Condo Vs. Townhouse: How Do They Differ?

Both condos and townhouses come in all sorts of shapes, sizes and structures, so determining the difference isn’t always as simple as looking at the exterior of the building or where it’s located.

The main difference between a condo and a townhouse is that the owner of a condo only owns the interior of their individual unit. A townhome’s owner owns their unit, the exterior of that unit and outside additions such as their front and back yard.

Let’s take a closer look at how condos and townhouses can vary and see which type of home is right for you.

What Is The Difference Between A Townhouse And A Condo?

It’s important to understand the basic differences between a condo and a townhouse. The determining factors in whether a home is a condo or a townhouse are what exactly the homeowner owns and is responsible for maintaining.

Condo Definition

A condominium, or condo, is similar to an apartment and has the following characteristics:

• Individual unit residing within a building or community of buildings
• Owned fully by the resident rather than rented from another owner
• Can be bought and sold like a traditional home
• Responsibilities for internal care and maintenance fall on the condo owner

Townhouse Definition

While a townhouse is also owned by the resident, it is a multi-floor home that shares a connecting wall or multiple walls with an adjacent property with a separate entrance. Townhouses usually have front yards and backyards, so the owner is responsible for both the inside and outside of their townhome.

Condo Vs. Townhouse At A Glance

Before we get into the minutiae of townhomes versus condos, the following table should give you a straightforward overview of the differences between these home types:

Now let’s look at some of the more intricate details that set a condo apart from a townhouse.

Condo Vs. Townhouse: Ownership

As previously mentioned, the biggest difference between a condo and a townhouse is that owners of condos only own the space inside their units while townhouse owners own the interior and exterior of their homes. This includes the land the home sits on and any other structures on that land, though they share one or more walls with neighboring townhouses.

These terms refer to what is owned, not the stylistic differences commonly referred to when discussing these home types. For example, when you hear the word “condo” you may picture a high-rise apartment building in a dense urban area, but a collection of attached, single-story homes in a suburban community could also be classified as condos.

While townhouses often take the shape of long rows of attached, multistory homes that line the streets, the defining feature is that they’re attached to at least one other adjacent home. Beyond that, they can be quite varied in how they look.

For reference, both of these types of homes are different from a detached single-family home, which is what you might first picture when you think about traditional homeownership. These homes are free-standing structures – meaning they aren’t attached to another home – that accommodate one household.

Condo Vs. Townhouse: Responsibilities

Because ownership is structured so differently with condos and townhouses, what a homeowner is responsible for varies quite a bit.

If you’re shopping for a new home and deciding between a condo and a townhouse, it’s important that you understand the responsibilities that come with both. Depending on which one you pick, you could either end up being financially and legally responsible for a lot more than you anticipated, or with a lot less control over your home than you’d like.

Condo Owner Responsibilities

With condo ownership, you’re responsible for everything within your unit. Everything else, including upkeep and repairs of the building’s exterior and common areas, is the responsibility of the homeowners association (HOA). Many first-time home buyers are enticed by condos since there are fewer responsibilities.

For example, if you accidentally run a hammer through your drywall while trying to hang a picture, you’d be responsible for patching up the hole. But if a falling tree damages the roof of the building, the HOA will pay for its repair – either by dipping into its reserve fund (money the association has saved up to pay for unexpected costs) or by requiring everyone in the HOA community to pay a “special assessment” outside of their monthly HOA fees to cover the cost.

If you’re looking to have the benefits of homeownership while avoiding some of the bigger financial burdens, a condo can be a great option.

Townhouse Owner Responsibilities

Owning a townhouse is closer to owning a detached single-family home in terms of who is responsible for what. While you’ll still be part of an HOA that will maintain common areas in the community, you’ll have more responsibilities when it comes to maintenance and repairs.

When you buy a townhouse, you’re responsible for the interior and exterior of the home as well as the land it’s on. That means if you have a yard, you’ll do the mowing and landscaping. If the deck needs repairing, you’ll hire the contractor. If the roof has a leak, that comes out of your pocket.

Both townhouse and condo HOAs may take care of things like:

• Garbage collection
• Plowing the street in the winter
• Upkeep of common spaces like pools, gyms or clubhouses

Exactly what an HOA covers will vary from community to community – be sure to read up on the bylaws before purchasing in an HOA-governed community so you know exactly what’s covered and your responsibilities.

Condo Vs. Townhouse: Costs

There are a few different ways your overall costs will vary depending on whether you buy a condo or a townhouse. If you’re considering which of the two might better suit your finances, you’ll want to think about purchase price, HOA fees, maintenance costs and homeowners insurance.

Purchase Price

Two of the biggest factors in determining a home’s cost are square footage and location. Because you’re usually purchasing more space with a townhouse than a condo, a townhouse will typically cost more.

Regardless of which one you choose, location greatly impacts the overall price. If you’re deciding between a condo in the heart of a popular city and a townhouse located in the suburbs, the townhouse may cost less. But in general, because you’re only buying the inside of the unit rather than an entire home, you can expect condos to be cheaper and pay less in property taxes. However, condos tend to come with slightly higher mortgage interest rates.

HOA Fees

Because HOAs play a much bigger part in the upkeep of the condo community, a condo owner is likely to pay higher HOA fees than a townhouse owner. Condos may also have more amenities than a townhouse, which can also contribute to higher fees.

