Tips on Considering a Condo Purchase
ALEX CHADWICK, host:
Even though the cost of buying a home has leveled out in many places, it remains so high that it's out of reach for many people. So what about buying a condo? There is a lot to consider there.
Joining us to discuss the issue, our personal finance contributor Michelle Singletary.
Michelle, hello. Welcome back.
MICHELLE SINGLETARY: Hi, Alex. Thank you.
CHADWICK: So the complications of a condo. There are extra fees like homeowner association fees. What are these, and how do you know when they might be too high, they're adding too much to the cost of buying a place to live?
SINGLETARY: Well, you know, if you have a co-op or a condo there's usually an extra fee to help with the common areas or maintenance of the grounds or things like that. You need to look at that in relationship to the other condos in the area to determine whether it's too high.
CHADWICK: Are there restrictions - I've heard about these - on what you can do with your property that are different from what you could do if you own a single-family home?
SINGLETARY: Absolutely. And some of them can be pretty daunting. When I owned my condo, for example, one of the condo rules was that you could not rent your condo. And the reason why is because they didn't want a lot of renters. And also, if a certain percentage of your building is full of renters, it makes it difficult for you to refinance or sell the home because the new buyer will have trouble getting a loan. In retrospect, you know, I thought it was such a hard rule because it took me a long time to find a buyer, but it worked out because they didn't have trouble qualifying for a loan.
CHADWICK: You said that you had trouble finding a buyer. Is that something that condo owners encounter more than people who are selling single-family homes? Is it more difficult to sell a condo?
SINGLETARY: In some markets it can be. For example, in my area condos weren't a common thing. There were more single-family homes. And so I had difficulty getting a buyer. Now, in some markets, like New York, probably even L.A., it may not be so hard. It's just that when you buy a condo, you got to do a lot more research, I think. You got to look at the condo fees. You got to look at the rules and regulations. Can you rent? What are all the things that you're limited to? In condos they can limit you the number of pets or how much your pet weighs.
CHADWICK: You know, there was a piece in the New York Times saying that the whole home ownership equation, the finances of it, may actually be turning around so that it now makes more sense to rent than it does to buy. Do you think that that's true in many places?
SINGLETARY: I think in a lot of markets that is absolutely true. It has come to the point where it is cheaper to rent - short-term and long-term - because you need to factor in the closing costs, maintenance, insurance, property taxes, all those kinds of things that you're not necessarily have to worry about when you rent. In many markets people have been priced out. And there's nothing wrong with renting. People sort of feel that they're not getting anything when you're renting. But you are. You're getting a roof over your head.
CHADWICK: Michelle Singletary, our regular expert on personal finance. She writes the nationally syndicated column The Color of Money.
Michelle, thank you again.
SINGLETARY: You're welcome.
CHADWICK: And Michelle has a new NPR podcast. It's free. You can sign up by going online to npr.org/colorofmoney - all one word.
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