Townhouse vs. Condo, Why the Difference Matters
Deciding on a townhouse vs. condo for your next home? Townhouses and condominiums have subtle but unique distinctions that may mean the difference between your dream home and an in-between home — and ultimately, it comes down to what you prefer.
We’ve defined the terms behind the townhouse versus condo debate, concentrating on the factors people usually consider most when deciding between the two. Either way you lean — townhouse or condo — you’re getting an amazing spot for welcoming trick-or-treaters!
One final note before we go any further — some of these conditions may vary. Some townhomes operate as condos, and there are all sorts of exceptions to these rules. So, without getting bogged down with too many legal definitions we want to add the caveat, “in most cases” to the statements below.
With that said, let’s take a look at the age-old dilemma of townhouse vs. condo and determine which is right for you!
What’s the difference between a townhouse and a condominium?
The difference between a townhouse and a condo comes down to the word ownership. What you own, what you are responsible for maintaining, and what living space you must share can vary between the two types of dwellings. Keeping ownership in mind, let’s get a few definitions under our belt.
What is a condo?
A condo or condominium is a single building or a community of buildings with separate units that are owned by individual residents. Similar to apartments, condos can vary in size or style, ranging from individual homes to high-rises, but they often share walls with adjacent units. Unlike apartments, residents own and maintain the interior of their unit. However, they don’t own the property on which the building sits. The exterior, lawn, and shared spaces are typically owned by a condominium corporation and maintained by a homeowners association (HOA). This corporation is jointly owned by all the condo owners and charges fees for general maintenance and major repairs.
Residents are responsible for their individual homeowners insurance, but insurance for the shared spaces is factored into the dues paid to the HOA.
What is a townhouse?
Townhouses or townhomes typically refer to a type of architecture. They are multi-level, independently-owned homes that share walls with other homes on one or both sides. But here’s where it can get a little tricky — townhouses can fall into a couple of categories.
Some townhouses operate like condos. Just like any other condo, the buyer owns only the interior, while the building itself is owned by a condominium corporation and maintained by the HOA. For the purposes of this post, consider these types of townhouse buildings to be condos.
But other townhouses operate more like traditional houses. The purchaser owns the interior and exterior of the unit, as well as the roof and land. In this case, residents are responsible for the maintenance and insurance on both their home and the property it sits on. This is what we’ll refer to as “townhouses” moving forward.
Townhouse vs. condo: What these differences mean for owners
Responsibilities when owning a condo
As we know, a condominium is a part of a larger complex of homes presided over by an HOA. This HOA manages the complex with a set of rules that are determined when the association is initially formed and are regulated by homeowners.
These covenants, conditions, and restrictions, or CC&Rs, are worth considering when looking for a complex that suits your needs. They outline the ways in which a resident can alter their property in order to protect its resale value and the aesthetics of the community.
The rules and regulations are more encompassing for condos than for townhouses because the HOAs of condos control more space inside developments. This can be a great thing when the roof needs replacing or when it comes time to pave a parking spot, as the resident is not personally responsible for this maintenance or cost. But, it is important to consider that individual needs will be weighed against those of the whole community and are subject to a lengthier timeline for execution.
Put bluntly, your request for extra parking spots or rose bushes might not be granted this year, or ever for that matter. And you might find yourself going head to head with Mrs. Smith who prefers tulips.
Responsibilities when owning a townhouse
When owning a townhouse, the owner is responsible for the exterior of the home and the land around it. The shared spaces in townhouse communities are often much smaller, compared to that of a condo. This means the costs associated with the HOA are significantly lower than with a condominium. A homeowner takes greater individual responsibility for their home and property, allowing them more room for independence.
So, that means total freedom? Well, not exactly.
Many townhouses are also governed by an HOA, which often handles things like trash removal and snow plowing. However, it can also restrict the aesthetic choices of homes in the community. This means the regulation of things like house color, roof type, and even mailbox style. Townhouses are a mix of independence and shared responsibility that fit some people better than others.
