Our Tulsa real estate market sits squarely in the seller’s favor right now. Prices have risen steadily each month this year. Interest rates rose almost 2% since the beginning of the year. While they fell off slightly over the past two weeks, experts believe interest rates may begin climbing again over the next few months. If you want to own a Tulsa home but find yourself priced out of the single-family home market, you might want to downsize your expectations and consider buying a condo.
Is Buying a Condo Right for You?
Condo Buying vs Single-Family House Buying
First, you need to know that the process of buying a condo differs from the process of buying a house. For example, your options for funding may be limited with a condo. Government-backed loans (FHA or VA) require that the property meets a specific set of standards first. While not impossible, receiving backing from the FHA or VA oftentimes proves difficult. Also, lenders charge more for condo loans than single-family home loans (about 0.125% to 0.25% higher, in fact). Why? Because they are considered a riskier purchase than a home loan due to the fact that two parties must be financially sound for the deal (the buyer and the condo association) instead of just one (the buyer) in a single-family home purchase. Fannie Mae charges a 0.75% fee upfront to the lender when buyers put less than 25% down. The lender passes this fee along to the buyer in the form of a higher interest rate.
When to Say “Yes” to a Condo
You enjoy community living. The idea of never mowing a lawn or shoveling snow again thrills you. Your homeowner’s association takes care of this. Minimal upkeep appeals to both the very young and retired folks looking to downsize their lifestyle.
Check Out the HOA Before You Buy
You need to make sure that the HOA is financially sound before you invest your money into buying a condo. Contact them and ask for copies of their most recent financial statements. Check to see that they have a reserve fund set aside (and funded) for improvements to the condo complex. Ask about any future projects they have scheduled and how that affects the condo owners (either inconvenience of monetarily).
Equity Growth in Condo Ownership
Unfortunately, the rate of equity for single-family homeownership outpaces that of condo ownership. Buildings appreciate in value at a much lower rate than land. Since a condo only includes the four walls the owner lives in, equity for a single-family home rises at a quicker pace. However, condos tend to cost less. This helps when you want to dip your toe into the real estate market without making a much larger investment needed for a single-family property. Plus, in the future, you could either sell it and get a single-family home (if you want) or keep it as an investment property and rent it out when you wish to move into something else.
When you decide that you want to own a piece of Tulsa real estate (whether a condo or a single-family home), contact me. I’ll help you find the right property for you right now.
Lori Cain, REALTOR®, Serving Midtown and the greater Tulsa, OK area. Call 918-852-5036.
