Why purchasing a condo or townhome may make a great deal of financial sense.
Becoming an owner of a condo or townhome has advantages you may not have thought about. “There are many reasons why buying a condo is a good idea,” said Ken Peterson, vice president of sales and marketing for Shea Homes Arizona. “When you buy, you are making an investment in ownership and you have an actual asset — not just a bill at the end of the month. When you buy a condo and contribute to the homeowners’ association, you have a voice in HOA affairs. By purchasing a condo you also have the freedom to select and change any interior feature, whereas when renting, you have no such options.”
More stable payments
“As rent prices continue to rise along with mortgage interest rates, you have a great opportunity to purchase — oftentimes for less than you can lease,” explained Joel Starkman, director of new home sales for Coronado Commons, a luxury townhome community near downtown Phoenix. “Construction costs are rising, too, which means new-housing prices will continue to rise as well. So why not start ‘saving’ money by buying?”
And if you choose to buy a move-in-ready condo or townhome, you may be getting the best of all possible scenarios and you may even find it easier to get a loan. “With move-in-ready, you can finance, close and take possession almost immediately,” said Chris Sailus, a vice president in Washington Federal’s mortgage and retail division. When a condo or townhome is move-in-ready, “it’s easier for a lender to absorb the project specifics,” Sailus said. “To-be-built (condos and townhomes) require a lot of patience, both from the buyer and the lender.”
Buying a quick move-in condo or townhome allows you to purchase a brand-new home and settle in fast which can be an advantage if you have sold your previous home and want to avoid a “double” move while waiting for a new home to be built, Peterson said.
“Buying a move-in-ready home also gives you a new, complete home with designer selected options,” he noted. “There are often incentives given on move-in-ready residences, making them a great investment. And you have the ability to lock-in rates sooner than you would if you were to build from the ground up.”
“If you have a fixed-rate mortgage, you’re going to have a set rate to pay every month versus continuing rent increases,” said Andy Pedersen, group vice president of marketing and merchandising for K. Hovnanian® Homes in Arizona, California and Texas. “As new-home prices inch up, rents can inch up at an even faster rate,” he said.
And, Pedersen pointed out, new-construction townhomes and condos have the benefit of higher energy-efficiency compared with a rental townhome built in the 1970s or ‘80s. “A rental unit also won’t have the advantages of new appliances, brand-new flooring and modern finishes,” he said.
In addition, today’s new-construction townhomes and condos typically have an open concept floor plan — especially in the kitchen and living areas — that allows for greater interaction with family and friends.
The bottom line
The bottom line on deciding whether to buy or rent a new townhome or condo, Starkman said, depends on market conditions and how long you expect to stay in your new home. If it’s at least two years, it may be better for you financially to buy now rather than continue renting, he said.
“The buyer also should consider the neighborhood and how successful the neighborhood and community have been,” Starkman said. If a community has sold a significant number of units, “then it’s likely to be in demand in the future,” he concluded.