Town Houses On The Rise Again

Posted in Blog Posts on November 6th, 2012 by capitalhm

Capital Home Management’s founder Maike Scherer was recently interviewed by Erik Martin from CTW. Here are the questions and answers.

EM:  Why is townhouse construction on the rise? To what can you attribute these numbers indicating the rising popularity of townhouses?

MS: Despite the drop in market share during the Great Recession, we anticipate the share for townhouse construction to increase in the coming years. The prospects for the townhouses are positive given larger numbers of home buyers looking for medium density environments and urban villages that offer walkable environments.

Townhouses are an ideal option for a number of buyer profiles who like to own a property in a more densely populated area. They provide the feel of living in a house, yet at a lower price point. In our experience, there are three types of buyers who gravitate towards this type of home:

a)      First time home owners
b)      Young professionals
c)      Empty-nesters

First time homeowners like the idea of owning a house at an affordable price point. Young professionals and empty-nesters enjoy the ability to live in a more densely populated area. A townhouse offers more privacy compared to an apartment. Yet it is relatively simple to maintain.

EM: Why should home buyers consider purchasing a townhouse? What advantages do they offer over condos and single-family homes?

MS: A major reason for buyers to consider townhouses is that they are a great long-term buy. In our experience townhouses are very easy to rent out. So, if a buyer’s life plans change renting out is a great alternative to selling. Today, homeowners can find mortgages that are at historic lows. We are experiencing a rare combination of reasonable real estate valuations and excellent long term financing options.

EM: What are the disadvantages of buying a townhouse? Is it also harder to get financing approval for one?

We didn’t find it harder to get financing approved. If there is a downside to townhouses we would cite the following reasons: Homeowners associations have a stronger influence on the outward appearance of the home. We find a more hands-on involvement of homeowners associations when it comes to landscaping requirements, color choices of the exterior, and higher upkeep requirements compared to single-family home neighborhoods.

EM:  How have townhouse styles/designs changed in recent years? Typically, what are the floor plans like?

MS: Modern townhouses have a more open floor plan, larger windows and high-end amenities in the kitchen and bathrooms. Townhouses have grown in size maximizing the foot print. Rooms got bigger with higher ceilings. Basements are now part of the living space. It’s not uncommon to find walk-out basements.

EM: What does a shopper need to consider carefully before buying a townhouse, including thoughts about homeowners associations, regulations, etc.?

MS: There are a number of issues that we find are crucial. Certainly, like in any other real estate investment, the location of the property is key. A big plus is that townhouses in a larger association are often very comparable. So, it’s a little easier to establish a fair market value.

Homeowners associations tend to be a bit more involved in townhouse-based neighborhoods. It’s important to understand the rules and regulations including the association fees.

It is also important to understand the quality of the school district. Even if the original purchaser doesn’t have kids, it could become a major factor if the property is later rented out or sold.

As townhouses became bigger the storm water run-off issues increased. So, we recommend to check ahead of time if the home is prone to flooding or to other serious water issues. Ideally, those problems should be remedied before the home is purchased.

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