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Houses Versus Condos in Southern Florida

By - 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.

5. Lifestyle

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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