Houses Versus Condos in Southern Florida
By Steve Gillman - April 11, 2014
Whether you are moving to southern Florida to retire or for
work, or just looking for a second home in a warmer environment,
if you are buying rather than renting you have a choice to make.
Will you buy a house or a condominium? There are advantages and
disadvantages to each, and you'll find them explained below.
Our comparison is based on six important factors.
First, however, there is a distinction we need to make when
it comes to houses. Some are in highly-regulated gated communities
with amenities like community pools and guard patrols. These
typically come with high association dues and are like condos
in most respects. Then there are the traditional houses in neighborhoods
that have only the usual rules and no dues, or at most have a
small annual association fee that is used to maintain a sign
or two and the entrance to the neighborhood. This latter type
is what we have in mind here when looking at houses versus condos.
1. Initial Investment
Condos win this battle in most of Florida. In Naples, for
example, there are areas where a two bedroom two bath condo in
move-in condition can be bought for $95,000 while a house of
similar size a few hundred yards away costs a minimum of $260,000.
Even if you have the money to pay cash for either one it is worth
considering that the $165,000 extra you would spend on the house
could instead be invested elsewhere if you bought the condo.
It could even buy two more rental condos in Naples.
There are some exceptions to this price comparison. In Port
Charlotte, for example, you can buy a small house for $75,000,
about the as a small condo. But this is true only of the simple
older homes that were built around 1960.
2. Annual Expenses
If you compare the ongoing cost of owning a house in Port
Charlotte to that of owning a condo in Naples, the house will
look better. That's because of the one big expense you will have
with any condo: the home owners association dues. You can avoid
this expense with a house.
On the other hand, if you compare a house to a condo in the
same area you'll get a different result. For example, when you
buy that $95,000 Naples condo you might have dues as high as
$400 per month. That will include insurance for the exterior
of the building, and perhaps water, as well as amenities like
a pool and nice landscaping. You don't have to pay any dues for
the $260,000 house down the street, but you will pay for your
own landscaping, a pool if you choose to have one, and exterior
maintenance. Because of the higher value, the cost of insurance
and taxes will also be much higher. Which has higher total expenses
on an annual basis? Probably the house, but you have to look
closely to make comparisons in this category.
3. Homeowner Control
Houses offer you more control than condo ownership, and that's
a big reason many people prefer them. Of course there are the
rules that come with condos, including whether you can have pets,
what size they are, which types of cars you can have (yes, some
even regulate that), and so on. But there are also other control
issues that you may not have considered. For example, if your
condo roof is leaking a bit, you can't get it fixed on your own.
You have to hope that the association board or management will
fix it when you want.
Financial control is another thing that many condo buyers
do not consider. It might seem that a condo would have more predictable
costs, and this is partly true. Since the outside of the unit
is handled by the association, you won't have the unexpected
cost of fixing that roof, for example. Or will you? If there
is a special assessment of $1,000 or $2,000 to fix a bunch of
roofs because the board didn't plan well, you'll have to pay
right now. In your own house you would have other options, like
patching the leak and waiting to get it fixed more permanently.
4. Homeowner Duties
Condos win this battle. You will not have to mow the lawn,
trim the bushes or water the flowers when you own a condo. The
elimination of virtually all house work outside of the walls
of your home frees up a significant amount of time.
This is not an easy comparison to make. You give up privacy
when you move into a home that has neighbors on the other side
of the walls and floors. But some people enjoy hanging out at
the pool with their neighbors. There is also that lack of outdoor
house work to consider. And it is easier to leave a condo when
you travel. Unfortunately many people do not know whether they
prefer the condo lifestyle or hate it until they try it. Make
your best guess.
6. Asset Appreciation
Condos over $1 million have been appreciating in value right
along with houses in southern Florida. But at the lower end houses
have been going up in value much faster than condos. This is
cyclical though. Once the prices of houses get high enough buyers'
attention will by necessity turn to the much more affordable
condos and their price gains will outpace that of houses in percentage
terms. So to venture a guess as to which is more likely to have
a better rate of appreciation you'll have to first guess where
we are in the cycle when you are reading this.
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