Condo Living: All the Pros and Cons
Condo living offers a low-maintenance lifestyle that is oftentimes more affordable than owning a single-family residence. This article details some of the pros, cons, and tossups of condo living and compares it to other options like living in a single-family home or townhome.
Condo Living Pros
Condo living is generally less expensive than owning a single-family home, particularly near dense urban areas. Take the Westwood neighborhood in Los Angeles. Let's compare two of its residential areas. The median list price of condominiums in Wilshire Corridor is approximately one-third of houses in the abutting Westwood neighborhood of Little Holmby. While the price disparity between houses and condos is not always this great, the comparison illustrates the point that some urban areas are substantially more affordable for folks who embrace condo living.
In some places, home buyers are left with no choice but to buy a condo. According to Waypoint Homes, condos are the only option in Downtown Atlanta as single-family residences do not exist there. This housing stock limitation is similar to the Century City and Downtown areas of Los Angeles.
Most condo buildings feature controlled access that prohibits entry without a key fob. Some complexes even require a key fob to call the elevator or select a floor. Additionally, many condo buildings place CCTV cameras at the entrances and common areas. Some folks feel more secure knowing neighbors surround
Condo building and condo complex security measures indeed provide greater security. People can't walk right up to a front door unless they are let into the building or complex. With single-family houses, anyone can walk directly up to a front door unless the house is gated or situated within a gated community.
But controlled access can also create some headaches. For instance, deliveries can become more complicated, mainly if there isn’t a call box to "buzz" people inside or a concierge to assist. Inviting friends over can be a pain, especially if a trip to the lobby is required each time to let them in.
Condos are easier to maintain than single-family homes and townhomes. Condo owners don’t have to worry about the property outside of their units, as their HOA is responsible for maintaining the common areas, amenities, exterior, and roof. Plus, there’s no yard to mow!
Thus, condo living can be an attractive option for those who hate maintenance but still want to capture some of the economic benefits of owning a home.
But those with the "DIY spirit" may become frustrated with this situation. If there are issues beyond their walls, owners must petition the HOA to fix them. Unit owners cannot fix problems independently, nor do they have control over how quickly repairs occur.
Condo Living Cons
Stairs and Elevators
Living in a high rise condo building in Los Angeles can be challenging from a logistical perspective. Lugging up groceries or large items can be challenging, especially if there’s an extended distance from the elevator to the door of one's unit. Even simply traveling in and out of the complex could take five or more minutes to accomplish.
Now, five minutes might not sound like much, but it can add up. Imagine a situation where someone travels to work and then home each workday of the month. If it takes five minutes on average to depart or arrive, that alone creates almost 4 hours a month of wasted time. It can also become psychologically frustrating to be unable to leave quickly.
Elevators can also require maintenance or become otherwise unavailable, creating scenarios where residents must climb flights of stairs, which can be incredibly challenging for those with restricted mobility.
Less Storage Space
Those who live in a house can store items in a shed, basement, garage, workshop, or attic. Someone living in a condo typically has none of those options. They are restricted to either storing items within the units themselves or possibly in a storage unit in their building.
Condo living, much like apartment living, entails sharing walls with neighbors. These neighbors can significantly impact one's quality of life. For example, these neighbors may:
- Blast their televisions at night or play loud music
- Stomp around their unit
- Leak water into adjacent units
- Smoke in their units or common areas
- Invite unsavory individuals onto the premises
- Slam their doors or speak loudly in the hallways
- Have noisy “wrestling” sessions
Fundamentally, there’s a lack of control that comes with condo living. Owners cannot control who their neighbors are or their actions. Another factor beyond one's control is the condo's quality of construction and how easily sound travels through walls.
There’s also a good chance neighbors are nothing but courteous, friendly, and helpful. But there’s nothing one can do except cross one's fingers!
Changing HOA fees
Anyone living in a condo building or complex will belong to a homeowner association (HOA) and pay HOA fees. These HOA fees will almost certainly only increase over time.
Problems emerge when HOA fees increase sequentially in a short period or are held artificially low. Developers sometimes artificially suppress HOA fees on new condo projects so that their homes are more affordable. Over time, HOA fees increase when the developer stops subsidizing.
Increasing HOA fees decreases a condo's marketability, as fewer people can afford the monthly HOA bill. The bottom line? Scrutinize the bylaws before making a condo purchase to see what annual increases in HOA fees are allowed.
