Should You Own a House or Condo?

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You’re finally ready to own a home, but what you choose should reflect your lifestyle.

So, you’ve decided to leave the ranks of renters and finally become a homeowner. What will it be: a house or a condo?

The classic American dream involves a single-family home, usually with a white picket fence (though those are kind of out of fashion these days). In many people’s minds, condominiums are for downtown city dwellers, childless young couples and singles, or retired folks who don’t want the hassles of exterior maintenance.

In today’s weak housing market a condo purchase can be particularly risky. Historically, condos have not appreciated quite as fast as single-family homes, and the condo market tends to be more volatile. In some markets, condo vacancies rates are very high and threatening to go higher. Not only does that depress prices, it forces condo associations to jack up fees, as there are fewer owners to share the exterior-maintenance costs.

But if both types of homes are available in the community you want to live in, the choice between a condo and single-family home is mainly a lifestyle issue. What are the pros and cons of each?

A single-family home would be all yours in the truest sense (ignoring the fact that any home with a mortgage really belongs to the bank). If you want to change the color, you can probably do whatever you like, within broad boundaries set by local ordinances to prevent polka dots.

You’ll have some buffer from the neighbors, unless you choose a row house, twin or duplex. That could be nice, since you can’t control who moves in next door.

On the other hand, maintaining all that exterior space is entirely on you. You’ll have to devote time to mowing, raking, sweeping, painting and cleaning the windows -- or pay someone to do it.

With a condo, the neighbors are usually close, and bad ones are a real problem when you consider the long-term commitment you make when you own instead of rent.

There’s typically little or no exterior work to do with a condo, as that’s usually handled by an association to which you pay a monthly fee. You might be allowed to put some flowers in the hallway, but a big vegetable garden would probably be banned.

For many people, a key factor is how they prefer to spend the weekends. If you like to putter and make trips to the home store, a house may be just the thing. If you like to leave town from work on Friday night and get back late Sunday or early Monday, a condo is probably the best choice.

Because the real estate market is so sluggish, either type of purchase should be seen as a commitment of at least five to seven years, maybe more, so the property should suit your current and future lifestyle.

If you’ll be starting a family, outdoor play space and school quality may be important, and a single-family home in the suburbs could be the best choice. If your career is likely to get more and more demanding, you might want to be free of chores and close to work, making a downtown condo a better option.

Of course, if you’re wavering in the choice between a condo and a single-family home, your plans may not be firm enough for either. That makes renting a good option. As a renter, you typically commit to no longer than a year or two, so you can easily move when your needs change.

On a purely financial basis, owning is better than renting in the long run. But that’s mainly because home prices tend to rise over time. The housing market is in so much trouble these days that it’s not at all clear that home values will go up over the next few years. You probably have little to lose by continuing to rent until your lifestyle is a little more established.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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