Portland Home vs Condo: Affordability

Last week, the Oregon Office of Economic Analysis reported that the housing market in Portland is “rebalancing”. In other words, the Portland real estate market is cooling fast. In a recent blog post, they outlined the indications that we’re seeing a once-in-a-decade shift in the forces favoring sellers over buyers. Long story short: Inventory is coming back up and the number of days on market is lengthening.

On the other hand, mortgage rates in Portland are also going up again, and the average home price remains high. For first-time home buyers, getting into their first home might still be tricky. According to the blog post, “The combination of higher interest rates and home prices mean households have to devote a larger share of their income to housing, if they want to buy.”

For those hoping to devote a reasonable, but not outrageous share of their income to housing, condos may be a tempting option. In Portland, they are popular for a number of reasons: Locations near city centers and public transit, availability, and added amenities like pools, gyms, and landscaping. Condos represent an intermediate stage between renting an apartment and owning a home with a roof, four walls, and a front and back yard.

However, there are financial considerations that come with owning a condo, from HOA dues to taxes. For those home buyers who are concerned about affordability, how do condos stack up?

Portland Condo vs Single-Family Home Costs

1. The upfront sales price: Generally, condos cost less than homes, period. For most buyers, the mortgage payment on a condo will be less than for a comparable home. Affordability point: Condo.
2. Homeowners Association fees: These fees cover everything from HOA administration to landscaping. Most homes aren’t part of an HOA, but all condos are. The affordability point here goes to: Home. Homes do require plenty of upkeep and maintenance as well, but there is more flexibility as to when and how you take care of any maintenance needs with your own home. With a condo, you simply experience that cost on a monthly basis.
3. Homeowners insurance: Usually less with condos, since the complex itself will likely provide some of the structural insurance, though it depends on HOA rules and individual policies. Point: Condo.
4. Property taxes: A good portion of Portland-area property taxes are based on square footage. Because condos are generally smaller than single-family homes in Portland, it’s fair to say that condo owners can expect to pay a little less at tax time. Point: Condo.
5. Other homeownership costs: HOA fees typically cover the outside of the condo, but what about the inside? Condo owners still have to pay for upgrades to fixtures like appliances, painting every few years and replacing things like flooring and cabinets. Then again, non-HOA homes come with the costs to maintain big-ticket items like roofs and landscaping. Point: Condo.

It’s pretty clear which option wins the affordability contest here. However, cost shouldn’t be your only consideration. Lifestyle factors are a major factor in deciding whether to invest in a condo in Portland. How are you with close neighbors, restricted parking, and communal space like hallways and greens? For more, see our real estate blog post on Buying a Condo in Portland: Ten Things to Know.

Ready to invest? Take advantage of the lull in the Portland housing market. Contact our top 1% buyer’s agent today!