Condo Vs. Townhouse | What’s The Difference?

This includes the type of house that is most suitable for you. If you have a tight budget and aren’t interested in detached houses, condominiums and townhouses are the two most popular house types to consider. 

You might’ve already heard of these terms in the course of your research to date, but are you confident about figuring out the option that will be more convenient? There are similarities and differences to both these options that you need to consider. You can only make an informed decision after considering the advantages and disadvantages of each type. 

So, we’ve made things simpler for you by drawing a detailed comparison between the two. Continue reading to learn more.  

Condo Vs. Townhouse

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Although these properties are similar in some ways, they also have significant differences. We’ll begin by defining each type of property to help you get the hang of the basics before moving on to compare the two. 

Defining Condos And Townhouses

A. Condominiums

Condo units, as they’re also called, are individual living spaces in a building or a community of many buildings. The living space or airspace in condos is usually owned by the owner, unlike apartments that might be rented from a landlord. 

All condo residents own the space outside of the interior, which includes a recreation center and a pool. Additionally, condo developments share ownership in common areas and land. 

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B. Townhouses 

A townhouse is, however, a building style that’s typically an attached structure consisting of 2 stories or more with common walls. It is important to note that the land and structure are owned by the townhouse owner.

In comparison, the land in condo communities might not belong to the owner — that’s the most significant difference between these two types. 

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What Are They Like?

Condos and townhouses share a common feature: they both have common walls. Most townhouses share one to two walls with their neighboring units, while the end units of a townhome community share only one wall. On the contrary, condosBased on the unit design, you can share more walls or even the floors or ceilings.

Another commonality is the fact that both of these ownerships have access to Common Interest Communities in most instances. This means that property owners share an interest in community amenities such as parks, clubshouses, clubhouses, and community centres. The owners of these units pay dues or fees to fund such amenities. 

The money and community maintenance costs are managed by homeowners associations, while in the case of condominiums, such an association is known as a “condo association.” 

Comparison of the Two 

Now, it’s time for a closer look at the essential determinants that can help you choose between a townhouse and a condo. 

1. Ownership

The most significant difference between a condo or a townhouse is the ownership. Since buying a condo implies you’re buying the interiors of a building unit, you get a fractional co-ownership of the other common amenities. 

Townhouse owners, on the other hand, own the land where the home is built. In several cases, there’s a front yard and a private outdoor space at the backside that you also own. 

As mentioned earlier, the common spaces and amenities in a condo are the property of the Homeowners’ Association (HOA) though the residents use them. This association collects monthly HOA fees to maintain these amenities. 

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2. Architecture 

Drawing a comparison between condos townhousesAnother important criterion to be considered is the structure and overall appearance. 

Condos are part of larger buildings that look like apartments. They share at least one wall. Their structure is such that they’re likely to have neighbors both below and above. In fact, the architecture of condominiums and apartments are so similar that it’s nearly impossible to distinguish between them. A condo is an apartment that you own. 

Although townhouses may share walls, their structure is closer to a single-family detached home. These homes have two stories and are arranged side-by-side similar to brownstone or row houses on the East Coast. In some cases, townhouses may have a single-level structure which is commonly called “patio home.” 

3. Insurance

Because of the different ownership of these properties, the insurance requirements for each type are also different. 

The condo association, and not the condo owners, takes care of insurance for condo buildings and land below them. Condo residents pay equal monthly, quarterly, and annual fees to the association for a policy. 

Every condo owner and resident must have insurance to cover the interiors of their unit and their belongings in the event of any unforeseeable damage. Moving on to a townhome, the owner of such properties may need a homeowners’ insurance policy since they hold the title to the land and other outdoor areas. 

You should keep in mind that this policy will cover liabilities like storm and fire damage, while earthquake and flood insurance are optional. Some associations might also provide insurance for the structures, in which case the townhome owners will need a renters’ policy to cover the owner’s belongings. 

