WHAT SHOULD I KNOW BEFORE I PURCHASE A CONDOMINIUM
can I recognize a condominium?
condominiums may be freestanding, like houses - like the Patio Homes in
Innisfree at Little Whale Cove, or attached to one another, like rowhomes. They
can look like ranch homes, old factory buildings or high-rise structures with
commercial businesses in their lower levels. Most lofts are condos.
A condominium is identified not by its appearance but by its legal
description and, sometimes, a sign at the entrance.
is a condominium?
are a form of real property ownership sanctioned under the Oregon Condominium
Act. These statutes authorize a form of property ownership in which the
homeowners association (HOA) holds title to the land or land lease, buildings,
swimming pools, driveways and lawns. Condominium
associations operate according to their declarations (commonly known as
CC&R's or Codes, Covenants and Restrictions), bylaws and, sometimes,
additional rules and regulations.
should I know about homeowners association (HOA) fees and special assessments?
fees are levied to obtain the income needed to pay for maintenance of buildings;
landscaping costs; insurance on the buildings; and water, sewer and garbage
costs. They are typically paid
monthly and average $219 per month in the Portland area. Most HOA fees are in
the range of $100 to $300 per month. Fees are normally set by the HOA's board of
directors and adjusted annually. Occasionally,
associations charge special assessments. If the association has a lot of
deferred maintenance, a low monthly fee or inadequate reserve funds, a special
assessment is more likely to be imposed.
should I know about condo pricing?
new construction, the builder sets the asking price. In resales, owners and
their Realtors price properties based on sale prices received for similar units,
or comps. Comps are easy to generate
in a condominium complex because a property for sale often has an almost
identical location and sometimes even an identical floor plans to previously
sold properties. Even so, prices within a complex may vary from one unit to the
next, due to differences in views, accessibility to amenities and quality of the
can you tell me about resale values?
same forces that affect other housing prices affect condo prices. It may be
true, however, that condo prices are more volatile than the prices of
single-family homes. Contrary to
popular belief, condos have generally matched other properties in appreciation.
In the early 1980s, condo prices fell dramatically when the Oregon economy was
in a severe recession. Prices of single-family homes, meanwhile, declined
moderately. In the mid-1990s, I
developed a condominium price index in which I tracked prices provided by 20
major Portland-area condominium associations. For a period of six years, my data
showed condo prices were increasing about 12 percent annually, while Realtors
Multiple Listing Service data showed that prices of all residences (including
condos) increased about 9 percent a year. While
the rate of appreciation for condos and houses differed at different points in
time, the two types of properties have appreciated by similar amounts during the
20-year period. The fact that
residential sales are currently brisk causes me to expect a more rapid
appreciation of prices for both houses and condos as the recession subsides.
Demographic trends -- including increasing numbers of empty-nesters and the
popularity of downtown living -- bode well for condo values.
information should I have before buying a condominium?
information about a condominium association is often difficult to obtain prior
to making an offer. Your Realtor
should be able to gather information from the listing agent before writing your
offer. You'll want to find out the association's rules about pets, parking,
renting the property to another party and any restrictions on the age of
residents. Beyond that, ask your Realtor to make your offer subject to your
receiving -- and being satisfied with -- the association's declaration, bylaws,
rules and regulations, financial reports and minutes of homeowners association
meetings from the last six months. The
minutes should reveal discussions about problems, which may result in higher
assessments or law suits. The financial reports give you information about the
level of reserves (money in the bank) and the financial health of the
association. Also, ask for the phone number of members of the board of directors
and the management company. These people are usually candid about the well-
being of the condominium association.
Ask The Expert reprinted from The Oregonian Newspaper, Portland, Oregon
April 21, 2002
by JOHN COOPER RE/MAX EQUITY GROUP