When looking for a new place to live, you have a few options.
You could choose to rent an apartment, buy a home, or buy a condo.
Buying a condo is similar to buying a home, but its costs are different.
Some find the monthly fees associated with condos, on top of their mortgage payments, to be expensive.
Why Are Condos So Expensive? (Top 10 Reasons)
Many condo complexes include utility bills in their monthly fees.
They do this by using a single provider for the various utilities, then charging the entire usage of the condo building as a whole.
That amount is then divided by the number of condo residents.
They all pay the same amount for utility charges.
Depending on how expensive utilities are, that can add a lot to monthly fees for a condo.
Some residents also have their own private utilities like cable and internet bills.
With those on top of their monthly fees, the price can exceed what they’d be paying elsewhere.
Not all condo communities bundle utility charges with their monthly fees, however.
Others allow you to pay for your own utility bills separately from your monthly condo fees.
That may be more affordable for some condo residents because it allows them to control how much electricity or gas they’re using.
They can make their bills more affordable.
It also means they’re not paying a large share for a utility they hardly use.
For example, if the gas bill is high, but one of the residents hardly uses their gas appliances, then they may feel that it’s unfair that they need to pay for the gas.
On their own utility bills, that’s one expense they can write off.
Condos are expensive because many condo operators bundle utility bills into their monthly fees.
If you live in an area where utilities are expensive, then your condo is going to be expensive.
2. Shared Costs For Amenities
Monthly fees don’t only share utilities.
They also share costs of amenities that the condo complex provides.
Many condo complexes have some sort of amenity to attract residents to the building.
Some include gyms while others have swimming pools.
Many also have a receptionist who is available at all times of the day.
Instead of paying for those costs themselves, the condo operators divide the costs among their residents.
Even if the condo resident never uses the amenity, they still need to contribute to its upkeep.
When these costs add to a resident’s monthly fees, they can become pricey.
It depends on the type of amenity that the condo community provides.
A gym, for example, is going to be less expensive than a pool.
A gym only needs an upfront cost of the equipment.
Besides that, they only need to pay a small amount to keep the area clean.
Now and then, they may need to replace a machine.
The other costs associated with the gym are relatively low.
A pool, on the other hand, is a more costly venture.
Not only are pools more expensive to install, but they also have lingering maintenance costs.
The pool constantly needs fresh chlorine to keep it sanitary and healthy.
The pH level of the water needs to be frequently tested to ensure it’s safe to swim in.
Over time, the pool liner starts to wear out and needs replacing.
It also needs cleaning at least once a day.
The costs associated with running a pool are higher than a gym.
As a result, the monthly fees are more expensive.
If a condo complex has several expensive amenities, then it increases the monthly cost significantly.
A condo resident has no say in whether they will help pay for an amenity or not.
They have to if they’re part of the condo community.
This is true even if they never use the amenity.
For some condo residents, the cost may be too high for what they get out of it.
3. Size Of The Condo
The size of the condo complex also impacts how expensive it is.
Larger condo complexes are going to sometimes have smaller monthly fees than smaller condos.
That’s because there are more people to spread the fees around with.
An example is a condo community that has 10 people versus one that has two people.
Both communities have a $10 bill that the condo operators will split between each resident.
The complex with 10 people only needs each resident to pay $1 each a month to cover the bill.
The condo complex with two people needs each to pay $5 a month to cover the bill.
There’s a point, however, when larger condos also attract more amenities and affluent residents.
When that happens, the price for things starts to increase.
Even with a lot of people sharing the bills, the price may be too high.
Regardless, you’ll find that your monthly fees may be smaller in a larger condo community than in a smaller one.
4. Area Code
The area in which you live may also indicate how expensive the condo is going to be.
That’s because certain states are more expensive to live in than others.
Washington State, for example, has some of the most expensive monthly fees for condos.
That’s because it’s doing well.
Its economy is growing, it has a great culture, and many people enjoy its climate.
Since it’s attracting many people to it, housing prices are going up.
There’s more demand for housing than there is supply.
When this happens, condo prices increase.
It helps lower demand to maintain an economic balance between supply and demand.
This is different in area codes that aren’t seeing as much growth.
In states that are seeing a decreased population, there’s less demand for condos.
As a result, the price lowers.
Condo operators need their prices to be attractive to entice new residents to join them.
Even moving one state over might impact how expensive or inexpensive condo monthly fees become.
5. Proximity To Vacation Spots
One of the main reasons condos can become so expensive is because they’re located near vacation spots.
Many vacationers love to rent condos to stay at during their holidays.
Condos provide luxury and privacy that a standard hotel can’t.
Many condos are also situated in coveted areas like on the beach or near the entertainment center.
It makes those condos ideal for vacationers who don’t want to walk far to get to the areas where they want to spend time.
If a condo is in such an area, then residents of the condo can expect their prices to go up.
That’s because condo operators want to attract vacationers as much as they do residents.
They know if they provide coveted amenities, then vacationers are more likely to choose to stay at their condo over someone else’s.
A resident can rent their condo to a vacationer a lot more easily.
That means the condo operator is sure to receive the monthly fees from that resident without a problem.
Residents can benefit from being near a tourist area, too.
They can rent their condo to vacationers to cover some of the costs of their monthly fees or mortgage payments.
Since vacationers pay by the day, the condo resident could have a nice side hustle.
