Settling the Condo vs Townhouse Debate (Which is Right For You?)

Choosing between a condo and a townhouse can be challenging, as both offer unique benefits and trade-offs. This guide compares condos and townhouses across key factors like costs, lifestyle, and maintenance to help you make the right choice for your needs.

The Key Differences Between Condos and Townhouses

If you're on a tighter upfront budget, looking for a great blend of flexibility and amenities, and would love to live in a tight-knit community, a condo might be the perfect choice.

On the other hand, if you prefer more privacy, lower ongoing fees, and a better long-term investment, a townhouse could be the way to go.

Ownership structure

When you buy a condo, you're essentially purchasing a box inside a big building. You'll own the space within your walls, but everything else is shared with other condo owners. This includes amenities like pools, gyms, and common areas jointly owned and maintained by the condo association.

Townhouse owners, in contrast, have full ownership of their entire unit, from the roof to the exterior walls. Most townhouses also come with a small plot of land that belongs exclusively to the owner. Your townhouse deed includes both the building structure and the land it sits on, giving you more control over your property. This means you can usually make exterior changes to your townhouse without seeking permission from a homeowners association.

Layout and design

Condos are usually part of larger buildings and offer a more communal living experience, while townhouses are often designed to resemble traditional houses and provide more independence and privacy. Here’s a detailed overview of the differences in layout and design:

Condos

Condos are typically part of larger buildings designed for communal living. They can range from sleek high-rises in urban centers to garden-style complexes with lush green spaces. Condo layouts focus on the efficient use of space, with minimal outdoor areas to maintain. Here are some common types of condo units:

1. Penthouse units: These premium units are located on the top floor and often feature private elevators, roof access, and stunning views. However, they typically cost 50-100% more than regular units.
2. Bi-level units: These condos function like traditional two-story houses, offering more privacy between living and sleeping areas. They usually cost 20-30% more than single-level units.
3. Loft-style units: With dramatic high ceilings up to 20 feet, loft-style condos have an open upper level for sleeping and a lower level for living. They often appeal to artists and young professionals.
4. Traditional bedroom units: Available in 1, 2, or 3 bedroom configurations with separate walls, these are the most common type of condo and offer the best resale value.
5. Studio units: As the most affordable option, studio condos have everything in one small, open space. They're great for single occupants, students, and are the easiest to rent out later.

As you can see, with such a wide variety of condo layouts available, buyers can easily find a unit that suits their lifestyle and budget.

Townhouses

Townhouses are multi-story homes, typically built in rows with shared walls. They often include private outdoor areas like patios or yards, and their designs resemble traditional houses, offering more independence. Here are some common townhouse types:

1. Traditional townhouses: Spanning two floors plus a basement or garage, traditional townhouses offer maximum space but share walls with neighbors on both sides. They're a popular choice for families coming from apartments.
2. Three-story townhouses: Built without basements on concrete slabs, these townhouses have the living room on the second floor for a more open concept. They're popular in dense city locations.
3. Back-to-back townhouses: Sharing both side and rear walls with neighbors, these townhouses feature open concept main areas and are great for first-time buyers and small families. They typically cost 20-30% less than traditional townhouses.

Townhouses provide a great middle ground between the privacy of a single-family home and the convenience of a condo. With their multi-story layouts and private outdoor spaces, townhouses are ideal for those who want a more house-like living experience without the higher costs and maintenance responsibilities of a detached home.

What Costs are Involved?

When comparing the costs of condos and townhouses, there are several key factors to consider, including purchase price, HOA fees, and property taxes. Generally, condos tend to have lower upfront costs but higher ongoing fees, while townhouses often cost more initially but may save you money on monthly expenses.

Purchase price

The costs of condos and townhouses vary a lot, and knowing where your money will go is key. From the initial purchase price to monthly fees, each option has its own financial trade-offs to think about.

Condos

Based on market data, condos typically cost 20-30% less than comparable townhouses in the same area, with average prices ranging from $200,000 to $400,000 in most metropolitan areas.

