Is It Worth It to Buy a Condo in Houston?

Thinking about buying a condo in Houston? They can be a fantastic option, offering convenience and a sense of community—and they’re often more affordable than townhouses or single-family homes. But, like any big purchase, it’s important to understand the ins and outs, especially when it comes to financing and resale potential. So, is it worth it to buy a condo in Houston? 

Finding a Condo in Houston

One thing you’ll quickly learn is that getting a condo loan can be a bit more involved than financing a single-family home, and many lenders do not offer loans on condos. Of the lenders that will loan on a condo, they will take a close look at the building’s Homeowners Association (HOA). They want to make sure the HOA is financially sound, with enough reserves for future maintenance and no major legal issues looming. After all, a healthy HOA contributes to a stable and well-maintained property, which protects everyone’s investment. Your condo is the collateral for the loan. 

Securing a Condo Loan

Another key factor is the mix of owner-occupied units versus rentals. Lenders generally prefer buildings where most residents own their units. It suggests a stronger sense of stability because homesteads are less likely to fall into foreclosure. If a building has too many rentals, it can raise concerns about higher turnover, neglect, and potential maintenance issues, which can make it harder to secure a loan. Also, federally backed loans like the FHA and VA loans have stricter criteria and typically find a good reason to decline most condos. If you’re using a conventional loan and putting 20% down, your odds of finding a condo improve, but really, cash is king when it comes to getting your foot in the door of a condo. 

Appraisals can also be a little different for condos. Because they’re part of a larger building, appraisers need to consider not just your individual condo unit, but also the building’s overall condition, its list of amenities, and how similar units in the building have sold. This extra layer of evaluation is just part of ensuring you’re making a sound investment.

Are Houston Condos a Good Investment?

Now, let’s talk about condos as an investment, even if you’re not an investor. Every homebuyer should consider their purchase an investment, because when you need to sell the property, you need to break even or hopefully make a profit! Condos can be a great entry point into homeownership, with lower upfront costs than townhomes and single-family homes. However, it’s crucial to factor in ongoing HOA fees. These fees cover things like landscaping, building maintenance, and insurance. They can vary significantly—and they tend to go up, not down. Plus, there’s always the possibility of special assessments for unexpected repairs and large maintenance projects, which will add to your costs. If you were hoping that owning your own home would fix your housing costs, this may not be so true in a condo. (Note insurance and taxes often go up too, but HOA dues can have significant increases year over year.)

Also, it’s important to remember that condo values never appreciate at the same rate as single-family homes. The building’s condition, the overall market, and even the quality of the HOA can all play a role in how your condo’s value changes over time. In fact, in Houston, you would need to own a condo for 10 years to see 3% appreciation, while single-family homes increase by this much annually. If you can generate a monthly rental rate that exceeds the monthly costs of ownership, it just might be a good investment though.

So, while condos offer a lot of advantages, it’s important to do your homework. Take the time to review the HOA’s financial statements, understand the building’s rules and regulations, and get a realistic picture of the ongoing costs. By doing your due diligence, you can make an informed decision and find a condo that fits your lifestyle and financial goals.

Get Started

That may seem daunting, but I’m here to help! As an expert in Houston real estate, I can help guide you through a smart home purchase that suits your needs and your budget, no matter what they are. If you’re ready to talk about buying a condo in Houston, let’s talk!