When real estate agent Margo Morgan first meets with people who are thinking about buying a home, they usually know where they want to live. But they often haven’t thought about how they want to live.
“People generally look at the neighborhood first, then at the price,” said Morgan, of Broward’s Morgan Realty Services. “That’s when they have what I call their ‘come-to-Jesus’ moment — usually their wants and needs don’t match their budget.”
That’s when the real work begins, said Morgan, who also teaches a first-time buyers class through a local nonprofit. “I sell by educating people about things they haven’t thought of. They’ve decided to buy a home — and that is an excellent idea. But they don’t realize that the home they pick has to be about the way they want to live.”
People who buy condos are usually younger or older — childless or their children have grown up and out of the house, she said. She also helps clients buy condos as their starter homes — as her first condo was, before her daughter was born.
“I tell people you have to live somewhere. Are you going to pay a mortgage for your own home or pay for someone else’s with rent money?” She added, “In this area, owning is usually less expensive and better for people than renting.”
The market in Miami-Dade County is distinctly tilted toward condos. Just 404,000 of the county’s 1 million housing units — in U.S. Census terms — are freestanding single-family residences. In some neighborhoods, nearly all homes are condos — as in Brickell, where thousands of new condos have come online since the recession. Others almost exclusively offer single-family homes, like Pembroke Pines and Miramar. In some areas, popularity has pushed prices up beyond the means of many middle-class families.
That is the case for once-affordable South Miami, where the median home value is almost $500,000, according to Zillow.
Longtime Realtor Hazel Goldman, of RE/MAX, specializes in the neighborhood. “South Miami has great schools and large lots,” Goldman said. “It costs more but those are things that parents want for their children and they’ll find the money.”
The decision about what to buy has more to do with what stage of life buyers are in, according to Goldman.
“I don’t think there’s much similarity between buyers looking for a single-family residence and those looking for a condo,” Goldman said. “What each offers is very different.”
The sales price of a condo is usually less than a house for similar square footage and amenities in the same neighborhood, so the property taxes are less.
But people who are looking for a house usually have specific reasons, she said.
“If they have pets, they look for a house. If they want a yard, they look for a house. If they want privacy, they look for a house. If they want good schools, a house,” she said.
Owning a house means being responsible for all the repairs and maintenance, from repairing a broken window to dealing with termites and fixing a leaky roof, she said. But houses also offer more control, fewer rules and greater privacy than condos.
“When I want to get my mail, I get in an elevator with many of my neighbors, ride down to the lobby where I see even more of my neighbors,” Goldman said. “That’s just picking up mail.”
Condos have their charms, she said. “You don’t have to directly maintain the exterior, you don’t have to worry about the roof because the homeowners association takes care of those things.”
“Condos are less time-consuming than houses. But you are limited by the management company and the homeowners association,” Goldman said. “Some associations are horrible and some are wonderful, so if you’re looking to buy, you need to take a good look at the association financials and to find out if the association board is doing its job — not too much and not too little.”
And it’s important to pay attention to the monthly fees. “It may look like a good deal, but if the monthlies are too low, it means they can’t take care of the building,” she said. Fees can include water, garbage collection, insurance, electricity, parking, maintenance and repairs, and the building’s insurance policy.
Condo owners can also be required to pay special assessments, usually a lump sum the condo board says all owners must pay in addition to the monthly fees. Assessments almost always have to do with fixing or maintaining the building. Projects can include those that improve everyone’s life (such as more efficient air conditioning) and maintenance needed to stave off disaster (like replacing plumbing). But some are discretionary projects like redecorating the lobby or adding rooftop amenities that may not be as important to some owners as others.
When buildings hit the 40-year mark, municipal codes in Miami-Dade and Fort Lauderdale require that the buildings undergo rigorous inspection of the structural and electrical systems; the buildings must then be brought up to current codes. If the homeowners association hasn’t been steadily saving for or working on those upgrades, the assessment for the 40-year upgrades can be staggering, running into tens of thousands of dollars, Goldman said.
Those surprise costs seem to be driving investors to buy houses, according to Bill Sevilla, the home ownership manager with Neighborhood Housing Service of South Florida.
“Investors are looking to houses because they can’t control the fees and assessments on a condo,” he said. “They’ve seen fees go from $87 a month to $400.”
But many lenders — including those who offer loans guaranteed by Fannie Mae or Freddie Mac — want to see that the condo building has more owners than renters, usually between 51 percent and 70 percent of the building owner occupied, he said.
Sevilla advises people thinking about buying either a house or a condo to do their homework before they shop. Take the time to check out first-time buyer programs that can provide up to thousands of dollars in grants and loans, he said.
“The greatest tool [buyers] have is the computer,” he said. The next greatest tool is the first-time buyers assistance many cities and counties offer.”
Then, he said, work with a real estate agent who knows the area where they want to buy. Local knowledge can save buyers much grief.
“I know a real estate agent who tries to put people above the 18th floor because you don’t hear the party noise,” Sevilla said. “If you’re below the 17th, you’re going to hear all the noise from the pool or courtyard, whether it’s a quinceañera, a graduation party or whatever. That’s the kind of knowledge that real estate agents who know a neighborhood have.”
Morgan said that people who buy condos are often interested in the social life around the building — the restaurants and entertainment in Brickell, for example. Or being close to the beach.
She recently helped clients buy a condo in the Galt Ocean Mile area of Fort Lauderdale, where the mile’s 30 condo buildings long ago formed a community association that connects residents to local events that attract thousands of people — both residents and visitors.
“They have block parties with local vendors and artists almost every weekend; jazz in the garden and wine tastings,” she said. “It’s a great area that comes with its own social scene. You just have to go outside.”