Now that you’re ready to buy a house, you might wonder what kind of property will be the best investment for you. And there are a surprising number of options: single-family house, townhouse, condo, multifamily property.
If you’re buying a home just for yourself or your immediate family, houses and townhouses will likely grab your eye most. Both can offer great benefits, but the choice really depends on your lifestyle and how you expect your needs to evolve during the next several years.
Let’s compare the differences between a townhouse versus a house to see which is right for you.
What's in this Article?
Let’s break down the specifics on each of these property types and how the homebuying process may change depending on which you choose.
A townhouse is a single-family residence that is attached or adjacent to other properties. Each townhouse is individually owned, with separate entrances and property lines. But it’s attached to other townhouses by one or more walls – though these walls do not have doors or windows, so residents cannot freely see or enter into one another’s homes.
When you move into a townhome, you’ll find that some homeownership responsibilities – such as lawncare and snow plowing – are often handled as a communal effort. The organization that manages the financial and administrative side of these tasks is called the homeowners association, or HOA.
Not all townhome communities are part of an HOA, but most are, since there are probably common areas and shared elements of the structure.
HOA fees are not exclusive to townhouses. In fact, single-family houses in planned unit developments often have homeowners associations as well.
But HOA fees and agreements can vary quite a bit based on whether you’re buying in a townhouse or planned unit development (PUD) community.
“HOA dues for townhouses are leaps and bounds higher than for most single-family homes in a planned unit development, so you must account for those in your overall budget,” says Catt Fleetwood, a branch manager with Fairway Independent Mortgage Corporation (which owns Home.com) in Wake Forest, N.C.
She also cautions that HOA fees can influence how much a mortgage lender will allow you to borrow.
“It can also affect debt-to-income ratios, so you may need to look at townhouses in a lower price point than you would with single-family residences,” she says.
But that doesn’t mean townhouses are a bad deal.
“One of the pros of a townhouse is that the HOA will be higher, but your lawn maintenance and upkeep will be far less, which may be a far greater value for a single person or couple who don’t have kids or pets that need a yard,” Fleetwood says. “It all depends on what your needs are.”
As a townhouse owner, you’ll be obligated to pay HOA fees that are used toward lawn care, maintenance, and upkeep of communal spaces.
Depending on the community’s amenities, your HOA fees may cover amenities and utilities such as:
- Water/sewer fees
- Garbage and recycling collection
- Snow and leaf removal
- Access to a communal patio or recreational space
- A community clubhouse
- Community swimming pools
- Tennis courts
- Fitness centers
These types of homes are appealing because they can be a lower-cost route to becoming a property owner. Townhomes may be located in desirable neighborhoods where the cost of homeownership is otherwise more expensive. In addition to getting access to a nice neighbor and a lower price point, there’s the added benefit of what the HOA fees can cover: exterior home maintenance and amenities.
Yes. If you buy a townhouse or a house in a community that has a homeowners association, you will be required to pay HOA fees as a condition of buying the property. It’s important to understand what the HOA fees are and whether they may increase (and by how much) before you commit to the purchase.
You’ll also want to be clear on the HOA rules. If you buy a house in an HOA community, there may be strict rules about the types of landscaping you can do, the colors you paint the home, the types of sheds or other structures you want to put on the property, and other types of home modifications. That’s the case whether you buy a townhouse or a house.
If you’re the type of person who likes to add creative touches to the outside of your home, or who likes to have free reign on what you can do with your landscaping and decor, or even park a large RV, an HOA community may not be for you.
A single-family home is a free-standing, or detached, residential structure. The main differences between a single-family house and a townhouse is the structure, since townhouses are connected to one another. Additionally, townhomes are usually part of an HOA.
Generally speaking, most single-family houses are in neighborhoods or locations that do not have a homeowners association. But some communities, such as the planned unit developments mentioned above, do have HOAs.
If you’re not sure whether a home is part of an HOA, ask your real estate agent. They can find out whether the home is subject to HOA fees and rules, as well as whether there are any covenants associated with the neighborhood.
Covenants refer to rules about how a property may be modified or used. If you’re buying a home that is several decades old, it’s possible that covenants were put in place when the neighborhood was first developed but have since expired.
Neither is necessarily better than the other – it comes down to your finances, lifestyle, and priorities. But here are a few points of comparison.
Oftentimes, you’ll see townhouses listed for lower purchase prices than single-family, detached homes. Townhouses may have a smaller square footage, fewer bathrooms and bedrooms, and a smaller yard or allotment of property.
But that’s not always the case. A luxury townhouse in a brand-new community may have a higher purchase price than a fixer-upper or a small home with limited property. Location matters as well. Buying a townhouse in a popular downtown area could well cost more than a single-family house on the outskirts or in a sleepier neighborhood.
As mentioned above, a lot of maintenance and upkeep in a townhouse community or planned unit development are handled by the HOA. Those costs come out of your HOA fees, and although the monthly HOA fees may be higher on a townhouse, your overall expenses may be less than with a single-family home.
“Both properties require regular maintenance and in most cases a single family will be a larger home and larger yard,” says Jeff Satre, a production manager with Fairway in Ashburn, Va.
