Research has shown that people consider moving more stressful than divorce. And while this may seem extreme, when you consider all the stresses associated with finding and buying a home, it actually makes sense.
Beyond the complexity of dealing with packing up your entire life, moving to a new home brings along decision fatigue. The emotional burden of having to make tons of significant decisions in a short time can be overwhelming.
Do you rent or buy? And when you decide this, what type of home will you choose? Do you care if your home shares walls with your neighbor’s home? Would you prefer a detached single-family home or a condo or townhome?
If you opt for a home that shares walls, you need to understand the differentiating factors in the townhouse vs condo debate. This article will help reduce your decision fatigue and make an informed decision about which is best for you in your real estate search.
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Condo Architecture: An Owned Unit
Before getting into the nitty-gritty details, it’s helpful to understand the difference between a condo and a townhouse. Both are common in urban areas, but they come with different pros and cons.
A condo is similar to an apartment in that it is a single unit in a building or community of buildings. However, instead of renting a unit, a condo resident owns their unit. This comes with various fees and rules, but more on that later.
Townhouse Architecture: A Home That Shares Walls
Townhouses or townhomes are often characterized by their architecture. They are attached to adjacent homes and share walls with one or more neighboring homes. They are generally larger than condos and have more rooms.
You can think of a townhouse as a rowhouse. They are two or more stories, and they offer a bit more privacy than condos. However, a townhouse-like structure is somehow referred to as a condo, as explained below.
Condo and Townhouse: What’s the Difference?
Defining a condo and townhouse is not actually a simple matter of architecture. The real difference lies in the ownership.
When you buy a condo, you own your personal unit. You also share ownership of the remainder of the building with other residents. The common areas, such as any pools, gyms, or other shared rooms, are all shared.
In contrast, owning a townhouse is more like owning a detached single-family house, other than the fact that it shares walls with neighboring homes. You own your unit and the land it is on. You share ownership of the entirety of the building with other tenants.
So with this definition in mind, a structure built like a townhouse can actually be considered a condo, depending on the ownership structure. If a rowhouse owner does not own the property it sits on; they actually own a condo.
The Costs of Townhouses and Condos
Condos and townhouses are great options for first-time homebuyers or people on a budget because they are generally more affordable than detached single-family homes. However, there are still major costs associated with each.
Purchase Costs
Townhouses generally cost a bit more than condos. This is because they are generally larger than condos, and the purchase price includes the land the townhouse sits on. However, mortgage rates for condos are usually higher than those for other types of homes.
Local Massachusetts Real Estate Data:
As of May 2023 the average price for a condo in Massachusetts hovers around $540,000, with cities like Boston seeing a slightly higher average due to its urban setting. In contrast, the average townhouse in Massachusetts is priced around $624,000, reflective of its larger space and the inclusion of land ownership.
HOA condo fees also vary based on amenities and location, but on average, Massachusetts condo owners can expect to pay around $200 – $1000 monthly, while townhouse residents might see slightly lower fees averaging at $200 – $300 monthly. In metro areas like Boston, this could be slightly higher around $400 monthly.
Massachusetts’ Property Market and Notable Neighborhoods
Massachusetts boasts a diverse property market that caters to a myriad of preferences, from bustling urban centers to serene suburbs. When looking into condos and townhouses, certain neighborhoods stand out in terms of popularity and offerings.
Boston: The heart of Massachusetts, Boston is where high-rise condos are most prominent. The Back Bay, Beacon Hill, and the Seaport District offer luxury condos with stunning cityscape views. If you’re looking for a mix of historical charm and modern amenities, these areas are perfect.
Cambridge: Located just across the Charles River from Boston, Cambridge is home to Harvard and MIT. Condos here are in high demand, especially around Harvard Square and Kendall Square, offering a blend of academic vigor and vibrant city life.
Somerville: Once an industrial city, Somerville has undergone a transformation, becoming a hotspot for townhouses. Areas like Davis Square are popular for their unique blend of suburban feel with urban amenities.
Worcester: As the second-largest city in Massachusetts, Worcester provides more affordable townhouse options. With its revitalization efforts, neighborhoods like Canal District have seen a surge in townhouse developments.
Brookline: Nestled between Boston and Newton, Brookline is a sought-after area for both condos and townhouses. With its picturesque streets and proximity to downtown Boston, it offers a balance of city and suburban life.
If you’re considering buying a condo or townhouse in Massachusetts, it’s crucial to familiarize yourself with these neighborhoods. Each offers a unique lifestyle and set of amenities, so understanding what each area provides will be key in your decision-making process.
Homeowners Association (HOA)
A distinguishing cost associated with owning a townhouse or condo is the homeowner’s association (HOA) fees. When purchasing either, you must pay a monthly fee for the amenities and maintenance responsibilities shared by the community.
The HOA is made up of tenants in the community. In a condo, the HOA is responsible for managing the building, the grounds, and any shared common spaces.
In a townhouse, the HOA manages common area grounds. It also sometimes deals with the townhomes’ structural aspects, such as the roof and exterior of the building.