The price per square foot for condos usually falls between $200 and $500, depending on the location and building amenities. Newer condo buildings with luxury amenities can command premium prices up to 40% higher than older buildings.

First-time buyers often find condos more accessible due to lower down payment requirements, which typically range from 3.5% to 10% of the purchase price. This lower barrier to entry makes condos an attractive option for those just starting out in the real estate market.

Townhouses

Average townhouse prices range from $300,000 to $600,000, offering more square footage and often including features like attached garages and private yards.

The price per square foot for townhouses typically ranges from $150 to $400, reflecting the inclusion of land value. End-unit townhouses generally go for a 5-15% premium over interior units due to additional windows and privacy.

Multi-level townhouses often offer 1,500-2,500 square feet of living space, compared to 600-1,200 for typical condos. This extra space comes at a higher upfront cost but can be a worthwhile investment for growing families or those who value more room to spread out.

HOA Fees

HOA fees differ between condos and townhouses, with costs reflecting the level of amenities and services provided. Factoring these fees into your budget will help you plan for the true cost of ownership.

Condos

Monthly HOA fees for condos typically range from $200 to $600, covering building maintenance, security, shared utilities, and amenity upkeep.

Luxury condo buildings may charge premium HOA fees of $700-1,200 monthly for enhanced services and amenities. It's important to note that these fees typically increase by 2-4% annually to account for inflation and rising maintenance costs.

Special assessments can also occur for major repairs, potentially costing condo owners $1,000-10,000 per unit. On the bright side, some condo HOAs include utilities like water, gas, and trash in their monthly fees, and insurance costs are often partially covered, reducing individual unit owners' expenses.

Townhouses

HOA fees for townhouses generally range from $100 to $300 monthly, primarily covering common area maintenance and sometimes exterior insurance. Some townhouse communities offer optional amenity packages for additional monthly fees, and others may cover snow removal and lawn maintenance.

While special assessments are less common in townhouse communities, they can still occur for shared infrastructure repairs. Overall, townhouse owners can expect to pay lower monthly fees than condo owners, but they should still budget for these costs when considering their total housing expenses.

Property Taxes

Property taxes are another important factor to consider when choosing between a condo and a townhouse. While both options come with property tax obligations, there are some differences to keep in mind.

Condos

Annual property taxes for condos average 0.5% to 1% of the assessed value, reflecting smaller square footage and shared land ownership. Property tax assessments for condos are typically based on the individual unit value plus a percentage of common areas

Urban areas may offer tax abatements for new condo developments, potentially lasting 5-15 years, and some cities provide tax incentives for first-time buyers purchasing condos in developing areas.

Townhouses

Property taxes for townhouses typically run 1% to 1.5% of the assessed value due to individual land ownership and larger living spaces. Tax assessments include both the structure and the land value, and corner lot townhouses may have higher property taxes due to larger lot sizes. Some jurisdictions offer homestead exemptions that can reduce the property tax burden for townhouse owners.

Lifestyle and Amenities

When it comes to lifestyle and amenities, condos and townhouses each have their own unique offerings that cater to different preferences and needs.

Condo

Modern condo buildings often feature a wide range of amenities designed to make life more convenient and enjoyable for residents. These can include:

• 24/7 security and concierge services for added peace of mind and assistance whenever you need it.
• Well-equipped fitness centers, business centers, co-working spaces, and rooftop decks for staying active, productive, and enjoying stunning views.
• Package reception services and cold storage for deliveries, ensuring your parcels are secure and your perishables stay fresh.

In addition to these practical amenities, many condo buildings also offer lifestyle-oriented features such as pet-friendly areas, community rooms for socializing, and even movie theaters or demonstration kitchens for hosting events at the nicer ones.

Some newer developments may also boast eco-friendly features and smart home technologies for a more modern and sustainable living experience.

