Why Florida Real Estate Prices Are Not the Most Important Thing to Consider When Purchasing a Home

Ask any prospective homebuyer what the most important consideration when purchasing a home is, and most likely you will be told that it has to do with the home's listing price. For Florida buyers surprised by a home's sticker shock, some realize they can save a few thousand dollars by purchasing a town home or condominium. While this does help to provide a lower monthly payment for a mortgage, long-term it can be more expensive than if the buyer went ahead and spent an extra few thousand dollars on a traditional single-family home.

With a condo or town home purchase, monthly Homeowner's Association Fees (HOA) are unpredictable from year to year. Some HOA fees rise by only a few dollars every year, while others can increase by $50 per month. This vast increase is very common in older neighbourhoods in Florida where units are in need of major repair work to siding, roofs, streets and road within the complex, and other major renovations. When these fees are added to a monthly mortgage payment, the cost of the increased expense can equal that as if a person originally purchased a home for $20,000 more.

Now, let's look at an example. Even if fees are fixed at $100 per month, then that is $1200 per year extra. When $1200 is multiplied by a borrower's 30 year loan, it means that an extra $36,000 went just to support fees. In addition, when building assessments are made for things like roofing, painting, plumbing and other repairs, the money has to be paid when the association requires it. While private homeowners have to contend with the same repairs, they have a bit more leeway, to for instance, if they need to wait a few weeks for the next pay check or two to arrive.