Is it a condo, is it a townhouse?

Is it a condo, or a townhouse?

If you are wondering if you are looking at a condominium, or a townhouse, it may not always be so obvious: many condominiums do look like townhouses, with 2 stories and even a real enclosed garage attached (as it is the case in this complex: the Old Mill in Mountain View).

A condominium is a unit inside of a larger complex, where the owner owns a small part of the whole
complex. It is also said that in a condominium, you own "from the paint on", meaning that the rest is owned in common.  For instance if there are 100 units, you would own 100th of the whole property; many times it includes several buildings, the land, the pools etc...  So in a way you do not really own where you live, you own a portion of a much larger property.  Of course you have exclusive use of your location, and also the exclusive use of a parking space, a balcony, a storage area.  The legal description (shown in the preliminary title report) indicates that it is a condominium.

In the case of a townhouse, you own the land you are on, and the house which is on it, and typically you are responsible for the maintenance of the whole place: you have to pay to repair or change your own roof, you have to paint the home, you take care of your own stucco, garden, fences etc...  If you have rules that limit what you can do, it would be because of the association that regroups all the townhomes around you, which might be responsible for the walkways, the access roads, the common facilities (pool, tennis etc...).  Those rules help keep a common look and living experience to all the homes inside the complex.

In many areas, especially where there is very little land to build on (think "the Bay Area"), the exact definitions get blurred, and you can have homes that may look like townhouses but are in fact condominiums.  So be careful and ask your agent to double check on that for you (in the preliminary title report).

Even though it is always good to "own your own land", lifestyles change, and many buyers prefer that an association take care of the roof, fences, pools, paint, and so on.  A condo can be better for that.  The "association dues" are meant to be used for those repairs, and often a management company takes care of them.

Also, if you are considering a purchase soon, be aware that the financing on condos will not be as easy or cheap as for townhouses, which are considered "houses" by most lenders.

I had written a blog in 2010 on the subject of condominiums, with an updated page on condominium details and explanations, which you may be interested in checking out ....

Thank you for reading,
Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A worthy local non-profit to remember: Community Services Agency in Mountain View

Bay Area Investors...

Investors: the trend continues in the Bay Area with a lot of buyers investors:

- 17% in the County of Santa Clara,

- 21% in San Mateo County - 27.5% in Solano County
- 25% Contra Costa County.

Over 20% of all purchases are all cash, with no loan involved.

In fact, an interesting phenomenon occurs in some depressed areas:
in some condominium complexes, where over 15% of the units are delinquent, (typical) banks will not lend…  So this leaves only cash buyers as potential buyers of these properties.  Obviously these buyers purchase the units for the long term, hoping that the real estate market will improve enough that the complex will go up in value.  The rents have increased so much in the past 2 years that the return on investment makes it a very viable deal.

An other problem can occur there though: if more than 50% of the units in a complex are non owner-occupied, loan are also almost impossible to obtain - or more expensive.  One of the rules of most lenders is that this important percentage has to be over 50%.  So that would leave future buyers and future homeowners in those complexes with a difficult situation: potential buyers who need a loan may not want to pay the extra fees and rates in order to get these loans.

Do not underestimate the need for good advice when you purchase a condominium.  A seasoned agent is a must, to make sure you are informed.  Here is a good informational page on this "condominium"subject.

Thanks for reading.
Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Los Altos prices: condos vs houses.

In the category: condominiums vs houses, I was curious to see how Los Altos fared, in plain simple terms.


Does it vary a lot from one City to another?  Not much: it turns out that it is fairly similar between Los Altos and Mountain View.
The following graph shows how condominiums and houses evolved in the past 5 years:

In Los Altos the condominium market started to be soft earlier than houses, and is a little slower to recover; - but overall is doing very well.




Los Altos townhall

  From the average price in 2006 to the average price in 2010, condominiums lost 4.3% in value, while houses lost 5.3% .  This is about the same as what the market did in Mountain View.

I think what is important to note is the general direction these figures point to, and the general idea that the peak was in 2007 - 2008, and the low 2009.

Again, it mirrors fairly closely what the County of Santa Clara experienced.      --Are you curious about your area? Let me know I am curious too.  I'll run the figures for you.
Francis
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