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4. Cost 

When you’re planning to move to a new condo or townhouse, the cost is one of the primary considerations. Both are more affordable than detached homes because of the community-centered residential arrangements. However, they differ in many ways. 

Condos are generally less expensive to buy because the owner is restricted to the space inside the unit. Due to the smaller square footage, owners pay less in property taxes and insurance. They do not have to pay taxes or insurance for the rest. 

Townhouses have higher taxes and a higher purchasing price due to their greater square footage, maintenance requirements, and other factors.

5. Property taxes

The property tax required annually for any home is determined by two factors – the assessed value of the home and the local mill levy. The first variable is determined by an assessor based on features such as the home’s size, number of rooms and square footage, as well the properties surrounding it. 

The mill levy value is dependent on the quality and quantity of local amenities. Libraries, parks, libraries, fire stations, police departments, and trails all have an impact on this value. Naturally, the mill levy will be higher in areas that offer more services and amenities. 

This means that taxes for condos and townhouses can vary depending on where they are located and other features. However, taxes for these homes are generally lower than those for detached homes. The property tax is also lower due to the sharing of amenities and areas. 

6. Fees

A major part of the cost you’ll incur for such homes is the fees payable to the development association for taking care of the shared amenities. Keep in mind that HOA fees can vary depending on the association. 

Condo associations have more maintenance and amenities than a townhouse. They can also take care of snow removal and lawn care. Condo HOA fees are usually more expensive. 

The fee for townhomes is usually lower because they have more maintenance responsibilities than condo owners and offer fewer amenities than condos.  

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7. Privacy

You must ascertain whether you’ll have privacy in the new home. 

Condominiums can be less private than they appear townhomesBecause there are more shared amenities and common walls, and areas. Townhomes on the other hand have separate entrances with fewer common walls and more yard space. This allows them to offer homeowners plenty of privacy. 

Both condo and townhome owners have the advantage of convenience. A townhouse needs minimal exterior maintenance, which isn’t required at all for a condo. Additionally, both types of homes have the benefit of having a variety of amenities that make it less difficult to move around for other activities like swimming or exercising. 

Another benefit is a sense belonging to the community, especially if you love social interaction. Most development associations offer community events and a clubhouse. If you enjoy these social interactions, a condo or townhome may be the right choice. 

8. Resale Value

Your home’s resale price will depend on many market factors, many of which are beyond your control. However, condos and townhomes are both beneficial if you look at the factors that can be controlled. 

A well-run HOA will make sure the general landscaping and common areas are in their best shape, so you won’t have to be concerned about making a nice first impression. That said, you’ll be responsible for ensuring that the home itself is fit for reselling. Buyers might be attracted by beautiful poolsides or well-kept open areas. 

Condos appreciate in value slower than other properties. Some condos have a higher appreciation rate than detached homes. 

The Concerns of Condo- and Townhome Owners

There are some downsides to buying a condo, townhouse or apartment. These disadvantages must be considered before you make the final decision to buy such a home.

1. More Rules and Regulations

If you choose to stay in a condo or townhouse community, you’ll have to adhere to several regulations, rules, and covenants. These regulations were created to increase the community’s appeal. 

The restrictions might seem too restrictive for some people, but they could be appealing to others. Failure to adhere to condo or townhouse community guidelines can result in fines, warnings, or property liens in extreme cases. So, you’ll need to become familiar with the restrictions of any community that you’re considering living in. 

2. Pet Restrictions 

Many homeowner associations may place restrictions on pet breeds and their weight. That said, these restrictions are essentially imposed on the “dangerous breeds” or those weighing over 45 lbs. 

3. Parking Limited 

Condominiums typically have limited parking options. This could be outdoor parking, or carports in specific spaces. As for townhomes, they don’t offer many options either, though they are more likely to have a single-occupancy garage. 