The benefits of condos and townhouses for owners
Now that we have a sense of what separates a condo from a townhouse, let’s take a look at why these residences are so popular by examining their benefits and noting their differences. Many of these benefits stem from an experienced and well-managed housing community.
If affordability is a major factor in your home buying decision, condos and townhouses are both great alternatives to single family homes. They are often less expensive in regard to both the initial investment, as well as monthly payments — even when you factor in various HOA and insurance fees. This is great for first-time buyers, families transitioning into a new state or area, and those who are looking to invest in a home as opposed to renting.
The next benefit to consider when purchasing a townhouse or a condo is resale value. Remember all the pesky fees we talked about earlier? With proper planning by homeowners in the community, those fees become investments into the livelihood of the property and the units themselves. Neighbors rely on each other as a collective to keep the neighborhood moving forward, especially during tough economic times.
A well-managed and maintained townhouse or condo community can give an owner the leverage they need when selling their unit, reducing the amount of time the property sits on the market. A successful community is also the key to holding value during an economic downturn. This rings true for both condos and townhouses.
Community perks and security
Finally, let’s consider the benefits of a tight-knit community and HOA lifestyle. Condo and townhouse communities can be up close and personal with neighbors. And who doesn’t love friendly neighbors? Whether your homes are physically attached or not, living in a townhouse or condo community gives you the opportunity for more socializing. Need a cup of sugar, perhaps? Want to meet in the lounge for a cup of joe? It’s all at the tips of your fingers.
Many developments also factor security into their budgets. Whether this is or isn’t the case, there are still plenty of neighbors nearby to rely upon. Then there are the perks of shared costs for things like lawn maintenance and going to the board with neighborly disputes, instead of the tool shed — kidding.
What are the risks/downsides for condo and townhouse owners?
While there are risks associated with any home purchase, let’s look at the flip side of the perks above and examine where condo or townhouse risks are similar and where they differ.
High HOA fees
If affordability is important to you, which it is to most, it’s important to be aware of HOA fees. We know that condo owners typically pay higher HOA fees because of their ratio of shared space, while saving on supplemental insurance. Townhouses don’t have as many HOA costs, but they tend to be slightly more expensive than condos and can have higher insurance costs. At the end of the day, a condo might be less expensive than a townhouse, but the money you save might not be much, if any, when you factor in HOA fees.
Although HOA boards act on behalf of their members, they do have the authority to push repair projects and, with approval, can enact one-time fees for repair projects. While this may be an investment in the community, it’s important to factor these costs in when budgeting for your townhouse or condo.
The next risk to consider is in resale value. This may be dependent on when the condo or townhome you’re considering was built. Many new developments are being built more efficiently and offer low initial prices to stay competitive with other properties. This means that as your unit ages, you may be competing with newer and less expensive developments. Something to consider when making the investment.
Finally, there is the community lifestyle. This is a double-edged sword. While purchasing a single family home does not necessarily mean you can escape all neighbors, it does come with a certain amount of privacy you just can’t get in many condos or townhouses.
Besides physically sharing walls — and even floors and ceilings — everyone is living in close proximity. This means you might be able to hear the neighbor’s new baby crying at night, and they might be able to hear your late-night Netflix binges.
A few key questions when deciding
The truth is, condos and townhouses share so many similarities that the smallest differences can become defining factors. The biggest when weighing a townhouse versus a condo is you and your personal preferences.
But remember, your influence can help make a community successful. So, consider how you can contribute — whether you serve on the board, become a vocal and well-informed HOA voter, or at the most basic level, just read and consider your contracts carefully and understand your obligations. CC&Rs and master deeds, folks.
If you’re still not sure what home is the right fit for you, check out our guide to the difference between co-ops and condos. All that being said, condos vs. townhouses is less of a battle and more a compromise for the things you value most in your home.