Most condo ownership structures are such that each homeowner owns a small fraction of the building as a whole. Associations will often charge a fee covering a reserve fund so that special assessments do not disproportionately impact new owners. But homeowners could still have to foot the bill if the HOA mismanages the building’s affairs.
For instance, imagine there was a devastating storm that damages a condo building's exterior. What's more, the HOA failed to purchase the proper insurance to cover this type of damage. Even worse, the building's reserve fund does not contain adequate funds to cover the repairs' cost.
This creates a scenario where a special assessment is levied to all homeowners per their ownership interest. Sometimes, new owners are hit with large repair bills on items they never were able to enjoy. Special assessments could also arise due to improvements or lawsuits.
Special assessments are more common in older buildings, as they require more ongoing repairs and maintenance than newer buildings. Older buildings may also lack individually metered units, meaning that all residents share utility costs equally.
The quality and governance of HOAs can vary wildly. Be sure to obtain a copy of an association’s financials and ensure it has proper cash flows, reserves, and a low delinquency rate! Additionally, look for any history of past special assessments.
As previously mentioned, condo residents are subject to the rules and regulations specified in their building's HOA bylaws. Sometimes these rules can be invasive and annoying.
Condo bylaws govern virtually all aspects of condo life: parking, trash, pets, smoking, guests, noise, and leasing. These bylaws can theoretically be changed at any time by the HOA.
In other cases, some repairs are at the mercy of the HOA’s property management company. Urgent repairs could take weeks or months to accomplish, leaving the homeowner with their hands tied. Thus, those maximally concerned with their freedom probably shouldn’t consider condo living.
It is prudent to review both the HOA bylaws and the property management company’s reviews before purchasing a condo.
An individual condo unit's value is closely tied to the other units in the building (specifically, the recent sales prices). If other people in the building fail to maintain their condominiums adequately, the value of one's unit may suffer.
Appraisers and buyers may compare single-family residences to similar houses that are potentially miles away. But adjacent condo buildings may vary significantly in their amenities and HOA fees, making apples-to-apples comparisons much more difficult. Thus, the sales occurring within a building play an outsized role when potential buyers and appraisers make their evaluations.
Again, this concept feeds into the general theme that condo living involves surrendering a certain amount of control to one's neighbors.
Condo Living Tossups
Some aspects of living in a condo are a mixed bag with no clear winner. Here are two tossups to consider.
Some condo buildings feature impressive amenity packages. Examples could include meeting rooms, swimming pools, sauna, gyms, rooftop decks, and even access to ground-level retail establishments. These amenities could be impossible or very expensive to install in a single-family home.
But access to these amenities can be revoked, potentially for extended periods. For example, during the COVID-19 pandemic, many condo associations in hard-hit cities (like New York and Los Angeles) closed down their shared amenities for periods longer than a year. During this period, residents were paying each month for these amenities but couldn’t access them.
While pandemics are thankfully rare, the point is that access to amenities isn’t necessarily guaranteed. Amenities can also make the building substantially costlier to live in, particularly for residents that don't frequently use them.
Real estate is hyper-local, and condo appreciation can vary significantly between cities. In some cities, condos outpace the appreciation of single-family residences. But be sure to thoroughly analyze what the historical condo market looks like in the area before jumping in.
Some have even used condo ownership as a stepping stone to owning a house. Initially, buying a condo is the only type of home they can afford. But eventually, their condo appreciates, and they can use accrued equity as a downpayment on a single-family home.
Parking affects condo living more than many folks might expect, but it largely depends on the building's infrastructure. Here's a quick rundown:
- Covered/Uncovered: Uncovered parking means exposure to the elements when entering or exiting. Harsh weather can make trips to and from the condo building brutal.
- Gated/Ungated: Ungated parking can represent a significant security issue. Anyone can walk directly up to cars at any time of day.
- Assigned/Unassigned: Unassigned parking can make it challenging to find a spot during peak hours.
- Guest Parking: If no guest parking is allowed, it can be tricky (or even unsafe) for guests to find parking nearby.
- Valet: Some luxury condo buildings feature 24/7 valet, meaning that parking is completely unnecessary.
The best-case parking scenario is a setup that is covered, gated, and deeded (or assigned) parking spots. Even better if there's a valet!