The Complete Guide To Buying A Condo
If you’re in the market for a new home, you have several options when it comes to property types. The majority (83%) of buyers purchase single-family homes, according to the 2017 Home Buyer and Seller Generational Trends Report from the National Association of REALTORS Research Department. The rest of buyers get into other types of homes, including townhouses, cooperatives and condominiums.
While most of us know a single-family home when we see it, differentiating between the other types of homes can be tricky. It usually comes down to ownership – and who owns what. If you own a single-family home, for example, you own the structures (e.g., house and garage) plus the land on which they sit (plus any additional acreage). Townhouses, on the other hand, are part of a multi-unit complex where you own the interior and exterior of the unit, including the roof, lawn and driveway – but not any common areas. Since townhouses are usually designed in rows, you typically share at least one interior wall with a neighbor.
Cooperatives, or co-ops, are popular on the East Coast, particularly in large cities. In Manhattan, for example, co-ops make up 75% of the housing inventory. [L1] In a co-op, you don’t technically own your house at all; instead, you buy shares in a corporation that owns it. The size of your house determines the number of shares you own, which in turn affects your taxes, maintenance fees and other costs. (For a closer look, see Housing Cooperatives: A Unique Type of Home Ownership.)
Finally, a condominium, or condo, is a unit in a multi-unit development where you own just the interior of the unit. All other areas – including the building’s exterior, hallways, lobbies, lawn and community facilities – are owned by the Homeowner Association (HOA). Whether you own a townhouse, co-op or condo, you’ll pay some form of monthly, quarterly or annual fee to your HOA to cover maintenance and other costs (some single-family homeowners also pay these fees if the house is located in an HOA community).
In this guide, we look at buying a unit in a condominium development. If you’re considering a condo for your next home purchase, read on to learn more about this flexible type of ownership.Condo Buying Guide: Condo Characteristics