Why are condo fee's so high in Houston?

[jdbaker]

I've been living in the Bayou Lofts for the past 6 months, and would love to buy the unit I'm leasing except that the condo fee's are way too high to make the numbers work. And it's not just my building, it seems the typical maintenance fee for a downtown loft/condo is around $.40 psf, which seems really high. I know that it's a lot higher than a typical Washington, DC condo fee. So, the question is, why are the prevailing fees in Houston so high?

Edited November 15, 2006 by jdbaker

[musicman]

I've been living in the Bayou Lofts for the past 6 months, and would love to buy the unit I'm leasing except that the condo fee's are way too high to make the numbers work. And it's not just my building, it seems the typical maintenance fee for a downtown loft/condo is around $.40 psf, which seems really high. I know that it's a lot higher than a typical Washington, DC condo fee. So, the question is, why are the prevailing fees in Houston so high?

sounds like you're living beyond your means.

[Pumapayam]

So, the question is, why are the prevailing fees in Houston so high?

Ask the management company for a breakdown of the yearly maintenance costs for the building.

It will make you appreciate where the money is really going.

[Houston19514]

I've been living in the Bayou Lofts for the past 6 months, and would love to buy the unit I'm leasing except that the condo fee's are way too high to make the numbers work. And it's not just my building, it seems the typical maintenance fee for a downtown loft/condo is around $.40 psf, which seems really high. I know that it's a lot higher than a typical Washington, DC condo fee. So, the question is, why are the prevailing fees in Houston so high?

What do the fees typically run in Washington DC?

[Parrothead]

I've been living in the Bayou Lofts for the past 6 months, and would love to buy the unit I'm leasing except that the condo fee's are way too high to make the numbers work. And it's not just my building, it seems the typical maintenance fee for a downtown loft/condo is around $.40 psf, which seems really high. I know that it's a lot higher than a typical Washington, DC condo fee. So, the question is, why are the prevailing fees in Houston so high?

That's pretty high! We pay half of that and I think it's a bit steep.

I'd do what Puma said and ask for a breakdown of the fees. You'll see very quickly what it all goes toward.

Good luck!!

[TheNiche]

I've been living in the Bayou Lofts for the past 6 months, and would love to buy the unit I'm leasing except that the condo fee's are way too high to make the numbers work. And it's not just my building, it seems the typical maintenance fee for a downtown loft/condo is around $.40 psf, which seems really high. I know that it's a lot higher than a typical Washington, DC condo fee. So, the question is, why are the prevailing fees in Houston so high?

A lot of it has to do with high insurance rates in Harris County. We're evidently very disaster-prone.

[jdbaker]

sounds like you're living beyond your means.

What are you talking about musicman? I said the numbers don't work, as in purchasing would not be a good deal. To clarify, although I could easily afford to purchase my unit, and pay the the maintenance fee, the total cost of ownership would represent an economic penalty when compared to my current lease.

Also, thanks Niche, that's what I thought the answer might be.

[TheNiche]

Also, thanks Niche, that's what I thought the answer might be.

I still think that you should take Puma's suggestion and talk to management. I know that insurance rates are a problem, but there may be others. I think that it might be interesting if we could get several HAIF members that are condo-dwellers to post their condo associations' finances side-by-side. I'd like to get a better sense of what the big cost drivers are, myself.

[Houston19514]

What are you talking about musicman? I said the numbers don't work, as in purchasing would not be a good deal. To clarify, although I could easily afford to purchase my unit, and pay the the maintenance fee, the total cost of ownership would represent an economic penalty when compared to my current lease.

Also, thanks Niche, that's what I thought the answer might be.

I'll ask again. What do condo fees typically run in Washington DC? One can't really say why Houston's are "so high" without knowing how much higher and also without knowing what is typically included.

[jdbaker]

I'll ask again. What do condo fees typically run in Washington DC? One can't really say why Houston's are "so high" without knowing how much higher and also without knowing what is typically included.

In DC they're usually around $.25 psf.

[Houston19514]

In DC they're usually around $.25 psf.

Would that be for a building with 24-hour front desk/concierge, swimming pool, fitness facilities, and parking garage?

[Mark F. Barnes]

Would that be for a building with 24-hour front desk/concierge, swimming pool, fitness facilities, and parking garage?

Doubtful!

[musicman]

What are you talking about musicman? I said the numbers don't work, as in purchasing would not be a good deal. To clarify, although I could easily afford to purchase my unit, and pay the the maintenance fee, the total cost of ownership would represent an economic penalty when compared to my current lease.

