As a first time buyer in San Jose, CA, a high cost housing market, it's likely that you may need to consider buying a condominium (condo) or a town home instead of a single family home as your first home. Here are some factors to consider:
Let's define what each of these terms mean:
Condo: with this type of homes, legally you own the space within the four walls of a unit but not the land the unit is built on. Additionally, you owns a share of the common ground. In another words, if there are 25 units in this condo development, then you own 1/25th of the common ground. Generally, you may have up to eight neighboring units; meaning you can have neighbors above, below, next to you, depending where your unit is located.
Townhome: legally, you own both the space and the land the unit is built on. You have less neighboring units, potentially one on each side.
Both condos and townhomes are what we called attached homes - referring to sharing of the walls with neighbors.
Single family homes: these are also called detached homes referring to that each home is typically a stand-alone unit. In this type of dwelling, you have neighbors who do not share any walls.
As aforementioned, with condo and townhomes, you have less privacy since you share walls and space with your neighbors, relative to owning a single family home.
Another key difference is that condos and townhomes have what is called a home owner's association (HOA) dues. This is additional cost to your mortgage payment. In San Jose area, the HOA can range from $200-$500 depending on what the HOA covers. At first glance, first time buyers may find this cost appalling. However, the HOA dues does cover common ground maintenance, exterior maintenance (roof, walls, etc), and hazard insurance. This can mean that as a first time home owner, your responsibility for maintenance is alleviated greatly. Additionally, the HOA dues may cover amenities like swimming pool, tennis court, or gym facility.
Because the entry price to condo and town homes is a lot more affordable than a single family home, it's an option to consider for many first time home buyer. In the United States, homeowners change homes every 5-7 years due to different life events. In another words, starting out with a condo/townhome is a good option when the lifestyle fits your needs. Chances are in few years when the financial situation changes, you may be able to buy a single family home.
In case you're wondering what the prices are like for Townhomes and Condos, click here to see a sample. This may be the answer to your calling for first time home ownership!
Feel free to contact me for an obligation-free consultation to determine what types of homes best fit your needs!
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