Condominium or single-family home, which is a smarter choice in Seattle?

One of the most often asked questions about residential real estate is: Should I purchase a condominium or a house?

As with many questions in real estate, no answer works perfectly in all situations. There are many reasons a condominium will work better for some, while a single-family home will work better for others. If you want to make things more confusing, there can also be an overlap where both options are best. Here you may want to think in terms of cost and area first. With the Seattle area’s home pricing increasing before one’s eyes, the key is to get into the market to capitalize on this growth.

The top things to consider are lifestyle and cost. If you find yourself walking the large hardware store’s lawn equipment aisle, dreaming of the day you can strap a leaf blower on your back while following behind your new, front-wheel driven lawnmower, condominium life is not going to be fulfilling. In the same way, if the idea of yardwork horrifies you, a single-family home may not be the best solution. Though highly simplified, one should never underestimate the value of lifestyle.

A condominium near downtown offers a lifestyle that suburbs cannot match. Being able to walk from your office downtown, meet a friend for a happy hour cocktail, head home for a quick change, and then out to dinner and a show is compelling for many. Conversely, if you have a small family and desire to let your little ones roam free and safely in a fenced yard, you cannot achieve this in a highrise. The challenge comes when you want a bit of both, and then the budget may become the deciding factor. Though not always the case, typically, a condominium has a lower purchase price than a single-family home within the same general area.

For this example, I looked at available single-family homes and condominiums currently for sale to make up these composites. Both of these are in the same general area within Seattle. In these cases, the selling prices are $500,000 for the condominium and $700,000 for the house.

Size is one of the most significant differences between these two homes. The condominium is a little more than half the size at 800 square feet versus the house at 1,350 square feet. Both have one bathroom, while the house has three bedrooms and the condo two. Parking is the same for both, with off-street parking, but neither has a garage. These properties are within walking distance of coffee shops, local restaurants, and parks, making both great for active people.

Looking into the numbers offers some insight into the cost differences. The purchase price is the most obvious. The price difference is substantial, especially when considering a down payment. For a conventional loan with 20% down, the difference is $100,000 for the condo and $140,000 for the house.

How do these purchase prices affect the mortgage and monthly costs? To make this comparison, I used a 30-year conventional loan at a three percent interest rate for both and the stated 20% down payment. The monthly payments work out to approximately $1,700 for the condominium versus $2,400 for the house.

After the mortgage, there are two more financial considerations. With any property, it is essential to look for monthly home association or maintenance fees. In our examples, there are no monthly fees for the house, while the condominium has a $300 a month maintenance fee.

The second area of financial consideration is property taxes. For this condominium, the annual property taxes are approximately $4,650, and the house is $6,510 or $387.50 and $542.50, respectively. Totaled up, the condominium has a monthly cost of $2,387.50, while the single-family home has a monthly cost of $2,942.50.

Understand that this is only one highly simplified composite example. The key with any home purchase, either condominium or single-family home, is to investigate all of the information that affects costs. Returning to the lifestyle differences, these are personal. The key is to find something you see yourself happy living in for several years and is within your budget.