Are you looking to buy a new home? Your options will generally include single-family homes, apartments, and condos. While many of these options are good, many people usually go for a condo with the perception that it’s cheap, only to discover otherwise. So, why are condominiums so expensive?
Condominiums are great; they offer a cheaper way to become homeowners, especially in major cities. But you may discover they cost more in the long term. This is due to the cost of utilities, shared amenities, condo size, location, reserve collection, repair fees, and target market of the condo.
Although condos might seem expensive when you look at all the fees, you also need to consider that you don’t have to do certain duties in terms of house maintenance that would have been necessary if you owned a house. Here, we discuss factors that make condos expensive.
1. Cost of Utilities
One of the major costs for condos is the monthly fees, and this can be very high because they usually include the utilities in it. Most condos have one provider for every utility, and they charge the entire condo building together. This means that every apartment in the building pays the same utility charges. This can make the amount you spend on monthly fees very high, especially since you still have private utilities such as internet and cable. Bundle fees like this can make your utility to be very high. A better option is to go for a condo community that doesn’t combine the utility bill with the monthly fee, which means every apartment pays its bill separately. In this case, you have more control over the cost of your utility bills, and you know that you’re only paying for exactly what you use. The tricky part is finding a condo operator that doesn’t bundle fees. If you live in an area with expensive utilities, your monthly fees would be high.
2. Shared Amenities
The condo has monthly fees because there are usually shared amenities that require maintenance. The swimming pools, gym, concierge, and more than your condo have been paid for through your monthly fee. It doesn’t matter whether you use these facilities or don’t; you still have to pay the fees, which can be pricey. The facilities available in the condo will generally determine how much you have to pay for maintaining these properties. For example, it’ll cost more to maintain a swimming pool than it would for a gym. So, the greater the number of expensive amenities on your property, the more likely you’ll pay more.
3. Condo Size
The size of the condo could also affect how expensive it is in terms of monthly fees. Bigger condos will have small fees since more apartments will be splitting the bill, ensuring it’s well spread out. Of course, it might get to the point where a bigger condo has more facilities which invariably makes it more expensive. Even with that, smaller condos are generally more expensive to reside in than larger ones.
Location affects costs, and that includes the cost of the condo. Condos in prime locations where the economy is good and the cost of living is high will also charge more fees, and the cost of even owning such condos would be higher. For example, if you’re buying a condo in California, you’ll spend more than getting the same condo in Texas. Condo operators will generally keep their prices attractive based on the economy. A key instance where location can make your condo more expensive is if it’s close to a vacation spot. In such cases, the demand would be very high, which means so would be the price. Many vacationers will rather get a condo than stay in a hotel due to the privacy and luxury these condos might offer and the lower cost of staying there for the long term. If the condos offer amenities and are close to places such as the beach, this might be the factor driving up their prices.
5. Repair Fees
The beautiful thing about condos is that you usually don’t have to focus on property maintenance yourself. There’s always someone doing it. But you still have to pay, and in most cases, you pay more. Part of the fees that you pay on condos monthly is repair fees which go towards maintaining different systems in the building and ensuring they function properly. Your repair fees usually cover maintaining the HVAC system, fixing water heaters, and other miscellaneous costs. The repair fees are usually low for newer homes since nothing is likely to spoil. But the older the condo gets, the more you’ll have to pay repair fees.
6. Reserve Collection
A condo with a reserve collection could also be more expensive to live in. a reserve collection is special savings account that the condo uses to handle any significant project on the property, such as elevator installations, roof installments, etc. Some operators get the reserve collection by charging high monthly fees and deducting the reserve from it. Others collect smaller monthly fees but will charge you when a major project comes up. In both cases, you’re still going to pay more. It depends on how often and how much you have to pay at once.
7. Target Market
The cost of your condo might also be high because it’s built to cater to a specific type of clientele. Unlike houses, condos are about investors’ demand, and investors usually focus on what would be most profitable. So, you may have no choice but to pay significantly more. For example, if your condo is in a business district, it could mean higher fees because you’re in the city’s center, where everything is easily accessible but comes at a price. Condo buildings in a gated community with guards, concierge, expensive features inside, and more are generally tailored for the wealthy.
Many people usually consider condos to be cheaper than houses. While this is true in some cases, condos can be quite expensive in the long term due to the additional costs. The additional costs are unlikely to reduce in the long term due to inflation. But you do enjoy several benefits from these extra fees.