Condo vs. House: Home-Buying Tips in an Impossible Real Estate Market Like LA

A budget around $650,000 is a fortune in most markets. But this is Southern California.

There may never be a better time than right now to buy a home in Southern California, financial experts say, citing interest rates that are set to approach historic lows, in addition to the slow of home prices, which aren't increasing as fast as years past.

Even so, for many in the region, the price of a single-family home is still out of reach. So is a condo a better option?

They both have give and take, as Michelle Chaplin is learning. 

She's a single mother, looking to buy a home in Los Angeles.

"It has been really challenging finding a property that fits all of my needs and my price point," Chaplin said.

Her budget is around $650,000 -- a fortune in most markets. But this is Southern California.

A home in Silver Lake she considered was priced at $599,000. It has one bedroom, one bathroom, and is under 600 square feet.

Yes, this is considered a house worth $600,000 in LA.

"It's leveling a little bit now but things are still -- prices are still going up," Mercedes Connor of Compass Realty said.

Connor said her clients are usually surprised by what their money gets them in a house, so some start considering condos.

"With condos you get amenities, you get security, you get to be in an area that maybe you couldn't afford to buy a house in, so they open up more options for people," she said.

How condos compare to homes

For both, you'll have the same monthly mortgage, and the same property taxes. But the condo will cost you an extra $400 a month (depending on the complex) for something called HOA dues. Here's what HOA fees typically cover: Maintenance for the building, gardening, maintenance on the pool or the spa (if you have access to those), keeping the gym clean, and keeping the building clean.

With a home purchase, there are no HOA dues.

But that means you're on the hook for everything.

"Let's say that the line to the sewer breaks. The HOA is going to repair that. It's part of their repair costs, whereas again if you're a homeowner and there's a crack in your sewer line, you need to pay for that," Connor said.

Another consideration; an FHA loan.

With an FHA loan, you don't necessarily have to come up with a huge 20% down payment.

"At this price point, you're under the loan limits for an FHA loan, so you can put 3.5% down and be able to get your foot in the door," Connor said.

Experts say while the house Chaplin looked at is a lot smaller than the condo, it likely to increase in value -- more so than a condo -- over time. Either way, she knows she has to act fast.

"I do love the house. I feel like it's going to be a competitive market to get it. It's at $599,000 so maybe if I were to go a little bit higher, kind of go to my max, I would be in the running," she said.

Another thing to remember: condo HOA fees are subject to change, and can even increase over time.

As for Chaplin, her story ends without a purchase. At the end of the day, the Studio City condo sold for $607,000, and the 600-square-foot home sold for way more, at $710,000.

She didn't choose either home, and her search for a spot in the challenging LA market continues.

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