house or condo?

[Renault78law]

I'm having a very difficult time trying to decide between a house and a condo. My parents and others are telling me that a house is a much wiser investment. The rub is that I can't afford a house in the neighborhood that I want to live. Further, the houses I've seen in neighborhoods that I can afford (even those that are outside of my pricerange!) have been atrociously disgusting. I really can't see myself living there.

I'm single and 27 years old. I plan on living at my next residence for 5 years or so. Will probably move to the burbs after I get married and have a kid.

On the one hand, I feel like I should live in the city while I can. I'm still young and single and have few responsibilities. I have the rest of my life to put up a picket fence in the burbs. On the other hand, I feel like I'm being superficial and foolish. A house is a wise investment, and you avoid high HOA ($350/month). Houses appreciate faster, or in the alternative, depreciate slower, than condos.

I really can't decide what to do. Thoughts?

 

[retronotmetro]

Renault-

This is a question with no easy answer, at least in this market. I generally agree with the conventional wisdom that single family homes are always the better investment. The problem is that in the LA area, single family home prices have reached a level where even a precipitous price drop would still leave single family home prices beyond the reach of a very large portion of the population. This leaves a lot of people with the only financially viable choice being condo vs. rental, unless they move way out into areas like Simi Valley, Palmdale/Lancaster, or *shudder* the 909.

My advice to you now would be to save as much as you can until you reach a career point where you are working on something you can stick with, and you foresee a relatively stable income level from it. I have some friends who could walk away from their law firm jobs without any loans, and money in the bank. I have other friends who are stuck with mortgages and expenses that prevent them from switching jobs.

I do think we are at the end of a market cycle now--houses are sitting on the market longer, and price reductions are much more common than they were a couple of years ago. Whether the next step is a price crash or a stagnation is anyone's guess, but I don't think prices will keep skyrocketing while you are looking.

 

[Dakota rube]

Renault:
You also need to take your desired lifestyle into consideration. If you're like most young men I've run across, the last thing you want to do on evenings or weekends is a bunch of lawn work or outside maintenance on a house. For that reason alone, the condo route might be a better choice. Look at the HOA as a cash payment for your time (lawn chores) and an actualized set-aside for upcoming maintenance items. Most homeowners do not save money each month to defray anticipated expenses and when the chickens come home to roost they are forced to take out a home equity loan or a short-term signature note. The condo forces you to allocate money each and every month for inevitable expense.

 

[Ambulance Chaser]

Good points all. The only thing I would add is that housing is unique in that it is both investment and consumption. It doesn't make sense to me to buy a house for the sole reason that it will experience greater appreciation than a condo if you hate it. If you look at the choice as condo vs. rental apartment rather than condo vs. house, the choice seems easy.

 

[Mr. Checks]

Originally Posted by Dakota rube

Renault:
You also need to take your desired lifestyle into consideration. If you're like most young men I've run across, the last thing you want to do on evenings or weekends is a bunch of lawn work or outside maintenance on a house. For that reason alone, the condo route might be a better choice. Look at the HOA as a cash payment for your time (lawn chores) and an actualized set-aside for upcoming maintenance items. Most homeowners do not save money each month to defray anticipated expenses and when the chickens come home to roost they are forced to take out a home equity loan or a short-term signature note. The condo forces you to allocate money each and every month for inevitable expense.

I agree with the Rube. If you factor in your lifestyle choices, the condo seems the way to go.

Although, I'd think that you ought not have any maintenance issues if you're only living there five years; any such immediate issues would likely be caught in your inspection and the price adjusted downward.

 

[Manic]

I'm a 29 year old, single, professional. I've done both the condo and the house thing.

I'll tell you right now that if you have that, "I want to be in an urban area" feeling. You should do the condo thing.

I lived in a downtown condo for a few years and loved it. But under pressure from my parents, I sold it and had a large house built for me, just outside the city. It was nice, but there was alot of work to be done and staying on top of the upkeep was too much for one person. It was made harder by the fact that I enjoy heading out to fine restaraunts and pubs in the evenings.

After one year, I sold my house, found an apartment right in the "trendy" district, and now wait for a condo to open in this area.

For me, it felt like the right choice. Sure I lost a hell of a great investment (but luckily I sold at the height of the market so I almost doubled my money). But in all I am so much happier living the urban lifestyle. I now live within to blocks of all of the city's best social offerings.