One of the biggest draws of condo living is the low-maintenance lifestyle it affords. With the majority of exterior maintenance and repairs handled by the condo association, residents can enjoy more free time and less stress when it comes to upkeep.

Townhouses

While townhouses may not have quite as many on-site amenities as condos, they offer a more spacious and private living experience that appeals to many buyers. Some of the key features of townhouse living include:

• Multi-level floor plans with private entrances, providing a greater sense of separation between living areas and more room to spread out.
• Attached garages or dedicated parking spaces, offering convenience and security for vehicle owners.
• Outdoor spaces such as small yards, patios, or balconies, allowing for a bit of private green space and the opportunity to enjoy the fresh air without leaving home.
• More flexible layout options, with some townhouses offering finished basements or bonus rooms that can be used as home offices, guest quarters, or recreational spaces.

Although townhouse communities may not have as many built-in amenities as condo buildings, many do offer some shared facilities such as swimming pools, fitness centers, or playgrounds. These features can provide opportunities for recreation and socialization without the added responsibility of maintenance.

Townhouses can be a good choice for those who want a bit more privacy and independence than a condo offers, but still appreciate the sense of community and shared amenities that come with living in a planned development.

Ultimately, the choice between a condo and a townhouse will depend on your personal preferences, lifestyle needs, and budget.

Maintenance Responsibilities

One of the biggest differences between condos and townhouses is who's responsible for maintenance and repairs. This can have a big impact on your budget and how you spend your free time.

Condos

In a condo, the homeowners association (HOA) typically handles about 80% of the maintenance needs. This includes things like building repairs, landscaping, and upkeep of common areas. However, as a condo owner, you'll still be responsible for the interior maintenance of your unit.

On average, condo owners can expect to spend between $500 and $1,500 per year on basic repairs and updates inside their units. This includes things like maintaining and servicing your HVAC system, which is typically the owner's responsibility. You'll also be responsible for any plumbing issues within your unit's walls and for maintaining and replacing your appliances as needed.

It's important to note that window cleaning and replacement policies can vary by building, so be sure to check with your HOA to understand your responsibilities. Some buildings may also require you to use specific contractors for certain repairs.

When it comes to insurance, condo owners typically only need to cover improvements and personal property within their units. The HOA's insurance policy usually covers the building itself and common areas.

Other costs to consider include annual deep cleaning services, which can run between $200 and $400, and the potential for water damage from adjacent units, which can complicate maintenance responsibilities.

Townhouses

As a townhouse owner, you'll be responsible for all maintenance, both inside and out. This means you'll need to budget for annual costs that typically range from $2,000 to $5,000 for exterior and interior upkeep.

Regular townhouse maintenance includes things like roof inspections every 3-5 years, monthly yard maintenance, and exterior painting every 5-7 years. You'll also need to budget for biannual HVAC maintenance, which can cost between $150 and $300 per visit, and gutter cleaning 2-4 times per year, depending on tree coverage.

Other maintenance tasks to consider include exterior pressure washing every 1-2 years, window maintenance and replacement, and pest control services, which can average between $300 and $600 annually.

If your townhouse has a lawn, you'll need to factor in the cost of lawn care equipment or services, which can range from $500 to $2,000 per year. And if you live in an area with snow, you'll need to budget for snow removal equipment or services, which can vary in cost by region. Finally, keep in mind that you may need to budget for foundation maintenance every 5-10 years, depending on the age and condition of the property.

While townhouse owners have more control over the maintenance of their properties, it's important to factor in the additional time and costs associated with these responsibilities when deciding between a condo and a townhouse.

Condo vs Townhouse Resale Value and Investment Potential

Now let's take a look at how condos and townhouses compare when it comes to resale value and long-term investment potential.

Condos

According to historical data, condos tend to appreciate at an average rate of 3-4% annually in stable markets. However, condos in prime urban locations often see higher appreciation rates.

It's important to note that building age can have a significant impact on a condo's resale value. Condos in buildings that are over 20 years old typically sell for 15-25% less than those in newer buildings.

