Condo vs. Townhouse: What’s the Difference?

There are so many decisions you have to make when buying a home. From location to price to whether or not a horribly outdated kitchen is a dealbreaker, you’ll be forced to consider a lot of factors on your path to homeownership. One of the most important ones: what type of home do you want to live in? If you’re not interested in a detached single family home, you’re likely going to find yourself facing the condo vs. townhouse debate. There are quite a few similarities between the two, and quite a few differences as well. Deciding which one is best for you is a matter of weighing the pros and cons of each and balancing that with the rest of the decisions you’ve made about your ideal home. Here’s where to start.

Condo vs. townhouse: the basics

A condominium is similar to an apartment in that it’s an individual unit residing in a building or community of buildings. But unlike an apartment, a condo is owned by its resident, not rented from a landlord.

A townhouse is an attached home also owned by its resident. One or more walls are shared with an adjacent attached townhome. Think rowhouse instead of apartment, and expect a little bit more privacy than you would get in a condo.

You’ll find condos and townhouses in urban areas, rural areas, and the suburbs. Both can be one story or multiple stories. The biggest difference between the two comes down to ownership and fees—what you own, and how much you pay for it, are at the heart of the condo vs. townhouse distinction, and often end up being key factors when making a decision about which one is a right fit.

Ownership

When you purchase a condo, you personally own your individual unit and share joint ownership of the building with the other owner-tenants. That joint ownership includes not just the building structure itself, but its common areas, such as the gym, pool, and grounds, as well as the airspace.

Townhouse ownership is more in line with ownership of a detached single family home. You personally own the structure and the land it sits on—the difference is just that the structure shares some walls with another structure.

“Condo” and “townhouse” are terms of ownership more than they are terms of architecture. You can live in a structure that resembles a townhouse but is actually a condo in your ownership rights—for example, you own the structure but not the land it sits on. If you’re searching primarily townhome-style properties, be sure to ask what the ownership rights are, especially if you’d like to also own your front and/or backyard.

Homeowners’ associations

You can’t talk about the condo vs. townhouse breakdown without mentioning homeowners’ associations (HOAs). This is one of the biggest things that separates these types of properties from single family homes.

When you purchase a condo or townhouse, you are required to pay monthly fees into an HOA. The HOA, which is run by other tenants (and which you can join yourself if you are so inclined), handles the day-to-day maintenance of the shared spaces. In a condo, the HOA is managing the building, its grounds, and its interior common spaces. In a townhouse community, the HOA is managing common areas, which includes general grounds and, in some cases, roofs and exteriors of the structures.

In addition to overseeing shared property maintenance, the HOA also establishes rules for all tenants. These may include rules around renting out your home, noise, and what you can do with your land (for example, some townhome HOAs forbid you to have a shed on your property, even though you own your yard). When doing the condo vs. townhouse comparison for yourself, ask about HOA rules and fees, since they can vary widely from property to property.

Cost

Even with monthly HOA fees, owning a condo or a townhouse typically tends to be more affordable than owning a single family home. You should never buy more home than you can afford, so condos and townhomes are often great choices for first-time homebuyers or anybody on a budget.

In terms of condo vs. townhouse purchase prices, condos tend to be cheaper to buy, since you’re not investing in any land. But condo HOA fees also tend to be higher, since there are more jointly-owned spaces.

There are other costs to consider, too. Property taxes, home insurance, and home inspection costs vary depending on the type of property you’re purchasing and its location. Be sure to factor these in when checking to see if a particular home fits in your budget. There are also mortgage interest rates to consider, which are usually highest for condos.

Resale value

There’s no such thing as a sure investment. The resale value of your home, whether it’s a condo, townhome, or single family detached, depends on a number of market factors, many of them outside of your control. But when it comes to the factors in your control, there are some benefits to both condo and townhome properties.

A well-run HOA will ensure that common areas and general landscaping always look their best, which means you’ll have less to worry about when it comes to making a good first impression regarding your building or building community. You’ll still be responsible for making sure your home itself is fit to sell, but a stunning pool area or well-kept grounds may add some extra incentive to a potential buyer to look past some small things that might stand out more in a single family home. When it comes to appreciation rates, condos have generally been slower to grow in value than other types of properties, but times are changing. Recently, they even surpassed single family homes in their rate of appreciation.

Figuring out your own answer to the condo vs. townhouse debate comes down to measuring the differences between the two and seeing which one is the best fit for your family, your budget, and your future plans. There’s no real winner—both have their pros and cons, and both have a fair amount in common with each other. Find the property that you want to buy and then dig in to the details of ownership, fees, and cost. From there, you’ll be able to make the best decision.