Well if you enjoy it more than your current lease, then the "economic penalty" is well worth the cost to move. if you're only concerned about economics i understand your point, but when i choose a place to live i weigh other factors as well.

[TheNiche]

Well if you enjoy it more than your current lease, then the "economic penalty" is well worth the cost to move. if you're only concerned about economics i understand your point, but when i choose a place to live i weigh other factors as well.

He doesn't have to move. He lives there. See the initial post.

[musicman]

He doesn't have to move. He lives there. See the initial post.

i see..but if you like it.....that's just another cost to pay.

[jdbaker]

Would that be for a building with 24-hour front desk/concierge, swimming pool, fitness facilities, and parking garage?

Yes, the fee includes great concierges, well maintained lobby, elevators, and hallways, a quality fitness room, and deed parking in a nice garage, and a very, very small rooftop pool. No question, the fee's provide some degree of value for the money, but at $520 per month (my loft is 1300sf) it is still a tough pill to swallow, and particularly so when one can purchase a townhome in virtually in area in Houston for substantially less psf than a comparable highrise. This is the big difference between Houston and DC, NYC, or Boston. Here, all things being equal, you actually pay more per square foot to live in a building. Very strange. It makes me wonder why no one has built townhouses in the downtown CBD yet. Land is a little expensive, but I think you could make it work.

Edited November 16, 2006 by jdbaker

[musicman]

No question, the fee's provide some degree of value for the money, but at $520 per month (my loft is 1300sf) it is still a tough pill to swallow, and particularly so when one can purchase a townhome in virtually in area in Houston for substantially less psf than a comparable highrise.

It's all about choice. You have the option to purchase the townhome for less psf but currently you are choosing to stay there. you MUST like it and therefore must be willing to pay the extra fees to do so.

[jdbaker]

It's all about choice. You have the option to purchase the townhome for less psf but currently you are choosing to stay there. you MUST like it and therefore must be willing to pay the extra fees to do so.

Musicman, you keep confusing things. Let me explain for the third time.

1. I lease a loft in the Bayou lofts.

2. I like my loft because it allows both my wife and myself to walk to work, and it's a nice building. The owner would like to sell the unit that I live.

3. If I were to purchase the unit that I currently live in, my housing costs (mortgage, property tax, ,& maintenance fee), would increase by around 30% as compared to leasing.

4. I would like to stay here, but I would not like to pay an extra 30% for the privilege of ownership.

5. I realize I have a choice as to where I live. However, this has absolutely nothing to do with condo fee's and/or renting vs. purchasing a condo.

Edited November 16, 2006 by jdbaker

[Mark F. Barnes]

Musicman, you keep confusing things. Let me explain for the third time.

1. I lease a loft in the Bayou lofts.

2. I like my loft because it allows both my wife and myself to walk to work, and it's a nice building. The owner would like to sell the unit that I live.

3. If I were to purchase the unit that I currently live in, my housing costs (mortgage, property tax, ,& maintenance fee), would increase by around 30% as compared to leasing.

4. I would like to stay here, but I would not like to pay an extra 30% for the privilege of ownership.

5. I realize I have a choice as to where I live. However, this has absolutely nothing to do with condo fee's and/or renting vs. purchasing a condo.

However you will be gaining equity if you buy, or you can contimue to rent and gain squat!

[TheNiche]

However you will be gaining equity if you buy, or you can contimue to rent and gain squat!

If he's paying 30% more per month, much of which is going toward maintenance fees and not the note, and if it is a 15- or 30-year mortgage, he probably won't be there long enough for the equity to accrue. And even if he does, there's the little matter of transaction costs.

Edited November 16, 2006 by TheNiche

[musicman]

Musicman, you keep confusing things. Let me explain for the third time.

3. If I were to purchase the unit that I currently live in, my housing costs (mortgage, property tax, ,& maintenance fee), would increase by around 30% as compared to leasing.

4. I would like to stay here, but I would not like to pay an extra 30% for the privilege of ownership.

5. I realize I have a choice as to where I live. However, this has absolutely nothing to do with condo fee's and/or renting vs. purchasing a condo.

i am confused then......you've mentioned several times the price to own your rental/lease unit is 30%more. To me sounds like you don't want to pay more to stay there and own the unit. All i said is that based on economics, your likes of the place, etc you have to make a decision whether you want to purchase the unit. sounds like economincs is your overwhelming criteria as to whether you want to stay there.

in step 5 you said "this has absolutely nothing to do with condo fee's and/or renting vs. purchasing a condo."