Other factors that can affect a condo's resale value include:

• Units with parking spaces typically sell for 10-15% more than those without.
• Higher floor units often command a 5-10% premium over lower floor units.
• Corner units generally sell for 3-8% more than interior units.
• Proximity to public transit can increase value by 10-20%.
• Updated kitchens and bathrooms can yield a 70-80% return on investment at sale.

In terms of buyer demographics, the first-time buyer market represents about 60% of condo purchases, indicating strong and consistent demand.

Townhouses

Townhouses, on the other hand, tend to appreciate at a slightly higher rate of 4-6% annually. This is largely due to the fact that townhouse owners also own the land their home sits on, which contributes significantly to long-term appreciation.

Family-oriented buyers make up approximately 70% of townhouse purchases, creating a stable resale market. Some factors that can impact a townhouse's resale value include:

• End units typically sell for 10-15% more than interior units.
• Townhouses with garage spaces can command a 5-10% premium.
• Properties with finished basements often sell for 15-20% more.
• Proximity to good schools can increase values by 20-30%.

It’s also worth noting that well-maintained townhouse communities with attractive amenities and landscaping tend to see higher appreciation rates.

When considering resale value and investment potential, it's essential to look at local market trends and conditions. Some areas may see higher demand for condos, while others may have a stronger market for townhouses. Working with a knowledgeable real estate professional can help you assess the long-term investment potential of different properties in your area.

Ultimately, both condos and townhouses can be solid investments if you do your research and choose a property that aligns with your financial goals and lifestyle preferences. By understanding the factors that impact resale value and appreciation, you can make an informed decision that sets you up for long-term financial success.

How To Decide Whether a Townhouse or Condo is Right for You

Choosing between a condo and a townhouse is a big decision that depends on your unique circumstances, preferences, and long-term goals. Let's break down some of the key factors to consider when making your decision.

Consider your budget

One of the first things to think about is your budget. How much can you comfortably afford to spend on housing each month? When calculating your budget, start with your total monthly costs including mortgage, taxes, insurance, and HOA fees, which typically should not exceed 28% of gross monthly income.

Keep in mind that condos often have higher HOA fees than townhouses, but they also typically require less out-of-pocket spending on maintenance and repairs. Townhouses, on the other hand, may have lower monthly fees but higher maintenance costs over time.

It's also a good idea to consider your long-term financial goals and even potential rental income if relevant. Are you looking for a starter home that you can build equity in and sell in a few years, do you plan to stay put for the long haul, or will you rent it out? Depending on your plans, one option may be a better financial fit than the other.

Consider your lifestyle preferences

If you're someone who loves being in the heart of the action and enjoys having amenities like a gym or pool right outside your door, a condo might be the way to go. But if you prefer a little more peace and quiet and don't mind taking on some extra maintenance responsibilities, a townhouse could be a better fit.

It's also important to think about your stage of life and future plans. If you're a young professional who values flexibility and mobility, a condo might make more sense. But if you're planning to start a family or want more space to spread out, a townhouse could be a better long-term choice.

Consider your location needs

Think about your daily commute, proximity to work, school, and other important destinations, and whether you prefer an urban, suburban, or rural setting.

Condos are often located in more urban areas, close to public transportation, restaurants, and other amenities. Townhouses, on the other hand, are more commonly found in suburban neighborhoods, often with more green space and a greater sense of community.

It's also important to research the specific neighborhood you're considering. Look at things like crime rates, school district ratings, and access to healthcare and other services. If you're planning to sell your home in the future, consider the area's potential for appreciation and development.

Consider your future goals

Finally, think about your long-term goals and how your housing choice fits into your larger life plan.

If you're planning to stay in your home for the long haul, a townhouse with a little extra space and a yard might make more sense. But if you're looking for a low-maintenance option that you can easily rent out or sell in the future, a condo could be a smart choice.

