In real estate, an area of confusion is understanding the differences between a townhome property and a condo property. This article will contrast the differences in ownership, lifestyle, and costs of these types of properties to help buyers who are considering this type of real estate.
What is the Main Difference?
The easiest way to define the two is the type of ownership. Condos are individual suites within a building where the purchaser owns the interior parts of the individual unit. The external parts of the unit and the shared spaces such as the front lobby, elevator, recreation space, and green space are owned collectively by all unit holders/owners within the building. That’s where condo boards come into play. Having set monthly condo fees and having voting rights on how the building is maintained and improved.
A townhome is an individually owned unit connected via a wall with its neighbour. The shared wall is owned by both parties who have certain rights regarding not damaging or demolishing it. Townhome purchasers own both the interior and exterior of the property. A townhome ownership is similar to a detached home, you own the building as well as the land designated with the townhome; including any yard, patio, or deck.
Here is where it can get confusing: some condos may present similar to a townhouse in terms of appearance, and some can be called townhome condos, but it all comes down to how the ownership is designed. Typically these are set up like condos with people owning individual units and shared ownership of the property with fees and a condo board.
Living in a Townhome vs. a Condo
A townhome is typically less expensive than a detached home but more expensive than a condo due to the property. A townhome could have a yard – the size of which would vary depending on where the property is located. The green space allotted to a townhome property is going to be less than what would be found in a detached home. Many townhome owners find this one of the main appeals. They can enjoy individual ownership and the feature of a yard, without the need for significant landscaping and upkeep. Townhomes also tend to have larger living space than condos, and more bedrooms, making them appealing to larger families. Townhomes tend to be built on smaller plots of land, and thus are taller than detached homes. This means that the living space tends to be more vertical, and spread out over more floors creating more stairs. Most condos units are only one floor, which is beneficial for individuals who have limited mobility or families with small children who need to be within eyesight. With a condo, you are part of a community with a shared interest in the property and collective rules about things like hanging holiday decorations on your door. In a townhome, you are more separated due to no shared ownership, which provides more privacy and control, like what colour to paint your front door.
Cost of Ownership
Condos and townhomes appeal to new homeowners or homeowners who are downsizing due to their lower costs. Even with a monthly condo fee, these properties are more financially accessible than detached homes. Of course, that doesn’t mean all condos or townhomes will fall under every buyer’s budget. The price of each property will still depend on its size and location and in the case of condos, how many amenities the building offers. In terms of maintenance, a condo is more cost-effective as the monthly condo fees will cover the cost of regular upkeep. In contrast, townhome owners are responsible for all maintenance, just like the owner of a detached home would.
When deciding between the two types of properties, think about after the mortgage is fully paid off. With a freehold townhome, there are no additional costs, other than typical repair and maintenance fees that owners of a detached home will experience in the lifecycle of home ownership. When a mortgage is paid off for condo owners, however, there will still be condo fees that will be ongoing.
Is there a Difference in Resale Value?
Typically, a condo is slower to grow in appreciation than a townhome. Of course, that will change depending on the market at the time. A good condo board will ensure the property’s resale value (or condo unit) is the best it can be in terms of maintenance and upkeep.
While in many aspects, a townhome is similar to a condo, there are some defined differences that buyers should be aware of to make the right decision when investing in a property. Working with a real estate agent experienced in buying and selling condos and townhomes can help clear up any confusion.