I'm confused at this statement because in step 4 you say you would not like to pay the extra 30%. Again, economics.

If you want to live downtown, then you have to pay the price to walk to work, whatever that may be.

[jscarbor]

Is the owner wanting to get market price or is he looking for a pipe dream?

Condo fees add up quick. Usually you have water, sewer, trash, maint(grounds, pool, common area) insurance. $.50 per foot seems high, I would think that the avg place runs $.20 per foot or so? Of course 24 hour concierge would up that fee by, what $50-80K per year divided by sq footage?

I'm in the middle of developing a smallish condo where we will hopefully be getting some income on the building thus reducing the maint cost for the association. I'm hoping we can reduce that amount by $.5-.10. If it works, its a great idea, if not....well...we tried.

[KinkaidAlum]

Condo fees can be high, but it's not like when you own a single family home, you aren't paying for many of these same things.

My condo fees pay for my gas, electric, building insurance policy, water/sewer, and general maintenance. We pay a little more per month to build a reserve for unexpected expenses like roof repairs/storm damage, etc...

Also, by being in a condo association that has a professional management team, I actually SAVE money on insurance because I can be a part of an umbrella policy that isn't normally available to single family home owners.

Now, my biggest regret with my condo fees is that they are based on square footage. There are a few energy hogs in my building that definitely get away with not paying for what they actually use (lights on in every room of the house, blasting their heat in the winter, waste water, etc...)

[Houston19514]

Hey, JD. Don't forget to calculate your tax benefits of ownership. (Interest on your mortgage, and your property taxes will be deductible on your federal income tax return).

[jdbaker]

Hey, JD. Don't forget to calculate your tax benefits of ownership. (Interest on your mortgage, and your property taxes will be deductible on your federal income tax return).

Actually, that's part of the problem too. If we purchased the loft, we wouldn't receive any significant tax benefit because the deductions (mortgage interest & property tax) would only slightly exceed the standard deduction that we can take as renters.

[Houston19514]

Actually, that's part of the problem too. If we purchased the loft, we wouldn't receive any significant tax benefit because the deductions (mortgage interest & property tax) would only slightly exceed the standard deduction that we can take as renters.

Gotcha. I was hoping you would take that into account. (a lot of people forget to account for the standard deduction)

[KinkaidAlum]

Back when I was looking to move back to Houston, I checked out buying a place in the Commerce Towers. At the time (about two years ago), I was told that I wouldn't pay property taxes for 8 years.

Does anyone know if that deal is still going on for downtown properties? I was under the impression that it was on a 10 year deal and counting down from the time the tax break was created rather than from the time of purchase (should be about 6 years left).

If that deal still exists, that's a CHUNK OF CHANGE.

[TheNiche]

Back when I was looking to move back to Houston, I checked out buying a place in the Commerce Towers. At the time (about two years ago), I was told that I wouldn't pay property taxes for 8 years.

Does anyone know if that deal is still going on for downtown properties? I was under the impression that it was on a 10 year deal and counting down from the time the tax break was created rather than from the time of purchase (should be about 6 years left).

If that deal still exists, that's a CHUNK OF CHANGE.

My understanding is that tax abatements are provided on a case-by-case basis, as negotiated between the developer and any taxing district that'll talk. Odds are that you wouldn't pay any City of Houston taxes, but would probably still have to pay Harris County and HISD taxes, as well as any other tax entity that wouldn't give an abatement.

Anybody have more specific information?

[ToolMan]

Unless you are really in love with the place, I would keep renting and invest that 30%.

I am in the exact situation where I rent downtown. I did the numbers and they don't add up to my advantage.

[jdbaker]

My understanding is that tax abatements are provided on a case-by-case basis, as negotiated between the developer and any taxing district that'll talk. Odds are that you wouldn't pay any City of Houston taxes, but would probably still have to pay Harris County and HISD taxes, as well as any other tax entity that wouldn't give an abatement.

Anybody have more specific information?

Niche is correct. A few buildings (including Bayou Lofts) are exempt from city taxes for approximately 10 more years. I believe the city of Houston tax rate is around .06% so the exmeption knocks off about 20% as compared to non-exempt buildings. It' significant, but not a deal maker/breaker.