Should I Sell My Condo and Buy a House?

October 17, 2022 by: Alex Capozzolo

When it comes to choosing somewhere to live, you have several options: you can rent, buy a house, or purchase a condo. But if you already own a condo, is it wise to sell your investment and buy a house instead? Property is a considerable investment, so there’s no straightforward answer; it depends on your financial circumstances and lifestyle needs. Selling your condo could be a great option to reduce your monthly bills. Still, purchasing a house in a seller's market could mean you spend more on your purchase than necessary.

Continue reading to discover why investing in houses and condos differs, plus the pros and cons of selling up and reinvesting in the current market.

How Is Buying A House Different From Buying A Condo?

There are many ways in which the purchase of a house and condo are similar processes; however, there are a couple of key differences. The most significant is the monthly fees that coexist with owning a condo. Owners can find that these fees, in combination with a mortgage, can be too expensive.

Why Are Condos So Expensive?

Condos are expensive because they often sit in the center of a city rather than on the outskirts or in the suburbs. In addition, condos rely on everyone who resides there to pay for utilities, repairs, and general amenities. Along with bills for general utilities, you’ll be expected to contribute to the upkeep of any onsite amenities such as swimming pools and gyms, regardless of whether you use them or not. And it’s these shared costs that increase your total outgoings for the month, regardless of how much you try to budget or save. When you live in a condo, you are responsible for everyone, not just yourself, so you may end up forking out for the expensive lifestyles of others.

Why Switch From A Condo To A House?

With things such as utilities, you’ll pay a flat fee no matter what your individual usage is. This is because your utility bill is calculated by the entire building's usage divided by the number of people who reside there. If you’re frugal and energy efficient, you may find that your efforts are fruitless when living in a condo. No matter what you do to keep your own costs down, you’ll still end up subsidizing the higher usage of the other residents. Due to the way that bills and expenses are calculated in a condo, you may find yourself with a much higher bill for outgoing costs than if you lived in your own home.

There are more responsibilities that come along with owning a standalone house vs. a condo. For example, larger condo buildings sometimes come loaded with security, a front desk, and parking. This additional separation from the outside world makes it less likely that someone will break in. You won’t have to look up squatter’s rights in your area if you live in a condo. People are much less likely to break in and start squatting in your home if you live in a condo. How do you defend yourself against people from the outside world? Considering investing in a home security system for your house to keep it safe when you are gone and at night.

Why Is Now Not A Good Time To Purchase A House?

When considering whether or not it's a good time to invest in property, there are several factors that a buyer needs to take into account: current (and future predicted) market trends, mortgage interest rates, inflation, and house prices. In 2021, the average house price increased by 16.9% compared to the market rates of 2020. Not only that but a low housing inventory means that buyers are inadvertently pushing prices higher to secure their dream home. In addition, while the average mortgage interest rate was around 3%, you’re now looking at fees of 5-6%, which can add up to thousands of dollars over the mortgage's lifespan.

Today, the USA is in the midst of a seller’s market, which means that the number of people looking to buy far outweighs those wanting to sell. This means that there is stiff competition for purchases, and you may end up paying more than the market value for the house. A quick way to keep track of and determine whether we’re in a buyer’s or seller’s market is to take the number of homes available on the market and divide it by the number of house sales over the past month. A result of seven or above reveals a buyer’s market, while a number of 5 or below suggests that it has switched to a seller’s market.

Why Is It A Good Time To Purchase A House?

There are many reasons why the current market could put people off buying a house, but as a condo owner, there are several reasons why now could be a perfect time. First, if you’re selling a house in a seller's market, you’ll get the best possible price for your condo. Secondly, moving into a new home could save you a lot of money on outgoing costs. A prediction by Zillow suggests that house prices will continue to rise, experiencing an increase of 17.3% by the beginning of 2023. With the house prices continuing to soar, now may be as good a time as any to get your foot on the ladder.

Should I Sell My Condo And Purchase A House?

Before making a decision, you’ll have to weigh up the pros and cons of your situation. You may want to move for personal reasons, such as relocating or expanding your family. In that case, you have good reason to buy a house now, no matter what the market is doing. While some mortgage interests are increasing, others are reasonably stable, so it’s worth doing your homework. Do you currently pay a mortgage? Can you keep the same rate on a new purchase? What’s the best mortgage rate on today’s market? Can you afford to pay for it?

When weighing up the cost of a mortgage, you’ll also want to factor in your current expenses. How much could you realistically save by taking control of your own finances and not making monthly contributions to unnecessary amenities such as gyms or swimming pools? Ultimately, you need to look at your financial situation and determine what is best for you. In some instances, you may get an excellent price for your condo and save money on your monthly expenses, making a house investment worthwhile. In other instances, you could unnecessarily switch to a higher mortgage rate and pay top dollar from a house sitting in a seller’s market. 

Final Thoughts

We’re currently experiencing a seller's market, which means you’re likely to pay over the odds on a house purchase. Still, it also means you can sell your condo at a great price. To make the best decision, you’ll need to determine the costs associated with each option to see which puts you in the strongest financial position.