Ultimately, the decision between a condo and a townhouse comes down to your individual needs, preferences, and goals. By taking the time to carefully consider your options and weigh the pros and cons, you can make an informed decision that sets you up for success both now and in the future.

Real-life example of balancing goals and risks

Meet Georgia and James, a couple who have purchased multiple properties in the same neighborhood. They’ve actually found themselves with 98% of their net worth tied up in real estate. While they’d experienced financial growth, Georgia voiced concerns about the risks of having “all their eggs in one basket.”

This example underscores a critical point: when choosing between condos and/or townhouses, it's not just about the property itself but how it fits into your overall financial strategy. You need to think about this future and focus on balancing the benefits of affordability, lifestyle, and future investment potential.

Ramit Sethi:  [00:07:52] What is the percentage of your portfolio that is in real estate right now?

Georgia:  [00:07:57] 98%.

James:  [00:07:59] I’d say something like that, yeah, almost everything. It’s a handful of dollars not in real estate.

Georgia:  [00:08:05] And that’s what I mean when I say I feel really exposed.

Ramit Sethi:  [00:08:10] So these three rentals and one primary, are they also in the same city?

Georgia:  [00:08:14] Yes.

Ramit Sethi:  [00:08:15] Oh, that’s good.

Georgia:  [00:08:17] Oh, within just a couple miles of each other.

Ramit Sethi:  [00:08:20] So you have 90-plus percent of your portfolio in one asset class in the same location.

Georgia and James’ experience is a powerful reminder that every housing decision impacts your financial future. Whether you’re considering a condo or townhouse, the key is to evaluate your priorities and risks with the same care. By aligning your choice with your goals, you can build a home (and a portfolio) that supports your future.

Pros of Condos

Ultimately, condos are a fantastic choice for those who value affordability, convenience, and urban living.

1. Lower purchase price and property taxes

Condos are typically 20-30% less expensive than townhouses in the same area. This makes them more accessible for first-time buyers or anyone wanting to stretch their housing budget further. Lower property taxes, tied to their smaller size and shared land ownership, add to their affordability.

2. Convenient amenities and low-maintenance living

Condo living is perfect for those who value convenience. Amenities like pools, fitness centers, and rooftop spaces are included in HOA fees, saving $50-100 monthly compared to paying for separate memberships.

As previously mentioned, the HOA also usually handles about 80% of maintenance, covering tasks like landscaping, building repairs, and snow removal. For busy professionals or anyone seeking a hassle-free lifestyle, this low-maintenance setup is ideal.

Also, with shared walls and centralized building systems, condos are often more energy-efficient than standalone homes. This translates to lower heating, cooling, and electricity costs, adding another layer of affordability to condo living.

3. Urban living and prime locations

Condos are often located in vibrant city centers, offering walkable access to restaurants, shopping, and public transit. These locations frequently provide shorter commute times, which is a major plus for anyone looking to save time and stay connected to city life. Urban condos are particularly appealing for those who value proximity to work or entertainment.

4. Security and professional management

entries. These measures provide peace of mind for residents, especially in densely populated urban areas. Professional property management teams are also standard in condo buildings, ensuring that external maintenance and building-wide issues are handled efficiently.

5. Community and shared experiences

Condos tend to foster a strong sense of community through shared spaces like lounges and rooftop decks, as well as organized social events. This makes it easy to meet neighbors and build connections. For many, the sense of belonging and social interaction is one of the most rewarding aspects of condo living.

Pros of Townhouses

If you’re looking for more space, privacy, and long-term investment potential, townhouses might be a better fit. Let’s take a closer look at what makes townhouses stand out.

1. Space, privacy, and flexibility

Townhouses offer significantly more space than condos, with typical square footage being 30-40% larger. This additional room often includes multi-level layouts, private entrances, and outdoor areas, making townhouses ideal for families or anyone who values privacy.

Land ownership also gives townhouse owners more flexibility to make changes, like landscaping or customizing interiors, without needing approval from an HOA.

