What’s more affordable in retirement – house or condo?

By Deborah Goonan, Independent American Communities


Rob Carrick of The Globe and Mail (Canada), recently introduced a new calculator to help seniors evaluate relative cost savings of downsizing from their mortgage-free home to a downtown condo.

It should not come as a surprise that, in many cases, the cost of downsizing ends up to be about the same, at best.

In fact, since the calculator does not factor in the inevitable cost of one of more special assessments, that “lock and go” condo may end up increasing your cost of living.

Here in the US, Community Associations Institute (CAI) – the trade group made up mainly of community management and legal professionals  – has been promoting the relative “affordability” of condos, when compared to single family homes.

But remember, CAI has a vested interest in a robust condo market, as do real estate agents that sell or lease condos.

Although the calculator was designed by a Canadian news organization, the variables can be modified to make similar calculations for the US market. I plugged in a few scenarios for myself, and in every case, the carrying costs of the condo were about $150 -$250 per month higher than holding onto a house, assuming the mortgage is paid off.

Reading through the comments following the article, several good points are made.

The calculator assumes the condo in question will be well-managed. Given that over 70% of association-governed communities in the US have underfunded reserves (according to Robert M. Nordlund of Association Reserves), that’s a rather optimistic assumption.


Other very important considerations to consider about downsizing to a condo:

  • There will likely be noise from neighboring condos, and a reduction in privacy. Some former homeowners may have difficulty adjusting to living in close quarters.


  • As a condo owner, you will have no direct control over how well or even if the building and grounds are maintained according to your expectations. The more “affordable” the sale prices of the condos, and the more limited the financial resources of the association’s owners, the more likely your condo association will find it difficult to keep up with increasing maintenance costs, especially as the building(s) age.

Similar principles apply to downsizing from a single family home – one that is not subject to a homeowners’ association (HOA) – to a smaller townhouse or detached village home that requires mandatory membership in an HOA.

  • As an HOA owner, you may have some additional control over maintenance of your home. But the timing of your repairs and maintenance, as well as choice of materials and colors, will be subject to the approval of the HOA. For example, your HOA might require you to replace your roof with shingles that cost 20% more than standard asphalt, simply to satisfy aesthetic requirements.


  • If you choose to move to a planned community with recreational amenities such as a pool, tennis courts, a community club house, a recreational lakeside location, or even a golf course, keep in mind that you will pay hundreds or thousands of dollars per year for those perks. And you will be obligated to continue to pay for these amenities even when you are no longer able to use them.


  • HOA owners are required to share the costs of maintaining commonly owned infrastructure, which may include roads, storm water drainage systems (everything from roadside gutters to large retention ponds and even dams used to create man-made lakes), landscaped parks and entry monuments. Those costs can be substantial – often requiring 6- or 7-figure budgets.



Finally, regardless of what type of Association-Governed Residential Community you may consider, be aware that, since associations are corporations, they can sue and be sued by members or any third party.

Your association will need to carry various insurance policies to help defray a relatively increased risk of loss due to theft or embezzlement, fire or natural disaster, or legal liabilities. In addition to the cost of insurance premiums, owners are collectively responsible for paying all uncovered costs.

Bottom line: your condo or HOA assessments will most likely be increased to cover a variety of unpredictable costs.

You can read the article and link to the calculator here:


Downsizing to a condo in retirement won’t always cut your costs




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