What Is A Townhouse? Pros And Cons Of Purchasing A Townhouse In 2021

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What is a townhouse? This is a common question asked when people are looking to purchase a home. Buying a home is an exciting event in every person’s life. Yet, the process is not always smooth-sailing, as you have to decide on your ideal home type and location. 

During your search, you may have stumbled upon townhouses. But what are townhomes, and how are they different from other housing options like a condominium or a detached home. 

Let’s take a closer look. 

What Is A Townhouse? 

You may have figured that a townhouse refers to a house in town or an urban area. The name dates back to the times of English Lords. The Lords used to have a house in town (hence the name townhouse) to stay in whenever they left their Castle or Manor House and traveled into town. 

Today, townhouses or townhomes are individually owned multi-floor houses that share a wall with neighbors on one or both sides. This house type has become quite popular, as there’s an increasing demand for low-maintenance homes that are close to amenities. 

Difference Between A Townhouse Or A Condo?

Townhouses are different from condos in subtle ways, such as ownership. When you buy a condo, you own the individual unit and share joint ownership over the exterior parts with other townhouse owners.

These exterior areas include the grounds, gym, pool, and other amenities. Conversely, when you buy a townhouse, you own the house and the structure it sits on. 

townhouse vs condo, living in a townhouse

Condos and townhouses are more distinguished in terms of ownership rather than architecture. If you are specifically looking for a townhouse, you should enquire about the ownership rights. 

One similarity between condos and townhouses is that residents must pay homeowners association (HOA) fees in both situations. When you buy a condo, you are required to pay monthly fees into a HOA. This HOA is managed by a select number of tenants. They will ensure that the daily maintenance of the shared space is managed appropriately.

In a townhouse community, the HOA takes common areas that include the general grounds, roofs, and the exterior of structures. In addition to maintaining the shared space, the HOA establishes rules for all tenants.

These may include rules about noise, renting your home, and what to do with your land. 

People have mixed emotions about HOA’s. Therefore, before you buy a house, enquire about the rules and regulations you’ll be expected to follow under the HOA. If you are looking at both condos and townhouses, then you should be aware the rules vary. 

What is a townhouse, buy a townhouse, townhouse or condo

Pros And Cons of Buying A Townhouse 

There are several advantages that you enjoy when you choose a townhouse over single-family homes. The benefits include:

Pros Of Owning a Townhouse

Affordability

Townhouses are popular because they are less expensive than a house. You don’t have to pay a large amount for a huge lot, as well as the house itself. Townhouses are smaller than a single family home but are much more affordable. 

Maintenance

Since townhouses are smaller in size compared to detached homes, you don’t have to incur additional costs in terms of maintenance. Landscaping the front is easy and fast. Whatsmore, the landscaping may be covered by HOA fees (depending on the HOA). 

Amenities

Townhouses come with a variety of great amenities such as; a fitness center, swimming pool, playground, pet amenities, transportation, and parking amenities, plus so much more. 

Availability of outdoor space

Townhouses offer residents a small amount of outdoor space or patio. 

More energy efficient

A townhouse has less space to heat and cool. As such, you’ll enjoy cheaper utility bills when compared to a huge house. 

You get the best of both worlds

A townhouse is like a hybrid between a detached home and a condo. You get the privilege of a small space and greater control over your property. You also get lower maintenance costs, and you get to be part of a townhouse community. 

Location

Townhouses are often located in suburban and urban areas, making them convenient in terms of location. The houses are near great amenities like shopping, dining, and entertainment. 

Cons Of Owning A Townhouse 

Less privacy

Not everyone loves being so close to their neighbors, especially if they are noisy. In a townhouse, you may be sharing a wall with less courteous people. Your tiny backyard may also not be as private as you would want it to be. 

Homeowners associations (HOA’s)

Some homeowners wouldn’t want to live within the restrictions set up by the HOA. The rules may impede you from making certain changes inside and outside your home. 

Financing Issues

Most homeowners assume that financing works the same whether you’re buying a townhouse or a detached home. But that’s not the case, and you may be surprised to see your lender treat the townhouse like a condo. There are instances where lenders underwrite townhomes, as if they were condos leading to higher costs.

Some lenders may have subtle variations. If you are buying a townhome in an area with lots of other townhomes, it would be best to get a lender who has experience within that location. You may even consult other owners to find out who they used for financing. 

Resale Value

In certain markets, the resale value of townhouses lag compared to the values of single-home markets. This is especially true in communities that have a high supply of condos and townhouses. Some developers imitate successful developments around the same areas, which in effect creates the same homes but newer.

Townhouses can hold their value for a longer period of time. But they face more valuation volatility, unlike single-family homes, which in turn makes them lose their value faster and take longer to recover. 

