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Condo vs. Townhouse: What’s the Difference?
By Peter Burns MONEY RESEARCH COLLECTIVE
The home-buying process is filled with decisions. Perhaps the most important one is what kind of home you want to buy.
While some cities may offer cheaper rent, there are benefits to owning your own home. This article explores the differences between owning a condo versus a townhouse to help you decide if either fits your lifestyle. Read on to learn about the differences between the two and the advantages and disadvantages of each.
What is a condo (condominium)?
A condominium, also called a condo, is a residence located in a building or complex composed of individually owned units. Condos vary in size and type but often share physical similarities with apartments. While condos are available in many areas, they’re especially popular in cities and locations where land is expensive.
A significant difference between condos and apartments is that an apartment complex is usually owned by a landlord who rents out individual units. Condos are individually owned units that an owner either lives in or leases out.
Other residents live above, below and on both sides of you in a condo building. The residents make up a community that often shares amenities like a pool, fitness center and recreation area.
As a condo owner, you’ll be responsible for the upkeep of your space, which is why you may want to buy a home warranty for added protection. Condo owners usually pay into a homeowners association (HOA) that may cover maintenance costs and upkeep for common areas. There will also be a set of rules enforced by the condo association that may govern things like pet policies, renovations or noise.
The average cost of a condo
Condos can be cheaper than townhomes in terms of housing affordability. The average cost of a condo will depend on if you are in one of the most or least affordable cities. As you would expect, a condo in New York City will be much more expensive than one in Cleveland, Ohio.
Other factors that’ll affect the price of a condo include:
-
- Square footage
- Number of bedrooms
- Number of bathrooms
- Floor plan
- View
- Available parking
- Available storage
- HOA fees
- Amenities
Speaking with real estate agencies or doing online searches for sale prices and current listings will give you a good idea of the average condo price in the area you’re considering.
What is a townhouse?
Townhouses, also called townhomes, resemble single-family houses, but share walls with neighboring units. Usually, multiple townhomes are arranged side by side in rows. Owning a townhome means owning a portion of the structure and the land underneath it. You may also have a small front and backyard space, depending on the lot.
Townhomes are often multi-storied living spaces but can also be single-level ranch-style dwellings. Each townhome shares walls with neighboring units, but you won’t have neighbors above or below you. Like condos, townhome owners can also choose to lease out their property.
While townhouse owners pay into an HOA, they usually have more freedom than condo owners. The HOA collects monthly fees and is responsible for some maintenance and upkeep of common areas and amenities. There’s no standard set of rules and regulations for HOAs, so it’s vital to understand an HOA’s specific fees and requirements before purchasing a townhouse.
The average cost of a townhouse
Much like condos, the cost of a townhome will vary depending on factors like location, size, style and HOA fees. Townhouses tend to be a more affordable option for homeowners than single-family homes.
Key differences between condos and townhouses
Condos and townhouses can be great options for many people, from first-time homebuyers to those looking for fewer homeowner responsibilities. Both may have amenities like fitness areas, meeting rooms or security systems. Likewise, both have drawbacks, such as having to pay into an HOA and follow its rules.
Some of the differences between these two housing options include the HOA rules, types of ownership, structure, square footage, maintenance costs and mortgage interest rates. You’ll want to understand these differences before researching the best mortgage lenders and starting your moving checklist.
Homeowners association (HOA) rules
Both condos and townhouse owners must follow the HOA rules. These rules are laid out in a document called a Declaration of Covenants, Conditions and Restrictions (CC&Rs). Every CC&Rs document is different, so be sure to examine the HOA rules and policies before purchasing a property.
HOA rules for condos and townhouses are often different, but you’ll find some common rules in both types of communities. One obvious rule is that you can’t renovate, damage or vandalize common areas. Other guidelines for shared spaces vary but usually include rules about behavior, noise and pets.
Both townhomes and condos may have pet restrictions, but regulations may be stricter with condos. The HOA may have pet policies such as:
- Not allowing pets
- Prohibitions on certain types of pets
- Pet size requirements
- Limitations on number of pets
- Vaccination requirements
While townhome HOAs are usually less restrictive about what owners can do in their own units, they may have rules about quiet hours or parties. Because condo residents live in close proximity to each other, HOAs often have strict rules about noise.
Both condo and townhome HOAs also usually regulate garbage disposal procedures. Your HOA may instruct you to put your trash on the curb on certain days or dispose of your garbage via a chute or dumpster.