Your HOA fees can vary widely, but generally, the more services they offer, the more you will pay in monthly fees. This means that condos typically have higher fees as the HOA is responsible for more than the HOA of a townhouse. Condos also generally have more amenities, which are covered by the HOA fees.
Property Tax
No matter what type of property you buy, you’ll have to pay property taxes. Property tax laws differ from state to state, but they are typically based on two things: the home’s assessed value and the tax rate in the area.
Because townhouses are larger and include property, townhouse owners will often pay more in property taxes than condo owners. To calculate the property taxes on a townhouse, the government will send a tax assessor to determine the value. They will look at square footage, the amount of land owned, the number of rooms, and the neighborhood to determine value.
On the other hand, a condo property tax only takes the interior of the condo into account. As it is generally less square footage than a townhouse, it can cost less. A condo property tax assessment will also include shared spaces in the building, such as hallways and common rooms.
Mortgage lenders will often set up property taxes to be paid with your mortgage payment. This is helpful as it spreads out the expense over twelve months and ensures that the taxes are paid on time.
Massachusetts Property Tax Insights:
In Massachusetts, property tax rates differ from town to town. This is a significant consideration, especially if you’re torn between a condo in Boston and a townhouse in a suburban neighborhood. The state doesn’t have a standard rate; instead, each city and town in Massachusetts sets its own property tax rate. Typically, these rates are based on the total value of all taxable property in the community and the amount of revenue needed for the public budget.
For condos and townhouses, Massachusetts employs a method called “ad valorem”, meaning that your tax is based on the assessed value of your property. Importantly, the value of condos can be influenced by shared amenities, while townhouses might have their rates affected by both the structure and the parcel of land they sit on.
Always consider consulting with a local tax assessor or using Massachusetts’s online databases to get an estimate of potential property taxes when deciding between a condo and townhouse in a specific area.
Homeowner’s Insurance
Homeowner’s insurance is necessary to protect your property and is often a requirement for getting a mortgage. It covers many things, including:
- damage from fires or storms
- stolen belongings
- liability protection if someone sues for getting injured in your home
Homeowner’s insurance is another cost that differs between condos and townhouses. Condo insurance only covers the interior of the home, so it is usually cheaper than townhouse insurance. The HOA fees cover insurance for things outside the home, such as roof repairs after a storm.
On the other hand, Insuring a townhouse can cost a bit more as you are also insuring the property the building sits on.
Other Considerations in Townhouse vs Condo Debate
Aside from associated costs, there are many other factors to consider when deciding between a townhouse and a condo.
HOA
Aside from the fees, it would be best if you closely considered the HOA itself before purchasing a townhouse or condo. In addition to maintenance issues, HOAs are responsible for establishing rules for the community.
Condo HOAs are more restrictive. They have rules about where you can park, what color window treatments you can have, and whether you can have holiday decor. Because you don’t own your property, you have less control over what you can do with the exterior.
There are still rules established for things like noise and renting out your property with a townhouse, but they are generally less strict. The goal of a townhouse HOA is to maintain or improve the neighborhood’s value, so they deal more with things like the paint colors allowed and landscaping requirements to keep things looking nice.
Before purchasing a home with an HOA, make sure you understand all the rules and regulations. Try to get a feel for how the HOA is run. A well-run HOA can make it feel like you live in a resort; a poorly run HOA can be a nightmare.
Resale Value
The resale value of a house is often outside of your control. However, there are still many factors within your control that you should consider.
A well-run HOA can offer great curb appeal as the exterior of the property will be well maintained. In fact, research shows that a well-run HOA can increase the value of a home by 4.2%.
Plus, with an HOA in a condo, you’ll just have to worry about making the inside of your home ready to sell. In a townhouse, you may be responsible for things like yard care. Additionally, extra amenities like a pool or gym can be a major selling point for those debating between a detached home or a condo.
Space Considerations
Townhomes are great for people with families or pets, as they have more interior and exterior space. They also offer more privacy to tenants, as they have fewer shared amenities and more personal space.
Condos are smaller, and you’ll cross paths with your neighbors more. This means less privacy but also allows more opportunities to build community and friendships with neighbors. Condo HOAs will sometimes even host events that are an opportunity to meet other members of the community.
Seniors
There are many condo communities just for retirees. Seniors moving into retirement should consider whether it is better to rent or buy a condo, as there are major benefits and downfalls associated with each. In both scenarios, living in a condo allows seniors the advantage of having assistance when needed.
Condos vs Townhouses: Which Is Best?
There is no clear-cut answer to the condo vs townhouse debate. If you are okay with a home that shares walls with your neighbor, both condos and townhouses can be a budget-friendly option for first-time homebuyers. But both come with associated costs, such as HOAs, property taxes, and homeowners insurance.
It would help if you also considered things like the HOA rules, space, and your personal situation. If you need more space and freedom and are willing to deal with the additional responsibilities associated with these, opt for a townhouse. If you prefer more interaction with others and fewer maintenance responsibilities, go for a condo.
Either way, make sure to cover your new home and belongings from significant loss with affordable homeowner’s insurance. Reach out today to learn more about how we can help you find insurance that fits your lifestyle today!
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