Looking for an affordable home? Try a condo
In a housing market with high demand and low inventory, condos are a great option for buyers.
In a housing market with historically low inventory, what’s a homebuyer to do? If you’re a first-time buyer hoping to enter the market or a homeowner looking to downsize, a condo may be your solution.
The popularity of condos has increased for precisely this reason. Condo sales were said to have “exploded” during the pandemic—as many homebuyers searched for an alternative to pricier single-family homes. Destin, Naples, Park City, Aspen, and Las Vegas are some of the hottest condo markets right now.
5 reasons to consider buying a condo instead of a house
Is a condo the right choice for you? Let’s explore some of the perks of condo living to see if it’s a fit:
1. It’s affordable.
This is what crosses most homebuyers’ minds when they look into a condo purchase: A condo is likely to be cheaper than a house. But how much cheaper? Recent data from the National Association of REALTORS® (NAR) shows that a median-priced condo may cost you $305,400, compared to around $450,000 for a median-priced house.
Saving well over $100,000 (based on median prices) on your purchase can lower your monthly mortgage payment. Just keep in mind that condo association fees may also apply—averaging around several hundred dollars a month to cover maintenance and amenities—adding to your monthly housing expense.
2. It’s low maintenance.
Speaking of maintenance: Lightening your home maintenance load is one reason many buyers gravitate toward condos. Typically, a condo or homeowner’s association (HOA) is responsible for most exterior upkeep. This might include landscaping, shoveling and clearing walkways, and maintaining roofs.
Condos are akin to apartments in this way and may be attractive to you if you don’t want to shell out thousands for exterior repairs, i.e., around $9,000 for a new roof.
Sometimes, less is more. Chat with an Academy Mortgage Loan Officer about your affordable homeownership options.
3. It has amenities.
What else might your HOA fees cover? Your condo complex may come with built-in amenities, like a pool, gym, dog park, clubhouse, game room, and even a rooftop deck. Some of these features may also be money-savers; though you’ll be paying a monthly HOA fee, you may no longer have to pay for a gym or pool membership.
You, like many buyers, may appreciate these “extras” if you’re looking for added security. It’s not uncommon for a condo complex to have gated entry, a doorperson or security checkpoint, and surveillance cameras in common areas.
4. You may have more options.
With housing inventory hovering around record lows, you may be having a hard time finding any listings that meet your needs in your area. Including condos in your search criteria could turn up many more choices.
Some homebuyers might also choose to purchase a condo as a starter home so they can enter the market. Home prices—and home equity—have been rapidly increasing. Buying a condo may give you the chance to become a homeowner and quickly begin building equity that you can later use to trade up and purchase a house. Get in touch with an Academy Loan Officer to find out if this is your best option.
5. You can join a community.
As soon as you move into a condo, you become part of a small, independent, and localized community. If you’re single, older, or new to the area, this can be a big draw. Condo associations may often throw residents-only events, providing an opportunity to socialize. You’ll also share communal living areas, which can make it easier to make friends.
This may be why those living in condos and housing co-ops continue to say they’re “overwhelmingly satisfied,” based on the latest surveys available. The majority of residents express that they feel like their association is looking out for their community’s best interests.
While condo living has its benefits, there are still considerations:
- HOA fees. A lower sales price is attractive, but make sure to factor in additional monthly HOA payments. Your Loan Officer will include these monthly payments when calculating the loan amount you may qualify for.
- HOA risk. Your Loan Officer may assess risk by looking for the presence of litigation involving a condo’s HOA. An HOA’s financial condition is also important: HOA budget and reserve studies will be analyzed for minimum reserve fund requirements to ensure the building can be maintained.
- Potentially higher interest rate. Another factor that impacts affordability and monthly payment is the added cost associated with your mortgage interest rate. A mortgage for a condo can typically have a higher interest rate to reduce the discount points paid at closing.
- Stricter approvals. Getting approved for a mortgage on a condo may be more complex as the approval depends on the development—not just the unit. Searching FHA- and VA-approved condominiums is a good place to start. Your Loan Officer can also walk you through the approval process.
Is a condo right for you?
There’s an easy way to find out. Reach out to an Academy Mortgage Loan Officer to see if a condo purchase can help you achieve your big-picture dreams and makes sense for your financial situation.
*Pre-qualification is not a commitment to lend. This blog is intended for educational purposes only. Please consult a trusted professional as personal circumstances may vary. Corp NMLS 3113 I Equal Housing Lender. MAC623-1481483.