Condo owners also should be prepared for the possibility of a hike in HOA costs if the association assesses additional fees for unexpected costs. While any HOA-governed community must watch out for these special assessments, condo associations have a much wider scope of responsibility, and thus may be more prone to needing additional funds to make necessary repairs.

Because townhome owners bear most of the responsibility when it comes to maintenance and repairs, HOA fees for townhouses tend to be lower. However, the cost will ultimately come down to the needs of each individual community.

Maintenance Costs

The flip side of having lower HOA fees, of course, is having higher maintenance costs. Condo owners pay their HOA to take care of both the regular and unexpected costs of maintaining a residence. For townhouse owners, that responsibility falls solely to them.

As a rule of thumb, homeowners are advised to have at least 1% of their home’s value set aside each year for maintenance and repair costs. Townhouse buyers should keep this in mind when considering the long-term affordability of their prospective home purchase.

Homeowners Insurance

Condos are usually cheaper to insure than townhouses. After all, homeowners insurance on a condo only needs to cover the interior of the unit; the HOA will have its own policy that covers the exterior of the building and any common areas.

With a townhouse, you’re insuring the entire home: interior, exterior and land. If you plan to purchase a homeowners insurance policy for your townhouse (which is a requirement if you’re financing the purchase with a mortgage), be prepared for it to cost about as much as it would if you were buying a detached home of a similar size.

Condo Vs. Townhouse: More Considerations

Here are some additional things to think about as you determine whether to purchase a condo or townhouse:

Financing

Depending on the type of loan you’re getting and how you intend to use the property (as a primary residence, vacation home or investment property), the mortgage approval process for a condo is typically more complex than it is with other home types, including townhouses.

To get a mortgage on a condo, it’s not just you and your finances that have to qualify with the lender – the larger condo complex and its governing association has to qualify too.

There are a variety of situations that can make mortgage approval on a condo difficult or even impossible, like if more than half of the owners within the condo association own their units as real estate investment properties rather than primary or secondary residences. Associations that are involved in ongoing litigation or have many delinquencies can also be a red flag for lenders.

Privacy

Townhouses are generally going to be more private than condos, though neither will be quite as private as a detached home.

With a townhouse, you may have your own yard, and thus an outdoor space that belongs just to you – meaning you’ll be able to garden or barbecue in peace. If a condo has any outdoor living areas, it will usually be shared by the entire community.

You also won’t have to worry about having (or being) a loud upstairs neighbor with a townhouse. However, the shared wall of a townhouse can also be a nuisance in terms of noise and privacy.

Apartment-style condos will be surrounded by other units, and all the noises and activity that comes with that.

With both types of dwellings, the amount of privacy you’ll have will depend a lot on the physical structure of the complex or community. Some condos may offer a lot of privacy, while some townhouses may provide very little.

Restrictions

How many restrictions you’ll have to deal with will ultimately depend on your HOA. While some condos may have relatively restrictive rules, townhouse communities can also come with their fair share of rules that homeowners are required to follow.

Which one is “better” in terms of restrictions might come down to what matters to you.

For example, many condos have restrictions on pets. They might dictate the number, type, size and breed that you can keep in your home with you.

Condos may also have restrictions on things that can be nuisances for others. If you like to play loud music, throw wild parties or you’re a smoker, you might have a harder time finding a condo association that suits your lifestyle.

On the other hand, townhouse association rules may prove stifling for those who want a home with a little more personality.

Often, HOAs in these types of communities want to ensure the uniformity of all the homes within the neighborhood. This can mean you’re limited in how much you can change the exterior – you might even need approval just to paint your front door a slightly different color.

These communities may also have strict rules on lawn maintenance, landscaping and even gardening.

In summary, HOAs can be very restrictive, very lax or somewhere in between depending on whether you’re in a condo or a townhouse.

Resale Value

The resale value of a home depends on both how well the property has been maintained and what the market is doing.

Neither type of home is inherently more valuable, though selling a condo does come with a significant risk when it comes to holding value – much of the maintenance and upkeep is out of your control. If your HOA decides to let common spaces fall into disrepair, that can turn off buyers – even if your individual unit is pristine.

Remember too that getting a mortgage for a condo comes with additional stipulations, and if something happens that makes the property ineligible for financing, that can limit your potential buyer pool to just cash buyers.

Amenities

Though townhouses can also exist in communities with amenities such as a pool or fitness center, these types of additions are typically more common with condos.

Keep in mind that the more amenities a community offers, the higher your HOA fees will be. Some high-end condos may offer amenities such as concierge services, rooftop decks, retail spaces such as coffee shops or boutiques, yoga studios or formal dining rooms with private chefs.

If a community’s amenities are important to you, you may find more success with a condo rather than a townhouse.

The Bottom Line: Is A Townhouse Or Condo Right For You?

There’s no one-size-fits-all answer to whether you should buy a townhouse or a condo. Both home types come with their own pros and cons. A condo may make sense for one person but be a terrible fit for another – and the same goes with townhouses. It’s all about what suits you, your needs, your lifestyle and your finances.

Ready to start the search for the perfect condo or townhouse? Connect with one of our agents who can help you find your dream home.