Multiple floors

Some people may cite multiple floors as an issue. Having your living space spread across multiple floors may be challenging for people with mobility issues. If you identify with this issue, you can consider opting for a ranch-style condo instead. 

What is a townhouse

Who Should Consider Purchasing A Townhouse? 

Townhouses are ideal for:

First time home buyers

You can check the home buyers guide to look for affordable townhouses. 

Homeowners looking to downsize

Maybe you’ve retired, and your children have left your home. You may find yourself in a huge house that you don’t need anymore. In that case, you could opt for a townhouse, as they are smaller and easier to maintain. 

People looking for a second home

Townhouses are popular with folks looking for a second home in vacation destinations. The property can be your slice of heaven during your vacation time and you can rent it out when you’re not there. 

Investors

A townhome can be a great investment property, especially if it’s located in a desirable area, for instance, near a college or major urban center where it can be rented out for profits. 

Factors To Consider When Buying A Townhouse

You need to consider certain factors before buying a townhouse. One of these factors is the downpayment that you have to pay. If you are not able to make the down payment, then you could consider renting. 

  1. You need to consider your budget to determine whether you can afford a townhouse before you start shopping for one. You should include the HOA fees for the house in your budget. 
  2. Next, you should come up with a must have list for the community. By now, you know what you need from a house. For example, the number of bedrooms, type of layout, and other factors that are important to you. You should also consider what you want included in the community, for instance, pet areas, a community pool, a less restrictive HOA, a gym etc. 
  3. You should test the wall. Sharing at least one wall means that it’s possible to hear what’s happening in your neighbor’s house and vice versa. When you’re inspecting the house, listen carefully to how much sound travels from the next door. 
  4. Talk to your future neighbors. It’s a good idea for you to talk to your future neighbors before buying the home. This is particularly important for a townhouse because you’ll be close to your neighbors. Ask them about the community and whether there are any issues with the HOA. 
  5. Think long-term. A townhouse may be appealing for you now but may not work for you in the future. For instance, if you are planning to expand your family, you may need a bigger home than a townhouse. Therefore, you should consider how long you want to stay in the house for and if a townhouse will meet your long-term needs. 
  6. Read the HOA rules. Some HOA’s may be restrictive. For instance, some may go as far as to limit the color you can paint on your door, to whether you should park in the driveway or garage. Some of these restrictions may discourage you from buying the townhouse. However, the good news is that there are lots of different HOA options, and you can find one that suits you best. 
  7. Check the common areas. If you plan to use the community pool, gym, or kids playing area, then you should check them out before buying the home. 
  8. If you are buying the townhouse as an investment property, you should evaluate the rental returns and the necessary prep work you may have to undertake. 
condo vs real estate, homeowners association, condo owners

Additional Housing Options 

When searching for a home to purchase, it is beneficial to consider other home options and whether or not they are right for you. The table below gives you a brief overview of home options. 

House Type Suitable For:
Apartment Ideal for a person looking for a cheap house near a prime location such as shopping, restaurants, or entertainment hub. Apartments are cheaper than a condo or single-family home. 
CondominiumSimilar to townhouses, condos appeal to those looking for a low-maintenance property that offers a sense of community and security. 
Townhouse Are a great option for first-time home buyers and those on a budget. This option offers you more space than a condo and tends to have lower HOA fees. 
Modular Home This house option is ideal for empty nesters who are looking to downsize, or couples and families looking for tiny homes. 
Single-Family Home Ideal for families that require a huge yard and plenty of room. 
Multi-Family Home Multi-family homes are great for those interested in investment and don’t mind taking on the responsibility of becoming a landlord. 
Bungalow This structure varies between 1,000 to 2,000 sq. feet. Bungalows are ideal for families that are looking for starter homes or retirees. It’s common for single-homeowners who want a single-family home lifestyle without the responsibility of managing a huge property. 
Ranch Home Ideal for homeowners who prefer single story living-be it singles, couples, families or retirees. 
Patio home This is a small free standing structure that’s typically capped at one-and-one and a half stories. The structure is a unit or part of several houses. It’s ideal for home owners who want low-maintenance structures and don’t want to deal with stairs. 

The Bottom Line

Figuring out whether a townhouse is right for you depends on your needs and wants. You will need to take into account what you want out of homeownership and what type of lifestyle you plan on having.

Many people love living in a townhouse because it makes purchasing a home an affordable option for them. The various amenities that they offer and lower level of maintenance is also really appealing. 

Whether you feel like you are ready to purchase a townhouse, it is important to streamline your finances before investing in something as significant as a new home. Work on paying down your debt, build up your emergency fund, and have enough savings to make a decent down payment on the house.

The information provided in this article will help you decide whether a townhouse is right for you.

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