Condo operators know this.
They want a part of the prize, too.
That’s why they might increase the price of their monthly fees.
If your condo is near a beach or another tourist area, then you can expect high monthly condo fees.
6. Repair Fees
Like any other building, condos fall into disrepair over time.
To cover those repairs, condo operators charge their residents a certain amount of money every month.
Those costs go towards repairs that the condo complex needs immediately or in the future.
The repairs are usually small in nature.
They may cover the cost of yearly maintenance for the HVAC system.
It may cover the cost of water heater repairs or replacement.
It may even cover miscellaneous repairs like lawn care or snow shoveling.
Depending on the age of the building and the number of repairs it needs in a year, the monthly cost associated with repair fees may be high.
Newer buildings may not have as high of a repair fee because everything is new.
The positive of having a repair fee as part of your monthly fee is that when you need a repair, you don’t need to pay for it.
The condo operators usually have a maintenance team that can take care of the problem for you.
If it’s a big job, then they’ll hire a team of contractors.
Repair fees can increase the price of your monthly payments and make living in a condo expensive.
7. Luxury Condos
Sometimes condos are expensive because they’re geared towards a specific part of the community.
Luxury condos feature some of the best amenities one can have in a condominium.
With indoor heated pools, private security, a gated community, and a 24/7 front desk receptionist, they offer a lot for their condo residents.
Even the homes have been designed with a certain class in mind.
They’re made and styled with the best materials instead of cheap ones.
With expensive countertops, hardwood floors, and fireplaces, these condos are for the affluent.
Because they’re geared towards richer individuals, they have the price tag to match.
All those expensive amenities add up.
Condo residents at luxury condos also pay for a certain lifestyle.
They expect the high price to deter others from joining the condominium community.
With higher costs associated with the condo, their monthly fees match.
The reason these types of condos are expensive is that they’re designed to be that way.
8. Reserve Collection
There are two different ways condo operators can run their business.
There are those who ask for a higher monthly fee and make a reserve collection out of it, and there are those who ask for smaller monthly fees and use special assessments.
A reserve collection is a savings account that the condo builds to tackle big projects like roof replacements, elevator installations, and pavement work.
They get the money for these large projects by charging their residents a large monthly fee.
The perk of this system is that residents can budget better.
They know how much they’re going to need to pay every month.
They also know that if a big repair or project does need to happen, that the condo can afford it.
Condo operators that don’t charge a large monthly fee for big projects rely on special assessments instead.
Special assessments are when residents receive a large charge for a month or two to cover the cost of the big project.
It can be helpful since residents can save more money when a special assessment isn’t needed.
However, it can also put them in a bind.
Some residents may not be able to afford a sudden increase because the low monthly costs are what attracted them to the condo in the first place.
They can’t afford anything more than that rate.
Experienced condo residents will tell you to trust a condo that charges a high monthly rate because it means they have a reserve collection.
You can plan your budget and always have peace of mind that the operators have the money they need to handle big repairs.
You can expect condos to be expensive because they need to pay for expensive projects.
9. Located Close To Business District
A condo may also be expensive if it’s located close to the business district.
For many cities, the business district is the heart of the city.
It’s where the entertainment and business districts merge together.
If you love living downtown, then you’re going to need to pay the price for it.
That’s because the business district is expensive.
Property taxes are high, and utilities can sometimes cost more, too.
The advantage is that you’re close to work and other entertaining venues.
You can save time and money on your commute.
Since property taxes are high, however, you can expect that your monthly fee is going to be high, too.
That’s because your monthly condo fee includes payment towards those property taxes.
Business condos are also in high demand.
People want to be closer to work to cut down on commute time.
Not only does it save them time and money, but it also helps the environment.
Since more people want to live closer to work, it means there’s less space in the condo.
As demand increases and supply decreases, the price of the condo increases.
10. Mortgage Rates
Buying a condo is like buying a home.
You need to buy a condo which can sometimes be as expensive as a house.
To pay for it, you take out a mortgage.
The problem with that is that mortgages can be expensive if it’s your first time taking one out.
A common mistake many first-time mortgage debtors make is that they focus only on the price of the house or condo.
They don’t focus on the interest rate of the mortgage.
That’s more important than the actual price of the condo.
An interest rate can drive up the cost of your monthly payments.
It can make owning a condo extremely expensive.
On top of your mortgage payments, you also have to pay for homeowner’s insurance.
Even though your condo isn’t a house, lenders won’t give you a mortgage until you have the insurance.
It’s standard practice.
With a mortgage, homeowner’s insurance, and your condo monthly fees, it’s easy to see why living in a condo can become expensive.
How To Save Money On A Condo
There are a few ways you can make owning a condo cheaper.
Consider these tips to save money on a condo.
1. Choose A Large Condo
If you want to make the most of your money, then you’ll want to move into a large condo.
The more people in the condo, the less you’ll have to pay for utility bills.
2. Look For Low-Interest Rates
When shopping for a mortgage to buy your condo, look for lenders who offer the lowest interest rates.
It might require you to have a higher down payment, but your monthly payments will be a lot cheaper.
It can make owning a condo more affordable.
3. Join The Board
Every condo has a board.
That board is in charge of determining the monthly condo fees and how they’re used.
If you want to save money or ensure your money is being used the right way, then join the board.
At the very least, you should attend the meetings and let them hear your voice.
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