If you want to reduce your living costs, consider moving into an apartment.
Houses may seem like the better option, but there are many financial benefits to living in an apartment.
Here are the 12 main reasons why apartments are cheaper than houses:
1. Apartments are Typically Smaller
Many apartments have one or two bedrooms. However, many houses have at least two or three bedrooms.
Some houses also have two living areas, a bigger kitchen, and a basement.
Meanwhile, apartments usually only have one living room and a small or mid-sized kitchen.
That means paying less to furnish all that space.
You also pay less per square footage in an apartment – however, you don’t own your living space, so you aren’t building equity or investing in a property if you rent.
Of course, you can leave some rooms of your house empty, but you may eventually decide to buy stuff for the whole space.
2. Walkable Cities
Some apartments are in the heart of cities or major shopping areas in the suburbs. That makes it easy to do some errands without using your car.
You can walk to the grocery store, pharmacy, restaurant, or shop around town. The more you can walk places, the less money you’ll spend on gas or car maintenance.
You could even get rid of your car entirely!
Even if you need to go somewhere not within walking distance, that doesn’t mean you have to drive. You might live near a bus line, and you can pay for a bus pass to travel around the city.
Maybe you can’t drive, and walking and the bus are your best options. You can save money on taxis or Uber when you live near everything.
3. Less Maintenance
Another way apartments are cheaper than houses is when it comes to maintenance.
Many apartment buildings and complexes have maintenance workers on staff.
The maintenance crew takes regular lawn care, such as mowing, raking, and clearing snow from the parking lot. They can also come to your unit if something breaks.
You don’t have to spend time or money hiring a plumber when a pipe bursts; if you ever need to replace an old appliance, your landlord will take care of the cost.
4. Shared Expenses
You and your neighbors pool your money to pay for gardening, roof maintenance, and other expenses.
If you rent your apartment, your monthly rent should cover this.
But maybe you own your apartment or condo. You can expect to pay an HOA fee each month to help maintain the exterior part of the property.
Over time, sharing these costs can help you save money. If you own a house, you’re on the hook for everything, and you may find that it costs more to care for an entire house compared to your portion of an apartment complex.
4. No Property Taxes
When renting an apartment, you won’t have to pay any property taxes, at least not for your home.
Your landlord will be responsible for those payments since it’s their property.
Even if you buy an apartment, your property tax bill will likely be lower than a house’s. Apartments and condos tend to cost less, and the value of your property affects how much you owe in taxes.
The savings may not seem like much after the first year.
However, you might save significantly while living in an apartment versus a house.
Be sure to consider the property tax rate where you live. Then, you can calculate how much you could save if you move from a house to an apartment.
5. Expected Expenses
At least when renting an apartment, you can expect the same monthly rent payment until your lease ends (provided they don’t raise the rent).
If something breaks, your landlord will pay for the repair or replacement.
That can make it much easier to budget for life in an apartment. The larger space usually comes with larger rent payments, even if you rent a house.
Of course, if you own your home, you’ll have more unpredictable costs. You may know you want to redo your kitchen in the next couple of years.
However, you never know when your appliances may stop working or when you have a plumbing or electrical emergency.
As the owner, you must put up the money to fix those problems, so some months of homeownership could be more expensive.
6. Lower Bills
Whether you live in a house or apartment, you’ll have to pay for utilities like electricity, water, and internet. If you live in an apartment, you can usually expect to spend less on your utilities.
You might pay the same for your internet as someone with a house.
However, you’ll most likely use less electricity and water when you have a smaller living space.
Apartment complexes may even include some or all of your utilities with your rent payments. Others might have you take care of those costs on your own, but that can still be cheaper than if you lived in a house.
You may also be able to look into an apartment complex that offers Wi-Fi. Then, you won’t have to pay for internet outside your standard rent.
7. Rewarded for Loyalty
Some landlords will honor you for staying with the complex for a long time.
For one, the rent increase for renewing your lease may be lower than the advertised price for new residents.
You can also get a lower monthly rent if you renew a longer lease. That can help you save money compared to if you move somewhere new every year.
If I renewed my lease early, I could choose between certain upgrades in one of my old apartments.
I can’t remember the exact options, but maybe you could get new light fixtures or a deep bathroom clean.
Getting those upgrades can offer you a better living experience. You won’t have to pay movers to take your stuff to a new apartment.
8. Referral Bonuses
Ask your landlord or property manager about a referral bonus if you live in an apartment.
Some apartments will offer you a cash reward if you recommend a new resident.
In many cases, you’ll only receive the bonus if the person you refer moves in, not just takes a tour. However, that option can be an excellent way to get some money back.
You won’t have that option when you own a house.
Sure, you could refer people to houses for sale in your neighborhood, but most homeowners won’t want to pay you for the extra marketing.
9. Save on Amenities
You may have to pay for a washer and dryer if you own a house.
Of course, if they ever break, you’ll need to replace them with your own money.
You might also want to pay for a gym membership or access to a community pool. Some gyms cost hundreds of dollars per month or year, and the same is true of pools, especially if you have a family.
On the other hand, apartments often come with all these amenities for no extra cost. You may be able to do laundry right in your apartment building, so you don’t need to go to the laundromat.
If you like working out, you can use the complex’s gym equipment and not have to buy your stuff.
The pool can also be an excellent option for the summer, and you may be able to have a guest or two.
10. Fewer Heating Bills
During the winter, a house could lose a lot of heat, especially when it lacks good insulation.
When you live in an apartment, you may only have one or two walls on the exterior of the building.
That means there’s much less of a chance of heat escaping your apartment. And unless you live on the top floor, you shouldn’t worry about heat getting out through the roof.
Keeping the heat inside your apartment means you’ll use less heat. Because of that, you can save money on your heating bill during the winter.
Of course, the smaller unit can also help you save money on heating since you don’t need to keep as much space warm.
11. Cheaper to Move In
You’ll have to pay your downpayment and closing costs if you buy a house.
Together, these costs can easily top 25% of the home’s total cost.
Median home prices exceeded $454,000 in the US in the third quarter of 2022. A quarter of that comes to $113,500, but you may pay more or less depending on the house you buy.
On the other hand, moving into an apartment will be much cheaper. For one, buying the apartment will probably cost less, so your closing costs will be lower.
If you rent an apartment, you can expect to pay a security deposit and one or two months of rent.
With the average rent around $2,000, you may only need to pay $4,000 or so to move into an apartment.
12. It is Easier to Move Out
You may find the perfect apartment, but your life situation changes, and you need to move.
If you can, you may want to wait until your lease ends so that you can move out without paying the penalty.
However, you can break your lease if you pay a small fee. The fee will depend on the apartment and how early you end the lease.
Still, that can be a more affordable option, especially if you need to move out of state. You can look for a new apartment in your new city and move in immediately.
On the other hand, if you have a house, it can take weeks or months to sell it.
During that time, you’d need to pay for your mortgage and a second mortgage or rent for your new place.