If you’re thinking about buying a townhouse, there are a lot of advantages to doing so. Townhouses can give you the opportunity to buy a home but in a more affordable way if you’re priced out of the traditional single-family market. They’re an increasingly popular option, and in 2021, the number of new construction townhomes was up 28% from the year before.
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So what is a Townhouse Technically?
The name is usually reserved for homes that share one or two walls with the adjacent property, and they usually include multiple floors. Each townhouse has its own entrance and very often will have a front and backyard area. These homes have a tall but narrow footprint, making them ideal in urban and high-density areas.
The following are some of the core things to know about buying a townhouse if you’re considering it.
1. Townhouse vs. Condo
You might be wondering how a townhouse is different from a condo, and there are some significant distinctions.
Townhouses are usually maintained like separate single-family homes.
Most people actually do consider townhouses to be single-family homes, even though they share walls.
If someone buys a condo, it’s more like living in an apartment, but you own the space within your walls rather than renting it. You don’t own anything outside of your unit with a condo. That means that everything, including the common areas and land surrounding the condo community, is owned by an entity that’s separate, but you can use these areas when you own a condo in the building.
When you buy a townhouse, you own the interior and exterior of your home and the property it’s on. You are then responsible for maintaining your home’s interior and exterior as a result.
2. The Pros of Townhouses
If you buy a townhouse, one of the big upsides is that it tends to be less expensive than if you were to buy a single-family, detached home in the same area, even with similar square footage.
Townhomes tend to have less maintenance, especially when it comes to yardwork, and you might have access to amenities as part of your development, like a pool or gym.
You also get the benefit of outdoor space that’s yours and is private with most townhomes, and you don’t get that with a condo or apartment. You might even find a townhouse with a private garage.
There are some downsides too. First, you’re probably going to have an HOA, and some people don’t love the idea of being told what they can and can’t do with their homes. You are also going to be living close to your neighbors and sharing some walls, and townhomes are usually multiple levels, so you have to consider whether that’s suited to your lifestyle, especially if you’re older or looking for your forever home.
3. Who Are Townhouses Best For?
While anyone can decide on the best type of living environment for them, townhomes are particularly good options if you’re a first-time homebuyer, you’re single, or you’re part of a couple but you don’t have children.
A lot of Millennial homebuyers are opting to go with townhomes because they can find options that are within the city, but they can still stay within their budget.
4. Make Sure You Understand the HOA Fees and Rules
Before you buy a townhouse, it’s incredibly important to make sure you understand all of the implications of being in an HOA community. You have to include the monthly HOA fees in your budget, and you need to review the rules and regulations and all of the financial statements and related documents before you buy a home.
You can decide to make your purchase contingent on reviewing the HOA documents and information so that you don’t experience any surprises.
5. The Market is Competitive
Even though the real estate market has cooled since its pandemic highs, there are still certain types of properties that are in high demand, and there’s a limited inventory of them. Starter homes are still in high demand, and there aren’t many options out there, so townhomes can be the choice for people who aren’t able to find a detached starter home.
It is a competitive environment, especially in desirable neighborhoods and areas.
6. Get Preapproved
It’s generally easier to buy a townhouse than a condo, and lenders look at buying these types of homes in a similar way to a detached house, but preapproval is still important. You need preapproval not only so you know what your budget is but also so that you will be able to accurately figure out your possible monthly payment, including any relevant HOA fees.