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Buying a Condominium Or A Townhouse

After you decide on purchasing a townhouse or condominium, you’ll need to keep in mind the following points:

1. Documents Governing

One of the first steps is to understand the regulations and rules of the region where you’ll reside. Irrespective of whether you’re buying a townhouse or condo, you’ll be staying in a community controlled by a covenant. There will be certain expectations associated with the purchase, including adhering to the covenant. 

By signing an agreement to purchase property, you agree to follow the rules. Not adhering to the rules may result in a small warning followed by a possible fine. In extreme cases, it may even end in a lien. 

Since you would never want to have such experiences, it’s best to read the governing documents before agreeing on the property. 

2. Pricing

One of the best aspects about purchasing a condo or townhome in a city is its consistency in pricing. These units are very similar and the pricing is much easier than a single-family home. 

So, unless the unit has certain truly unique characteristics, it’s easy to use models of comparative pricing to determine the worth of a unit. 

3. How the Management/Board deals with owners 

Another important piece of information you should get from unit owners is how their management group and board handle their requests. The two parties should have a friendly and cooperative relationship. This will ensure that all important actions and procedures after ownership are carried out smoothly and are completely fruitful. 

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4. Check out the Current Issues

It is a good idea to speak with current unit owners about the upcoming issues regarding ownership and how the community is being managed. Ensure that there aren’t any major issues that might need special assessments. And in case there’s one such issue, you may want to know whether the reserve fund of the community is big enough to handle it. 

A side note: Repairs, maintenance and upkeep are ultimately the responsibility of the owners. You should find out if a bigger expense is coming before you finalize the deal. 

Financing such Homes

If we compare the financing options for a townhouse and condo, they’re more or less similar to that for a single-family home. The only difference that might affect the financing of such homes is the lender’s risk involved. 

Because condominiums present greater risk to lenders, the interest rate will be slightly lower. However, you can reduce the interest rate on a loan with a greater down payment of at most 20%. 

Sometimes, the lender may review the development requirements before granting the loan. This review helps to assess the risk associated in factors such as the potential risky management of the project or the reserve funds. 

A primary requirement for eligibility is also the number of units owned at that time. Other important factors include the availability and strength of the balance sheets.

The eligibility to finance the home through government financing is another factor that can affect the development of condominiums. This is related to FHA and VA loans. For such loans to be approved, the condo or townhome must be eligible according to the VA or FHA standards. Also, you need to verify that there are no litigations. 

These Homes Are Sold

Reselling them is a different challenge than selling a single-family home, as they are subject to different criteria. First, condo and townhome markets can be seasonal. If a property’s location is in a resort, it will be best not to wait for peak season. 

These properties are very similar so potential buyers can easily determine the value of a unit based on historical sales. Unless there is an unusual characteristic, the unit will not be worth much. condominiumThe costs will be similar. 

Maximizing the profit is the key to avoiding a long time on the market, appraisal problems or overpricing the property. This is especially applicable if you’re pitching the home in a seasonal market. 

It’s also important to practice transparency while selling a townhome or condo. These properties are often part of housing associations and it is a selling of the association. That’s why you should make it simpler for potential buyers to obtain information about the development of the home. 

This would include giving them access to newsletters, governing papers, and other relevant information that will help them decide if the house is right for them. 

It is important to remember that they will eventually learn more about the surrounding area and the neighborhood. Therefore, it is best to keep any information secret. A transparent approach is more beneficial than wasting time or money when you promise buyers something different. 

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Final Thoughts

Let’s sum it up: Choosing between a condo and a townhouse is a matter of priorities. So, think about what matters more to you — is it the convenience, privacy, or affordability? 

If you’re a first-time homeowner looking for convenience but aren’t fully equipped to handle ownership responsibilities, a condo might be better. For growing families that value outdoor space and a safe community, townhouses might be more appealing. 

When looking at financing, be sure to compare the current mortgage rates and use a mortgage calculator. If you’ve found the right option and just require financing, roping in a reliable financier who will offer the best rate is crucial. 

So, do your research accordingly, and with that, we’ll sign off for today. But stay tuned as we’ll soon be back with more guides!


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