Thursday, February 25, 2010

At what level do condo fees make sense?

According to the Consumer Expenditure Survey in 2008, the average urban consumer spends:
1. $1,100 per year on maintenance, repairs and other expenses (or as high as $1,700 per year for homeowners)
2. $1,000 per year on household operations (I'm a little unclear as to what this means - it excludes utilities, etc. however)

According to the American Time Use Survey in 2008, the average person spends:
1. 0.19 hours per day on lawn and garden care
2. 0.06 hours per day on exterior maintenance

For the average person who actually participates in the activities the time is:
1. 2.00 hours per day on lawn and garden care
2. 2.04 hours per day on exterior maintenance

Assuming that I value my time at $10 per hour and also assuming that I'm neither the average nor the person who participates in the activities (4 hours per day on these activities is way high for me!), and that I spend 2 hours per day on both these activities then this leads to 2x365 = 730 hours per year. At $10 per hour that would be $7,300 per year.

Roughly, I should then expect to spend $9,000 - $12,000 per year on household maintenance, repairs, etc. This means that I should expect to reasonably pay $700-$1,000 per month on condo fees. If I value my time more than $10 per hour then I should expect to pay more.

Also, many condo buildings have a gym or a pool and I would need to factor in the annual cost of membership to these facilities as well. The CEX does not have a line item for this unfortunately. The closest line item is approximately $600 per year on personal care products and services which I'm assuming includes things like hair cuts and the like.

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