Condo vs Townhouse: What’s the Difference?

The PropertyClub Team
Oct 1st 2020
Deciding between buying a condo or a townhouse can be a challenge. Both types of properties can make for fantastic homes, and there are pros and cons to each. Here's what you need to know about owning a condo vs a townhome.

Buying a traditional single-family home with a yard and a fence is not the only route to homeownership. You have plenty of options, including condos and townhouses. Both condos and townhouses offer many of the same homeownership perks without the often-exorbitant prices of single-family homes. However, there are a few differences between condos and townhouses you should be aware of before making any purchase.

What’s a Condo?

Let’s get some basic definitions down before we plunge into the differences between condos and townhouses.

A condo, which is short for condominium, can be either a community of buildings with separate units or a single building with separate units. You can find condominiums in all kinds of sizes and styles. The majority of condos will share walls with adjacent units/owners, although some can offer more privacy and feel more like a townhouse. A condo’s owner is responsible for the unit’s interior, but not the property on which the unit sits.

Instead, any shared spaces, including the exterior and lawn, are maintained by a homeowners association.

A condo will feel more like a rental apartment you own than a townhouse or a single-family home in many ways. But there are differences between condos and apartments

What’s a Townhouse?

A townhouse is pretty distinct from a condominium: it’s essentially a single-family home that can share one or more walls with other individual units. In most cases, townhouses show up as rows of individual homes and don’t usually go above two or three stories in height.

When someone purchases a townhouse, they own the interior and exterior walls, plus related spaces like the lawn and roof. However, maintenance costs for common areas or shared areas are covered by homeowners’ associations. 

As you can see, both condos and townhouses represent avenues to homeownership and are distinct from traditional houses.

What Are the Similarities between Condos and Townhouses?

Both condos and townhouses are owned by their residents. But they’re also quite similar since one or more walls are usually shared with adjacent and attached condos or townhouses. Most of these buildings’ rowed style is why people consider them to be a step below traditional houses in many cases – they don’t always usually have backyards or distinct property parcels on which they rest.

You can also find condos and townhouses in the same areas, including suburbs, rural areas, and urban sprawls.

What’s the Difference Between a Condo and a Townhouse?

Though condos and townhouses do have a few similarities, it’s more useful to determine their differences, so you know which will be perfect for your needs. Here are some of the key differences between condos and townhouses. 

Ownership Differences Between Condos and Townhouses

There are some fundamental differences between condos and townhouses in terms of direct ownership.

  • When you purchase a condo, you own the individual unit. But you share ownership of the shared parts of the building and common areas with other tenants/owners. Common areas include a gym, grounds, airspace, and so on.
  • When you purchase a townhouse, the ownership style is closer to that of a traditional single-family home. You own both the structure and the parcel of land. But you also share some walls with another structure.

Condo vs. Townhouse Costs

Of course, condos and townhouses also differ dramatically in terms of costs. The good news is that, even with monthly fees from a homeowners association, condos and townhouses are usually or affordable compared to owning a traditional single-family home. This makes condos and townhouses perfect choices for first-time homebuyers.

In general, condos are cheaper than townhouses. That’s because you aren’t purchasing any associated land. Remember, townhouse ownership usually comes with buying the small parcel on which the home rests.

However, condo homeowners association fees are usually more expensive because there are more jointly-owned spaces for the association to maintain over time. Thus, you should look at the overall costs between condos and townhouses carefully to determine which is actually more expensive over the long-term.

Lastly, mortgage interest rates are often higher for condos than for townhouses. This can differ based on your geographic area and the condominium complex itself, of course, with cheaper condos often having higher mortgage interest rates than more expensive condos.

Homeowners Associations

There are some big differences in terms of homeowners association requirements and fees. In fact, these differences help to distinguish these types of structures from traditional single-family homes more than almost anything else.

Whenever you buy a condo or townhouse, you have to pay monthly fees to a homeowners association. This HOA is run by other tenants (and potentially you if you apply and are accepted), and it covers the day-to-day maintenance of all shared spaces. For condos, the HOA covers the interior common areas, the general building pipes and associated pieces/walls, and the grounds of the shared condominium complex.

For townhouses, the HOA manages any common areas, plus some roofs and the exteriors of some structures if those areas are shared between tenants/owners.

Furthermore, the HOA includes a list of rules that all tenants have to abide by when you purchase a condo or townhouse. These include restrictions on noise, activity levels in the early parts of the morning or later parts of the evening, and so on. It’s essential to ask about HOA restrictions and fees (because you will need to pay some money to cover the above-mentioned maintenance tasks) before purchasing a condo or townhouse since it’s something you’ll have to live with over the long-term.

Condo vs. Townhouse Responsibilities

Condos and townhouses have a few differences in terms of owner responsibilities.

If you own a condo:

  • You’re responsible for paying into a potentially pricey homeowners association
  • Your homeowners’ association might have more restrictions due to the greater amount of common space
  • You’re less responsible for repairs to your unit or the common area individually
  • But you’re also less likely to get individual requests approved since requests for particular decorations, flowers, etc. must be weighed against the entire community

If you own a townhouse:

  • You’re responsible for your home’s exterior and any surrounding land
  • Your homeowners’ association costs are likely lower, and restrictions are less encompassing
  • Your aesthetic preferences may be more individualistic within reason
  • You may be responsible for keeping your property clean as it affects the entire property’s value

Condo vs. Townhouse Resale Value

Many people purchase a condo or townhouse with the intent of buying another home in the future. Because of this, resale value is an important factor to consider before finalizing a purchase.

Your condo or townhouse’s resale value is affected by a number of factors, including:

  • the type of condo or townhouse
  • market attributes, like whether it’s a buyer’s or seller’s market
  • the value of surrounding condos or townhouses
  • the geographic area/climate/sprawl

Generally, appreciation rates for condos and townhouses are a little slower in terms of growing value compared to single-family houses. But this is rapidly changing since more and more millennials are settling for condos and townhouses so they can start owning a home now instead of waiting for another few years.

Remember, the resale value of your condo or townhouse is dependent on the quality of the individual unit plus the quality of the common areas. Because of this, condos often have better resale value if their homeowners’ association does a stellar job of keeping common areas clean.

On the flip side, the resale value of a townhouse may be higher or lower than a comparable condo, depending on how well you take care of your individual unit and how well your neighbors take care of theirs.

Perks and Security of Condos and Townhouses

Lastly, be sure to consider the differences between condos and townhouses in terms of their perks. Since condos usually have more common areas, these areas are more affected by a homeowners association’s dedication and pooled income.

Condos usually have better community resources and perks, including better gyms, pools, and clubhouses. That’s because it’s assumed the individuals in the assorted condos will take advantage of these perks more often. 

On the flip side, townhouses may have a few perks or shared common spaces, but these are usually less impressive or luxurious. But townhouse owners don’t have to pay as many fees for spaces they may not even be interested in using.

In terms of security, condos can be more secure than townhouses, again due to the greater pooled income from the owner/tenants. However, townhouse owners can take greater charge of their own security since they own the exteriors of their buildings instead of being restricted to whatever the homeowners association deems appropriate.

Conclusion

Ultimately, both condos and townhouses offer alternative routes to homeownership, aside from getting a traditional, single-family home. More and more millennials are looking into these options due to their affordability and convenience, primarily since excellent condo and townhouse properties can be found close to metropolitan areas where high-paying work is easier to maintain.

Both condos and townhouses can be rewarding if you choose the type of home that best suits your budget, needs, and sense of collective community. Condos are likely better for those with a desire for a more “tight-knit neighborhood” feel, while townhouses are more suitable for more independent-minded homeowners.