2. Lower HOA fees and maintenance control

Townhouses generally come with HOA fees that can be up to 40-50% lower than those of condos. These fees often cover limited services, like maintaining shared areas or snow removal, leaving more control to the homeowner.

While townhouses require more personal responsibility for upkeep, this control means you can handle maintenance on your own schedule and budget.

3. Outdoor spaces and parking convenience

A private yard, patio, or balcony is a common feature of townhouses, providing space for gardening, entertaining, or relaxing outdoors. Additionally, most townhouses include an attached garage or designated parking space, offering convenience and added storage that’s harder to come by in condos.

4. Long-term investment potential

Townhouses often appreciate at a faster rate than condos, thanks to their land ownership component. With a steady demand from families and buyers seeking more space, townhouses tend to hold their value well and are considered a solid long-term investment. Features like finished basements and proximity to schools can further boost resale value.

5. Ideal for families and future growth

The multi-level design and additional bedrooms of townhouses make them well-suited for growing families. And unlike condos, townhouses can also offer options like renting out a basement or spare room for extra income. These practical features make townhouses a flexible option for both current needs and future plans.

What You Should Avoid When Choosing A Condo vs Townhouse

Even with all the pros and cons laid out, it’s easy to make a few missteps when deciding between a condo and a townhouse. Make sure to watch out for:

• Overlooking HOA rules and fees: Before buying, many people skim over HOA rules and end up frustrated by restrictions on pets, renovations, or rentals. Always review the HOA’s financial reserves as well.
• Ignoring long-term maintenance responsibilities: Condo and townhouse buyers often underestimate the maintenance tasks they’ll need to handle. Townhouse owners should budget for exterior upkeep like roofing and landscaping, while condo owners must account for interior repairs like appliances and plumbing.
• Failing to research resale trends: Property values for condos and townhouses can vary significantly by location. Skipping this research could mean choosing a home that’s harder to sell or doesn’t appreciate well.

What happens when you underestimate long-term costs

Meet Eric and Elena. They’re a young couple in their mid-20s who thought they were making the perfect step toward financial security by purchasing a condo together. But seven months later, their savings account was draining fast. They were spending $2,000 a month more than they anticipated.

Their story reveals how easy it is to underestimate the true cost of homeownership and why aligning your financial decisions with your lifestyle is so important.

Ramit Sethi:  [00:46:12] I don’t know if the realtors told you that. How come they only talked about what a great investment is? They never actually told you how to get the money.

Eric:  [00:46:19] Well, eventually, you’ll be able to take some equity out and then rent it out to someone and then you can buy another one.

Ramit Sethi:  [00:46:28] Oh, right. We’re already in debt. We’re losing money. And so let’s buy another one. Yeah, that’s good. That could work, but it’s a different mindset and philosophy than your primary reasonings. How much taxes will you have to pay when you sell and fees, transaction fees, all that?

Elena:  [00:46:46] So when we purchased we had like 18,000 in fees that we had to pay. And then we’re, of course, aware that when we sell we have to pay the realtors and the seller, and it’s about like 25% of I don’t know how much. Is it 25%? I don’t even know how much it is, which shows like we shouldn’t have really gone into this.

This is a great example of a common mistake: not fully understanding the financial implications of homeownership. Eric and Elena underestimated the true costs of buying and selling, from transaction fees to taxes, and assumed equity alone would justify their purchase. As Elena admits, they went into the decision without having all the critical details, highlighting the importance of running the numbers and aligning your choices with a clear financial plan.

Weigh Every Factor For Your Rich Life

By carefully considering your budget, lifestyle, and future goals, you can weigh the pros and cons of each option to find the perfect fit. Take the time to evaluate not just the financial details but also how your choice aligns with the life you want to create.

Whether it’s prioritizing flexibility, family, or long-term growth, the right research and planning will help guarantee your new home supports the Rich Life you’re working toward. After all, your home isn’t just a place to live, it’s a foundation for the life you truly want to build.