The amount of property you have will, of course, play a role. Townhouses often include a small yard or patio area, but it’s likely to be much less than what you’d have with a stand-alone, detached house. If you buy a house with large front or back yards, a few acres, or a lot of trees, you’ll be responsible for maintaining that land.
That will include purchasing tools and equipment for mowing, weeding, and otherwise caring for the property, as well as paying professional tree removal companies to take down dead branches and even entire trees if they become a danger.
Putting in a pool or tennis court on your own property will certainly cost you more than buying in a townhouse development that offers these amenities. But that may be worth it if you don’t want to be constrained by the rules of an HOA.
True, you’ll pay more to customize the property. But you’ll likely have more freedom to put additions on the house, build patios and decks, overhaul the landscaping, and make other changes that may not be allowed in an HOA community.
Without HOA restrictions, there’s more potential to add value to your property since you can make more expansive changes and upgrades.
Homeowners associations may also have rules restricting activities such as pet ownership, leasing your unit out, having visitors, and more.
If the bylaws of the HOA permit, they may be able to increase your HOA fees and even change or introduce new rules that you may not like.
That’s why you really want to read the fine print on an HOA agreement before you commit to purchasing a townhouse or house in that community.
Both townhouses and houses have their advantages, depending on your needs. If you work or travel a lot and don’t want to spend a lot of time on maintenance and landscaping, a townhouse may be a great fit. Living in an established community may also make it easier to meet new people, a definite bonus if you recently moved to the area.
A townhouse may also be attractive if you’re downsizing in retirement and don’t want to worry about things like snow removal, salting your walkways, or mowing the lawn.
On the other hand, owning a standalone house offers many benefits as well. Not sharing a wall with neighbors provides you more privacy, and you may be able to buy a home with more yard space for children and pets to roam, or for developing a garden.
“Some townhome owners have identified the lack of control and privacy associated with their proximity to others as drawbacks,” says Solomon Greene, a broker at Drake Realty in Atlanta, Ga.
Having more privacy and space also provides flexibility if you have hobbies such as fixing up cars, woodworking, or other activities that you wouldn’t have the room or allowance for with a townhouse.
The appreciation rate and resale value of single-family houses tends to be better overall than townhouses. But that’s not universally true.
In a dense urban area such as a major metro, townhouses can appreciate similarly to single-family residences, says Michelle Mumoli, a real estate broker associate in Jersey City, N.J.
“Historically, throughout major metro areas such as Jersey City, Hoboken, Weehawken (along the Hudson River), condos and homes have done very well, because we usually cater here to New York homebuyers or folks already renting in close proximity,” she says. “They have done pretty well on appreciation, looking at typical appreciation rates of 2-3% per year nationally, but with obvious exceptions in these macro markets due to supply and demand.”
In an area where people favor single-family houses, townhouses might be less of a draw and therefore not be able to hit similar prices as standalone residences.
Townhouse vs house: Pros and cons
|Potentially lower purchase price||HOA can raise fees and enact stricter rules without community consensus or input|
|Homeowners association manages exterior and common area maintenance, landscaping, snow removal, etc.||Property improvements are limited to what the HOA allows|
|Depending on community, access to amenities such as a pool, clubhouse, and fitness area||Less privacy due to shared wall|
|More privacy||Potentially higher purchase price than with a townhouse|
|More flexibility to do improvements||You are responsible for making and paying for all repairs|
|Potentially higher resale value than a townhouse||Adding and maintaining amenities like a pool or fitness areas could be costly|
You can use the same types of mortgage loans for a townhouse as you would with a single-family house, including:
However, getting HOA documentation for a townhouse can make for a longer underwriting period than you’d have with a single-family residence that is not in an HOA community.
“In some cases, HOA complications can create lags in the loan process for townhouses,” says Cristina Ortega, a real estate investor in the Los Angeles area. But, she adds, “it is still attainable.”
Work with your lender to find out the best loan program for you based on your finances and the property requirements. They can also tell you exactly what documentation they need regarding the home, including any HOA fees or information.
As with all homebuying decisions, the right answer lies with your preferences and financial circumstances. If you like the lower-cost, lower-maintenance type of homeownership a townhouse provides, it could be a good way to enter the real estate market, especially as a first-time homebuyer.
On the other hand, if you value privacy, extra space, and more autonomy over the property, a single-family house may suit you better.
Whichever way you’re leaning, be sure to work with a real estate agent who understands what you’re looking for and a lender who is accustomed to closing loans on the type of home you want to buy.
Townhouse vs house FAQs
A townhouse can be a worthwhile investment depending on your personal preferences and financial goals. A townhouse is an excellent choice for those who prefer to outsource maintenance and landscaping, and who don’t mind sharing a wall (or walls) with their neighbors. Depending on your local market, a townhouse may be more affordable than a standalone house, and it may hold its value as well.
Generally, single-family homes have higher resale value and appreciation than townhouses. However, townhomes in major metropolitan areas can appreciate at similar rates as single-family homes.
The most significant disadvantage to living in a townhome can be the homeowners association (HOA). The HOA can be a perk of buying a townhouse, as it manages landscape and general maintenance for communal spaces. However, you will pay HOA fees (and depending on the HOA agreement, those fees may increase over time), and you will have to adhere to the HOA’s rules. These can include restrictions on pets, home modifications, visitors, and other lifestyle concerns.
Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.