Welcome.

RFG is the place to find practical, real world information on personal finance, real estate, investing, stock options and more.

Condo vs Townhouse

Condo vs Townhouse

Evaluating a condo vs a townhouse

I've made no bones about my affinity for condos. To people like me who value their time, live in the city, and want their life to be as simple as possible, it's absolutely the best way to go. But recently, I've been hearing people talk about townhouses as a different alternative to single-family homes. At first I wanted to dismiss that out of hand, but then I realized that I had never REALLY dug into the differences between condos and townhouses in a material way. 

Today I'm going to do my best to take an objective approach to the discussion and dissect the positives and negatives of both housing types across a variety of factors including Cost per Square Foot, Privacy, Outdoor Space and Maintenance. 

Definition of a townhouse vs condo (for this discussion)

There are many different types of townhouses, so I'll need to simplify the definition a little bit for this comparison to make sense. Generally, a townhouse has a couple of defining characteristics:

  1. At least one wall is shared with another building

  2. The title includes some amount of land in addition to the structure itself

  3. All maintenance for the property is the responsibility of the owner

Put more simply, they usually look a lot like this: 

townhouse.jpg

Comparing the difference between a condo and a townhome really comes down to #2 and #3. In a condo, there generally isn't any land deeded to the property (although there is common ownership in the property the building is built on). Most townhouses include the small patch of land they are build on (generally around 1000 sq. ft.), which usually includes a small yard. 

Townhouses are also generally maintained by the owners themselves, rather than a homeowners association as it would be in a condo. 

Difference between condo and townhouse #1: Cost

One of the most important differences to evaluate when purchasing a house is how much it's going to cost. Duh. The question is, do you get more square footage for your money with a condo or a townhouse. 

This is actually a really difficult question to answer because cost per square foot generally decreases as homes get larger. This is true for single family homes too, a 4,000 sq. ft. house is generally cheaper on a cost per square foot basis than a 450 sq. ft. studio condo. But, since we can find condo's and townhouses in a similar size and quality it should theoretically be possible to compare. 

Looking in my native Seattle in the Fremont area, I found 4 relative similar properties to compare.

  1. Townhouse #1: 4105 Fremont Ave Unit A - 3 bed/2.5 bath - 1100 sq. ft. - $614/sq. ft. - Built 2005

  2. Townhouse #2: 3924 Linden Ave N Unit E - 2 bed/ 1.75 bath - 1230 sq. ft. - $673/sq. ft. - Built 2015

  3. Condo #1: 1310 Lucas Place #402 - 2 bed / 1.75 bath - 891 sq. ft. - $675/sq. ft. - Built 2004

  4. Condo #2: 4321 Linden Ave Unit H - 2 bed / 1 bath - 790 sq. ft. - $620/sq. ft. - Built 1929 (but remodeled)

Trying to look at this objectively, there are a couple of things we can see. First of all, the condos in the comparison are much smaller than the townhouses, so we would expect them to be slightly more expensive on a cost per square foot basis. Despite that, we can see that the prices are broadly similar between the two types of properties. 

Winner? This one is tough to call because they are so close to one another. We'll call it a tie, although the condo advocate in me wants to point out that you could probably get more floor area for your money with a condo, if you purchased a property at a similar size to the townhouses we see here. 

Comparing condominiums to townhouses: Privacy

Privacy is key. Although it's nice to have GOOD neighbors, it's never a given. Minimizing the amount of forced contact with neighbors is an unmitigated benefit. At the very least, it's nice to be able to choose not to have contact, if you don't want to. 

Comparing condominiums to townhomes is pretty easy when it comes to privacy. No matter which home type we are talking about, there will be shared walls. Condos have them, townhouses have them. However, only condos have shared FLOORS. Anyone who has lived under a noisy neighbor knows how much this matters. Having said that, if you are on the top floor of a condo this might be less of a concern, since you don't have to worry about anyone on top of you. On the other hand, you still have to think about the people below you... so maybe it isn't that big of a benefit. 

Winner? Townhouses win by a mile because they don't have shared floors. See, I can be objective!

Comparing outdoor space between condos and townhouses

This one might not be as simple as it seems. It's true that most townhouses have a small yard... but I would argue that isn't necessarily as big of a benefit as you might imagine. Having 100 sq. ft. of private space is certainly nice, but it isn't really usable or enjoyable. On the other hand, many condos have beautiful shared spaces and common areas with pools, barbecues, and views. See the townhouse on the left below, vs. the condo on the right. 

townhouse backyard.jpg
outdoor space.jpg

Winner? I am not going to dictate this one. Some people want their own space, some people might prefer a better shared space. For me... I'd take the condo!

Comparing maintenance between condos and townhouses

Comparing the two types of houses for maintenance is difficult, because it's so different. Townhouses are similar to single family homes because the townhouse owner is generally responsible for all maintenance. This is nice in a way, because there isn't any home owners association bill. On the other hand, when you need to spend $20,000 replacing the roof, or the deck, or the siding... it's all on you.

Condo owners have a different obligation. Every month you send money to the HOA, but if the association is decently responsible you shouldn't ever have to write a big check. 

Outside maintenance is also a consideration. With condos, there is no outside maintenance. Townhouses might require you to fix the fence, plant flowers, mow the lawn, etc. Some people may like that... but I don't.

Winner: In my opinion, condos are better here. I'd rather have a predictable monthly fee than a HUGE bill every once in a while. 

So... what's better, condos or townhouses?

It's up to you! If you want to make things easy on yourself, and you don't mind sharing spaces and paying a monthly fee... condos are for you. If you prefer a little more privacy, and you want to take care of maintenance on your own... townhouses are the preferred option. 

Best Stocks to Short: Ohhhhh... $SNAP

Best Stocks to Short: Ohhhhh... $SNAP

Using debt as a forced savings plan

Using debt as a forced savings plan