I dont understand condos.....

I mean, I *never* have. I dont get the point of paying 2/3 the cost of buying a house, and then paying 2/3 the cost of renting an apartment every month ON TOP of your mortgage.

Here's a little comparison for you.... I've pulled up some information from one of the leading real estate companies in my area. The prices below were posted by Royal Lepage as the averages for my area in the fourth quarter of 2006.

Condo: $331k
Luxury Condo: $580k
Detached bungalow: $480k
Standard townhouse: $484k
Two-story house: $588k
Monthly condo maintenance fees average: $450 a month, plus utilities. (range from $250-$750)

Now. Me personally, I pay $750 in rent a month. That includes all utilities except for phone service. That happens to be on the low end for the area, however, an average apartment around here is about $750 *plus* utilities. Lets be generous and say that rent is $800 a month. I'm completely disregarding utilites, because houses, apartments, and condos all have to pay utilities, generally. And yes, you do have to pay property tax on a condo. Property tax for 2007 in my area is 0.85%/a.

	Condo	Apartment	House
Initial investment	$331,000	$0	$484,000
Monthly investment	$684	$800	342
Investment after one year	339208	9,600	488,104

If you graph this out, the break even point from a condo to a house is 37 years down the road. Seems financially sound for any but the most die-hard long term investors. Incidentally, these rates are calculated with 100% cash down. If you do the math with a mortgage for 75% of the cost (fairly common) the break even point is about 50 years away.

Seems better to get a condo, doesnt it? In and of itself, in a unit-per-unit comparison, you're right. What people forget to take into consideration is the space that these different prices gets you. A condo is, essentially, apartment sized. If you want a large condo, you go ahead and do the math in the chart above; the numbers are all there. You lose money your first month just on purchase price alone, much less having higher maintenance fees. Here's something that was reported by the Globe and Mail, one of Canada's national newspapers. These numbers were an average, not specifically of my area, but of several metropolitan areas together.

Condo average price per square foot: $311
House average price per square foot: $196

So. If you redo the chart above with the condo prices redone as if they were the same square footage as the houses... in other words, raise the condo purchase price by a ratio of 311/196; 1.58x the price. The condo becomes $522,980.

You start out $34,876 behind the house buyer, and lose another $342 every month.

Price-wise; I personally find that condos are at a disadvantage. You're free to disagree. I would rather hunt around and buy a smaller, cheap house.... or else bite the bullet and pay a little more for the sake of a BIGGER house.

What other advertised advantages do condos have over houses? Mm. Yes, they say something about maintenance, dont they. Well. I've now found out a bunch of maintenance-related stuff now. You cant actually have any maintenance done to things like water piping and gas lines and stuff without the agreement of your neighbors, since they legally own the space that might need to be gotten to in order to do repairs. On top of that, you're legally exempt from any form of landlord tenant protection because you own instead of renting.

I have a friend who has had no gas to her condo (IE, no hot water) for over a week now.... and it cant be repaired until her next door neighbor gives permission. However, her neighbor is rarely home, gone for a month at a time, presumably on business trips, and is only home for a day or so in between. Condo people and gas people have told her theres nothing they can do; and she cant consult the housing tribunal since she's exempt.

Why on EARTH do people want condos?? Financially speaking, its a net loss from both a rental AND ownership perspective, you have all the neighborly downsides of living in an apartment building, and have none of the renovation priveledges of living in your own house....

If anyone can think of any advantage, beyond being able to say "I own my own home", please tell me.... and honestly, I dont consider that an advantage; because if you dont pay condo fees, they can restrict your access to your house; which isnt very different from being evicted.

I'm sure some clever wag is going to point out about the concierge service. Lets say the concierge is serving 100 condos. Lets also say that they maintain concierges for 12 hours a day, 7 days a week. That means, over the course of the month, you are paying less than four hours of labor. In my area, that's maybe $50. Perhaps you'd like to discuss lighting of common areas, shovelling, people to vaccum the carpets? Another $50 a month, tops, when averaged over a year. You want to talk about not having to maintain your lawns and soforth? First of all.... why is not having something an advantage... and second of all, if you dont want to maintain it, put down some form of garden thats self-maintaining. One time investment of a few hours a year, or else hiring a professional gardener for a day, and that's it. Cost *there* for a house, another $50 a month, if divided over a year; as opposed to paying maintenance fees to NOT have a garden at all.

So. Higher cost. Less features. Have to deal with all the noise inherent in apartment buildings. Benefits? Well... if you pay some of the really high costs, you might get access to a gym or something....