home.
- Multi-floor living: Multi-floor living may not be suitable for older homeowners. They are usually highly vertical.
Buying a condo
- Less maintenance: One of the biggest advantages of living in a condo is that other people will do the maintenance for you, including cutting grass and maintaining the grounds.
- Security: Most condos offer gated or locked entries that improve security for the residents. Some also have doorkeepers and security professionals to enhance security for the residents. If you live alone or need a security guarantee, it can be more reassuring living in a condo than in a single detached family house.
- Amenities: Most condo communities offer residents best-in-class amenities that are usually out of reach for an average homeowner. Amenities such as a pool or a fitness center make it easy to get to know your neighbors and socialize.
- Affordability: Condos are generally priced lower than single-family homes or townhouses. If you are on a tight budget, a condo can be a great option.
- Sense of community: Condo owners are part of a larger community. With closer proximity to neighbors, you can have meaningful relationships with neighbors and become lifelong friends.
- Appreciation: In the past, condos used to appreciate at a slower rate than single-family homes due to the fact you get land when you buy a home. However, in the recent past, this has changed. A real estate report estimates the market value for condos appreciated by 38.4% between 2012 and 2017, while the value of single-family homes appreciated by 27.9%.
- Equity: condos can be an ideal option for anyone looking to establish a financial future. This is because condo owners can earn equity on their homes. By paying your monthly mortgage requirements, you increase your property value.
- Proximity to city life: unlike single-family homes, most condos are located close to vibrant downtown areas. Living close to downtown makes it easy to reach the workplace, visit restaurants, go shopping and do more.
- HOA fees: Condo amenities such as pool, fitness center, security system, and maintenance crew all cost money which ultimately pushes up the monthly HOA fees.
- Lack of privacy: Structurally, condos are more like apartments with neighbors surrounding you in all directions. A condo may not be an ideal option if you are looking for peace and quiet or more privacy.
- Resale challenges: It can be a challenge selling your condo home owing to the narrow pool of buyers interested in such properties. Families with children or pets often prefer homes with yards. Besides, some potential homebuyers may also dislike the idea of living by someone else’s rules.
- Delinquency: Condo communities finance their activities from the financial contributions of their residents. Unfortunately, some homeowners may fail to keep up with their association dues. This forces the rest of the residents to cover the extra financial burden.
Who should buy what?
You’ve probably heard the question, “are you the condo type?”. We all have different answers to this question, but ultimately the decision to buy a condo or a townhouse boils down to lifestyle, convenience, and cost. Your decision will also likely be influenced by your family’s size and future plans.
Essentially, condos and townhouses share several similarities and a few differences. The subtle differences can be the differentiating factor when choosing between the two options. Millennial buyers with limited homeownership exposure and little to no time for maintenance will benefit more from starting out with a condo. More established buyers will be looking for the extra yards of outdoor space and amenities for their growing families, and a townhouse will suit them better.
Interestingly, on the other end of the age spectrum, seniors and older adults looking for housing will benefit from the reduced home maintenance responsibilities and will probably go for a condo.