Peggy Chirico ~ Hartford & Tolland County Real Estate Blog

What's the difference between a condo and a PUD?

Many of my clients who are looking at condos will assume that all more-densely populated developments are condominiums, whether they are looking at converted apartment buildings, new townhouse developments, duplex or triplex communities, or planned single-family homes with very small lot sizes. 

However, the appearance of the community does not determine whether a complex is a condo or a PUD (planned unit development); it is a matter of ownership and how the community was set up.  Some communities look like PUDs, but are actually condominiums.  For example, Lakewood in South Windsor, CT is a PUD (sometimes called PAD for Planned Area Development) whereas Whitney Crossing in Vernon, CT (which is a community of detached homes) is listed as a condominium.

In a condominium, the individual units are owned by each tenant, but all the common areas are owned by the tenants jointly (as tenants in common).  In a planned unit community, each tenant owns the unit and may have rights and responsibilities to the property the unit sits on; ownership of the common areas is shared among the association.

The Homeowner Association fees vary widely among condos and PUDs; some PUDs have very low fees, but not always. A prospective buyer should find out exactly what amenities are available and what the HOA fees cover.  Some condominium communities seem to have higher fees but may include heat, hot water, basic cable, etc.  Communities with very low fees may only pay for snowplowing and maintenance of common grounds.

In addition, don't rely on MLS to find out if a community is a condo or a PUD/PAD.  I have seen some units in the same complex listed as condos, while other units are listed as PUDs/PADs. 

A prospective buyer must delve deeper into the bylaws and written documents of the community to find out the extent of one's rights and responsibilities.  Both types of ownership may have restrictions on such things as pets, maintenance, improvements, subleasing, insurance, etc.  The legal documents will tell you the boundaries of your property, your responsibilities  for repairs (as well as the community's responsibilities), what changes if any you can make to the exterior, etc. 

Why does this matter to a buyer?  You will want to know this information before making a decision about purchasing, so don't wait until you have written a contract before getting the information.  The type of ownership will have a great impact on the type of financing and insurance you will need.

This post describes very general distinctions between condos and PUDS, but prospective buyers should be aware that the terms are not interchangeable.   Please verify type of ownership to see if the property would be right for you.

It's a Buyer's Market, Isn't It?

With all the doom and gloom news about the real estate market, it's easy to assume that it's a buyer's market.  In fact, many buyers figure that they can put off making homebuying decisions, make outrageous lowball offers, or be as unreasonable as they want to be because they think it's a buyer's market.

Maybe it is and maybe it isn't.

It all depends on what market you are in.  But before we look at the different markets in our area, let's agree on what a "buyer's market" actually is.  While you may find somewhat different numbers out there, most often people will say that

1-4 months of inventory              =     Seller's market

5-6 months of inventory              =     Neutral market

7 or more months of inventory    =     Buyer's market

To determine how many months of inventory there are, we need to calculate the absorption rate, which is the length of time it will take to sell the existing inventory, given how many houses were sold in the prior month.

So we need to know how many houses are currently on the market, including those under contract and those under deposit; we also need to know how many houses sold in the past month.

Here are the absorption rates for some of the towns in my service area:

This information is for single family home sales as reported in the MLS, and absorption rate is reported in months.  As you can see from the information, most of the towns would represent a buyer's market.  Glastonbury and West Hartford are neutral markets and South Windsor is a seller's market.

However, we can narrow this down in any number of ways that will prove to be more useful.  We could calculate the absorption rate by price range, by school district, or by neighborhood. 

We would see, for example, that in the price range of $150,000 to $200,000 in Manchester (104 on the market/9 closed sales in December) the absorption rate is 11.5 (a buyer's market), but in the $250,000 to $300,000 (18 on the market/3 closed sales in December) the absorption rate is 6 months (a neutral market).

Absorption rates can explain a market or help inform a decision, which is useful to buyers as well as sellers, but it is just one piece of information.  A well-priced home is the most important factor and can defy trends in absorption rates.

If you are interested in getting more information about absorption rates in your neighborhood, please contact me.

Advice for Homebuyers - The list price is negotiable; the property taxes are not.

Today I went shopping for homes with my buyers.  They had several towns that were on their list so they could broaden their range of possibilities.  Many of the homes were bank-owned and so offered an attractive price.  Here in Connecticut, each town sets its own tax rate so the property taxes can range significantly from one town to the next.

Among the homes in their price range, from $200,000-$225,000, the property taxes ranged from $3,900 to $7,000.  That means that each month they will pay anywhere from $325 to $583 a month, in addition to the principle, interest, and insurance.

So while the sticker price may look very attractive, you must also factor in the taxes when making your decision.  One couple that I was working with had their hearts set on living in one particular town until they found out that they would be paying $600 a month in taxes on their first home.  They decided that another town offered attractive homes with a much more reasonable tax rate.

Just something to think about. When you are perusing the listings, pay attention to the taxes as well.  The list price is negotiable, but the property taxes are not.  (Yes, I have heard of people arguing with the Assessor's Office for reduced taxes, but it doesn't happen that often, especially now when all towns are looking for more money for their budgets.)