Because townhomes have their own exteriors, HOAs usually impose rules concerning the appearance and upkeep of a unit’s exterior. Townhome owners often have to take care of the appearance of their home, which may consist of lawn care and snow removal. Some rules may restrict exterior features like:
- Decks, patios and fencing
- Holiday decorations
- Paint colors
- Landscaping
Townhouse HOAs may also restrict the types of vehicles that can be parked on your property, and they sometimes prohibit motorcycles, RVs and boats. Street parking for yourself or visitors might be regulated as well.
Condo HOAs usually have stricter rules about what owners can do with their individual units. For example, you may need permission from your HOA to remodel or renovate your interior. Most condo HOAs also prohibit blocking entryways or walkways with furniture, boxes, bicycles or other objects.
Breaking the rules of your HOA can result in serious consequences. Depending on the terms of the HOA agreement, you may be prohibited from using communal facilities, face fines or have liens placed on your property until you correct the violation.
Type of ownership
What you own when you buy a condo or a townhome differs. If you buy a condo, you own a unit in a larger complex or building. You’ll own the interior of your unit but not the exterior. If you purchase a townhouse, you’ll own the interior living space, the unit’s exterior, and the land. Even though a townhouse is connected to other units, owning a townhome is the same as owning a stand-alone single-family dwelling.
Structure and number of common walls
Condos and townhomes come in different shapes and sizes but often have similar characteristics. A townhouse often starts on the ground floor and can be multiple stories. Townhouses also typically have one or two shared walls on the sides. Condos can be on any floor of a larger building.
Like townhomes, most condos have shared walls on the sides, but a condo unit may also be joined to another unit by the ceiling and floor. Although townhomes have shared walls, it can be easier to feel separation from neighbors compared to a condo. Sharing more walls and having more residents nearby often means condo owners have less privacy.
Because condos are usually inside a larger building, the common entrance may offer a higher level of security than the individual townhome. Look into whether or not your condo building also offers on-site security.
Square footage
While condos can be large, multi-level units, on average, they usually provide less square footage than a townhome. When measuring the size of a condo, the assessor will measure the inside of the unit without considering the width of the wall to find the square footage.
Square footage usually doesn’t include certain areas, such as:
- Garages
- Patios
- Decks
- Porches
- Airspaces
- Vaulted rooms
- Unfinished areas
Measurements may include attics and basements if they are habitable and heated.
Maintenance costs
HOA fees can run anywhere from a few hundred to several thousand dollars per month. HOA fees are subject to change with new assessments of significant projects and repairs that affect the entire community. These fees often cover the following:
- A general operating fund for building upkeep
- A reserve fund for unplanned expenses
- Insurance policies
- Special assessment fees for urgent repairs that go over budget
HOA fees for condos are often more expensive because they cover costs to maintain the exterior of the structure as well as landscaping, roofs, elevators, parking structures and other amenities. While townhome HOA fees may be less expensive, you’ll likely need to cover more maintenance and upkeep costs yourself, depending on your HOA guidelines.
Mortgage interest rates
The process of getting a mortgage loan for a townhouse is similar to getting a loan to buy a house. Applying for a loan to buy a condo is more complicated.
Because condo owners may share operation and maintenance costs of common areas, government-sponsored enterprises like Fannie Mae and Freddie Mac deem condos riskier investments. Because of that extra risk, the mortgage interest rates for condos tend to be higher than those of single-family homes, including townhouses.
How do condos and townhomes differ from duplexes?
A duplex — or multifamily home — can look like a single house from a distance, but it has two separate living areas. You can also find triplexes, which contain three separate living spaces, and quadplexes, with four living spaces.
Side-by-side duplexes have two units with a shared wall in the middle. A stacked duplex — sometimes called an up-down duplex — has one residence on the lower floor and a separate residence on the upper floor. Duplexes have separate entrances for each dwelling, and the floorplans may differ.
Unlike a townhome, duplexes usually have only one owner, but purchasing a single duplex unit is possible. Buying the entire structure and renting half of the property is an efficient way to pay off the mortgage on the property with your tenant’s rent while living in the duplex at little or no cost.
Condo vs. townhouse: Which type of property is right for you?
Condos and townhouses differ in cost, ownership, responsibilities and structure. Do your research to understand the rules you would have to follow in your desired community and what your responsibilities will be as a new condo or townhome owner. Once you’ve decided which type of property is best for you, you’ll want to read up on what things to do when moving to make your relocation less stressful.
Peter Burns worked on ByteDance’s Tik Tok Monetization Product team in Beijing, China, and was the lead writer for OpenLanguage. He was the face of Wall Street English China, improving their Tik Tok account from 5k to over 1.3 million fans. His accolades in the education industry include receiving a master's degree from USC and working as an English professor. Peter has lived in South Korea, China, Colombia, Bolivia, and Argentina and can speak conversational Korean, Mandarin Chinese, and Spanish.