Published by REALTOR.com | October 27, 2024
With the salary needed to afford a home more than doubling since the COVID-19 pandemic, the dream of owning a home has become harder for the average American.
A townhouse—defined as a home where at least two floors share a wall with another home—might lack the space and privacy of a single-family residence, but it has a lot more going for those who need a more affordable entry point to homeownership.
“At current interest rates and assuming a 10% down payment, that’s a savings of roughly $185 per month,” says Realtor.com® economist Joel Berner.
And those savings are even more significant depending on where you shop.
“There are 36 ZIP codes here where townhomes are plentiful and offer a 30%-plus discount against single-family homes,” says Berner. “They tend to be in city centers of Atlantic markets where single-family homes are expensive. In these townhome hot spots, townhomes or row homes offer the best of both worlds: proximity to desirable parts of the city and the chance to own a piece of property at a more affordable price.”
In fact, seven ZIP codes exist where townhouses are selling for over a 50% discount versus single-family homes. The biggest discount is in Raleigh, NC, where a townhome costs a median of $463,335. Meanwhile, a stand-alone single-family house will run you about $2,499,250—making townhomes here 81.46% cheaper.
While many urban areas such as Baltimore, Philadelphia, Boston, and New York City have always been townhome fans, suburbia has caught on at this point.
Land is no longer plentiful and cheap, not even way out in rural areas. Developers have to make their investment count, and builders can fit a lot more townhomes on a single plot of land than single-family homes. Multifamily buildings are more eco-friendly, with much less required clearing of forest or farmland.
Year-to-date starts of 2- to 4-bedroom-unit projects (typically townhomes) are up 31.5% across the country year over year, while single-family starts are up only 10.1%.
An op-ed in the Wall Street Journal posits that people should forget about the “antiquated” idea of a large single-family home in the suburbs and instead consider the townhouse.
But will townhouses truly take over in people’s minds and hearts?
Lawrence R. Samuel, author of “Home Ownership in America,” notes that in the 1960s, condos were lauded as a way for everyone to enjoy homeownership, while in the late 1970s, it was the mobile home. More recently, one can look at the popularity of the tiny house.
None has ended the rule of the single-family house.
“I don’t foresee any other form of housing, including townhomes, usurping the supremacy of the single-family house,” he says. “It ideally aligns with the core American values of independence and private property.”
