Can I afford a condo, is a condo right for me? Condos are more affordable than single-family homes, but you have to pay monthly assessments.
Comment: Just read your column in today’s paper responding to a question for advice whether to buy a home at age 66 or continue renting. I was surprised you didn’t make two observations.
First, your correspondent wants to buy a condo. As you know, condo values are first to be affected and last to recover in a real estate market decline. Now would be the time to buy a condo because the values haven’t increased as much as single family residences (in most parts of the country) yet interest rates are low, around 3.25 percent for a conventional 30-year fixed rate mortgage.
A single level condo would be affordable for her, and she wouldn’t have the concern over big ticket maintenance issues, such as landscaping or high homeowner insurance rates.
Second, you didn’t suggest she look into her state’s programs for deferred property taxes. In Oregon, where I live, if one is over age 65 and income under about $35,000, and one has no higher than 80 percent loan-to-value mortgage, one can qualify for deferred property taxes.
This needs to be renewed every two years but property taxes (which are high in Oregon) can be deferred until the place is sold, when they will be taken out of equity as a kind of property lien.
A: Affordability is a tough issue, when hundreds of billions of dollars in wealth has been destroyed by the foreclosure crisis and more than 13 million Americans remain underwater, with homes worth less than the loan amount.
Compounding the problem is that continuing high unemployment and underemployment levels thwart the ability of middle-income families to feel as though they are getting ahead. It’s tough to save for your future when you’re barely making enough to pay your mortgage, property taxes and insurance.
To your comment: Condos tend to be more affordable than single-family homes. In many major metro areas, single family houses have been selling well, but a glut of condos on the market has continued to keep prices low, even as mortgage interest rates have dropped to historic lows
But, there are some issues with condos: You can’t find appropriate condos in every part of every neighborhood, you have to pay monthly assessments which will hamper affordability, and you have to live with other people on all sides.
It goes without saying that some folks don’t like to be that close to their neighbors, and others shouldn’t be. Sam once had a client who had to use a broomstick to hit the ceiling to quiet down the neighbors upstairs. (Nobody was happy in that scenario.)
Your point about reduced or deferred property taxes for seniors is a good one. Not every state has programs like this, but seniors should see what is available and if they qualify, take advantage.
In some places, property taxes are reduced for seniors and there is no payback on sale requirement. But if there is a deferral of property taxes, be sure you and your future heirs (if you plan to leave them the home) understand what is required for the payback provision, especially if property values decline again and you still have to pay the tax collector money to make good on the deferral.
Thanks for your comments.
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