Condo's in an urban area such as this, are just as good, if not better, investment wise as a large house in the burbs. Alot of people will pay anything to live here.

My advice would be to get a condo someplace you love to be, and enjoy it. Instead of buying a house somewhere you only want to be until you can afford more.

You are right though, you have the rest of your life to put up that white picket fence.

 

[itsstillmatt]

Originally Posted by Mr. Checks

I agree with the Rube. If you factor in your lifestyle choices, the condo seems the way to go.

Although, I'd think that you ought not have any maintenance issues if you're only living there five years; any such immediate issues would likely be caught in your inspection and the price adjusted downward.

Remember that this is California and not the midwest. Houses and condos here are not as waterproof as they are in other parts of the country, and maintenance issues pop up all of the time. There is a trade off between waterproofing and earthquakeproofing, and here we are more worried about tremblors.

 

[esquire.]

Originally Posted by Renault78law

My parents and others are telling me that a house is a much wiser investment.

I may be muddling things up in my mind, but I thought I remembered that in some markets, condos have actually had a higher appreciation rate than houses. Your parents are probably correct that it would be better to buy a house vs. a condo for an investment over a long period of time, but it doesn't sound like you're planning on staying there too long.

Nor, would I necessairly rule out renting if you're not planning on staying in your area too long. The NYTimes had an interesting analysis on the benefits of home ownership vs. renting, and their conclusion on which was better depended on the particular market.

One thing to remember when you check out the condo is to investigate the HOA. When people buy condos, they never pay attention to the HOA and that's one of their biggest mistakes. The HOA upkeep and management will help determine how much you end up enjoying living there. The manager at my condo was a micromanaging, wannabe McDonald's manager. I would get these ridiculous notices in the mail, informing me that I must take down some hanging plants off my patio or else I would be fined. I ended up showing the manager all the neighboring condos that also had hanging plants on their patios, how the rulebook of the HOA allowed hanging plants, etc... The managers reply was that I would then need to sign up for a separate condo association meeting a month later to discuss this issuse. Sometimes, I would get other notices and the manager would even deny sending them.

Plus, you want a compotent management that is responsible for the condo's upkeep. The balcony had signifigant termite damage and needed to be fixed. Even though this fell under the association's responsibility, they declined to fix it. You're going to pay hundreds of dollars in fees for instances like this, and not every association will be as vigilant as it should be with its duties.

 

[acidboy]

if you need to have a garden, buy a house. otherwise a condo is good.

 

[johnapril]

Hell is other people.

 

[LabelKing]

Acting is happy agony.

 

[Will]

The only negative in my experience with condos is that they can be less liquid than houses in a downturn. But if you're planning to live in it for at least five years that will take you well past a normal downturn, if that's what's going on now.

 

[drizzt3117]

I'd go condo personally.

Although I'm certainly glad I purchased a house (esp in Orange County, four years ago) sometimes I think the ease of a condo would be better, and if you're talking about LA and not talking about purchasing something new... I would definitely recommend condo.

 

[Ivan Kipling]

Totally agree with you, about new construction's lack of appeal. Many, many of the new homes in which my friends and relatives reside, are hideous. I don't care what they cost . . . I wouldn't have them, if you gave them to me. They're hippodromes. Not houses.

As for homes being a solid investment, you never know. All depends on where you are. I endured the sixties urban revolution; my hometown went to pot, overnight. We left a beautiful house, were paid less than its brick and stone were worth, and ran to the suburbs.

I think you're a little young, for a house. I've lived in them, all my life . . . they are a LOT of work. Help is not easy to find. Lawns and landscaping are expensive, to maintain. There's always something, that needs attention. I'd consider a condo, at this point . . . you may not want to marry until later than you think. If you change your mind, you can always househunt, when the need arises.

 

[esquire.]

Originally Posted by Ivan Kipling

[COLOR="DimGray"they are a LOT of work. Help is not easy to find. Lawns and landscaping are expensive, to maintain. There's always something, that needs attention.

I don't see why the lawns and landscaping would be that expensive to maintain, especially if he's not buying a new home without any landscaping.

You could mow the lawn yourself a couple times a month, pay some neighborhood kid to do it, or as Kent Wang has suggested, use a illegal immigrant to mow your lawn for less than fifty dollars a month.

To me, it would still be cheaper than the hundreds of dollars you'd be paying to the HOA each month.