Should You Buy a Townhome?

Published

January 10, 2015

AJ Smith is an award-winning journalist with more than a decade of experience in television, radio, newspapers, magazines and online content. She currently serves as the managing editor for SmartAsset. AJ has a passion for meeting new people, sharing stories and helping others. She has degrees from Princeton University and Mississippi State University. AJ and her husband also write and illustrate educational children’s books.

Single-family home? Apartment rental? Co-op? Condo? When you are considering which type of home is best for you, it is easy to get overwhelmed. New homeowners may find that townhomes offer a middle ground between expensive single-family homes and less-private condominium units. Before you make the decision to buy a townhouse, check out the advantages and disadvantages of owning one.

What Is It?

A townhouse is part of a planned development. You generally only have one common wall with your neighbor and own property from the ground to the ceiling. Townhomes usually include individually owned front and back lawn, but also common areas like pools, parks or gym. Most townhomes are part of a homeowners association, so you will likely incur extra fees but receive some benefits in return.

Pros

The homeowners association will take care of some maintenance. This makes it good for those who want more free time or don’t enjoy maintenance tasks. The developments also usually include certain amenities, like a pool, park, playground, clubhouse, community library, gym or recreation area. Since everyone in the association shares these features, costs are distributed.

There is usually simpler mortgage qualification criteria than other home types, and townhomes usually do not cost as much as single-family structures because of the shared foundation and walls. (This calculator can help you determine how much house you can afford.) You hold legal title to the property and land where you reside. In addition, property taxes and mortgage interest payments on a townhome are tax-deductible.

Cons

A homeowners association usually governs townhomes, so you have less independence in making certain decisions about your property and even specific unit. This can limit your ability to paint your home a certain color, add sheds or even park certain vehicles in your driveway. The homeowners association will also require fees for upkeep of the common areas and property.

You are also responsible for the property’s real estate taxes in full. Furthermore, most townhomes offer less privacy and more limited yard space than single-family homes. Your living space is also more vertical than horizontal in most developments, so you will have to walk up stairs to get between different living spaces. Resale of townhouses is also usually more difficult than for a single-family home.

Despite the complications and potentially high costs, townhomes often offer the most attractive option in urban or near-urban areas. If you are considering buying a townhome, weigh the benefits and limitations carefully, and talk to your real estate agent and mortgage professional to ensure you know all the details and obligations involved in ownership of the property.