Condo vs townhouse: what’s the difference?

There are pros and cons to both types of homeownership.

Elissa

Elissa Suh

Published February 7, 2020

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KEY TAKEAWAYS

  • The difference between a condos versus a townhouse is based on ownership

  • When you buy a townhouse, you own the land. When you buy a condo, you only own the living space

  • Both may have homeowners association (HOA) fees, which are usually higher for condos

Before taking out a mortgage, first-time homebuyers will likely encounter different types of properties. When a traditional, detached, single-family home with a garage isn’t an option because of cost or availability, condos and townhouses are the most common alternatives. But what exactly is the difference?

The major difference between a condo and a townhome is in how they are owned, not necessarily how they are structured. For example, you may find townhouses lining a street in New York City or other densely populated cities, but these are often the equivalent to owning a house.

If you buy a townhouse you tend to own the land on which it’s built, but when you buy a condo, you only own your unit and not any surrounding spaces. Confused? Keep reading. We’ll discuss the difference between condos and townhouses in depth.

What is a condo?

Short for condominium, a condo is a usually single unit within a building, much like an apartment building, but it can also be one floor in a ranch-style house. There are variations in what counts as a condo, structure-wise, because a condo is defined by ownership. People who own condominiums only own their units, and do not own the condo buildings in which they are situated at large. While you own the space within your unit and all of the square footage of your living space, you and other condo-owners jointly own the building and the land that it sits on.

Condos are usually part of a community with many amenities — like a swimming pool, tennis court, rooftop lounge, or garage. All of this property is maintained by the condo association or homeowners association.

Homeowners association (HOA)

Residential communities and developments often have a homeowners association and a condominium is no different. The condo association or HOA is responsible for managing upkeep in common areas, like stairs, lobby, entrance and more. Condo owners are required to pay dues, or fees, to the HOA to help with the costs. Monthly fees may be a few hundred to a few thousand dollars, depending on how expensive the condo is and what amenities they have.

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If you live in a condo, you must follow the rules and regulations set by the HOA (officially called CCRs, or covenants, conditions, and restrictions). Many of these rules are constructed around respecting your fellow condo-owners and keeping up the good appearance of the building and community overall. For example, the HOA often has rules regulating late night noise, pet policies, recycling procedures, and even whether or not how you can decorate the hallways or windows.

Part of your HOA dues also go towards homeowners insurance. While you should still get your own personal home or condo insurance, the HOA insurance should cover damages to the common area and the building overall, including exterior structures like the roof. Learn more about how condo insurance works.

HOA fees do not cover property taxes for condos, which are assessed the same way they are for other types of property.

What is a townhouse?

Townhouses can also be defined by ownership. Owning a townhouse is similar to owning a single-family home. You own the entire building and the land that it rests on, including the outdoor space, unlike with a condo.

Townhouses are typically built very close to one another, often times with the walls and garages of one townhouse touching those of the neighboring one.

There may not be as many amenities for a townhouse community, so townhouses tend to come with lower HOA fees. But not all townhouse communities are alike. For example, you may find a townhouse property that has a private golf course for its residents.

In urban areas, like New York City, a townhouse mostly refers to the style of a building — usually a narrow building with multiple floors and a slim backyard, nestled on a block next to other townhouses that look exactly the same. These buildings can be rented or owned, and are rarely part of a larger community with an HOA. Owning a townhome here operates similarly to owning a single-family home.

Is it better to buy a condo or townhouse?

Both condos and townhouses can be more affordable than single-family homes since they usually have less land or acreage (or, in the case of a condo, no land at all). They can also be a good stepping stone for people who want to experience home ownership with less demands, since both condos and townhouses require less maintenance than detached houses. Costs ultimately depend on location. For example a condo in San Francisco will be more expensive than a five-bedroom mansion in South Carolina.

Features of townhouses and condos can often overlap, especially regarding amenities and housing structure when you’re in the suburbs. Here are a few things you should consider when trying to decide between a condo vs townhouse:

How much space do you need?

Condominiums are usually in close proximity to one another while townhouses may give you more space. Keep in mind, in urban areas it’s possible to find condos with a very high square footage (and a very high price). But generally, townhouses have more space like a front lawn, backyard, or patio. Buying a townhouse is often the choice of people who can’t afford a traditional, detached, single-family home.

Do you want more or less involvement?

The benefit of a condo is not having to worry about maintenance issues, since these are taken care of by the HOA. Condos owners usually have less autonomy due to the HOA rules, but they may also feel more secure and at ease in regards to both personal safety and the upkeep of the building. (This works the opposite way if the homeowners association is particularly disorganized, idling, or an untrustworthy member finds its way into the condo association.)

If you have a townhome, you may be responsible for the wear and tear on your house on your own.

How much can you afford to pay in monthly maintenance fees?

Owning a condo is often the choice of people who don’t want the responsibilities of maintaining a home. Think of it like a more robust and involved apartment building with added amenities and costs.

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Personal Finance Editor

Elissa Suh

Personal Finance Editor

Elissa is a personal finance editor at Policygenius in New York City. She writes about estate planning, mortgages, and occasionally health insurance. In the past she has written about film and music.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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