We recently wrote about the handful of factors that affect a home’s resale value. Today, we discuss how the type of home affects its resale value, specifically how does the resale value of a single-family home compare to a condo or townhome. Buying a home that fits your current needs and wants should always be your top priority, but it is worth keeping in mind that not all home types are created equal.
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Factors that affect a home’s resale value
Let’s do a quick recap of our previous article. With an eye to the future, there are a few critical factors that play into the cost equation that should be considered when comparing and choosing homes, including:
- Size. The middle ground is often the best fit. If a home is too big, it’ll be hard to recoup your investment. And if a home is too small, it will be hard to sell (buyers want more space).
- Location. Known as the number one factor affecting a home’s value, the location should be top of mind for you. Too close to the central city means it may turn family buyers off. But too far and the working parents won’t want to commute. It’s a balance.
- Style. Classic vs. modern. Traditional vs. new-age. What is the style of the home? Fads come and go, so make sure you are buying a home with considerable mass appeal. Ask yourself, where are the trends heading?
Home type and resale value
Let’s jump in. Today we will be reviewing three home types: single-family homes, condos, and townhomes. Determining which home type is right for you is a matter of preference and constraints.
A single-family home (SFH) is wholly detached and, therefore, entirely independent. The owner is in charge of all the repairs, maintenance, and necessary upgrades in the house. These homes usually come with a garden or a small lawn, and caring for them is another task that the owners have to think about. With all these things in mind, it’s evident that single-family houses are a lot of work and require quite a bit of dedication.
For this reason, busy people or individuals might steer clear of them. On the other hand, because of their general flexibility, larger living space, complete independence, and privacy, families with children will favor them.
Keep this in mind. The resale value of a single family home will depend on the demographics of the area. If the local real estate market consists mostly of families, a SFH is the way to go. But if you are in a less family oriented neighborhood, say a recent college graduate neighborhood, you may want to give this more thought.
Another significant advantage that buyers appreciate is expansion. Owners can knock down a few walls and add extra rooms or finish basements. This is something not afforded in either condos or townhouses. This gives them an edge over other types of houses and increases the potential market since clients can customize their home to their liking.
A condominium is an independent living unit that is a part of a more massive complex, similar to an apartment. The resale value of a condo is a bit more complex than SFHs because it heavily relies on the area in which they are located. In urban areas, like San Diego and San Francisco, they are considered a wise investment, and their price increases with each year since they are in high demand. However, in most rural areas or small towns, condos might not be worth as much or give a considerable profit when resold.
Condos are usually preferred by people looking for something low maintenance, provide privacy, and are economical. People without any children or individuals who are just starting out in their careers usually fall into this category and would opt for a condo for some time before moving into a detached house.
An added advantage of buying a condo lies in community association management, on whom lies the responsibility of maintaining the complex to ensure everything is perfect. If the association has honest, reliable, and efficient people, it could vastly help the resale of a condo purchased in that complex. This is because buyers will assess the general condition, and if they deem it to be fair, they’ll be more inclined to purchase in that building.
For condos, sellers and buyers need to thoroughly research their market and their selling trends in the area before making a conclusive decision.
A home that shares at least one wall from the ground to the roof with another house is called a townhouse. They’re usually narrow with a multi-floor plan and, in some cases, include a little green area, i.e., a small garden or place for plants. They’re not as high maintenance as single-family homes, although they provide almost all the other advantages of one.
In recent years, the demand, as well as the supply of townhouses, has seen a sharp increase. This is because they’re space-efficient, affordable, and suitable for families as well as individuals seeking to upsize. As a result, the resale value of townhomes has increased as of late.
Most townhouses are equipped with modern features and systems since they are targeted towards a more updated and aware demographic. Buyers are also likely to get better amenities in townhouses like shared swimming pools, tennis courts, courtyards, etc. while providing the same security and privacy as a detached home.
Location is one of the crucial considerations of buyers when house hunting. Since most townhouses tend to be located in urban areas or places of high traffic, they have a higher chance of being close to service centers and most offices, making them highly desirable.
Since buying a home is both a financial and an emotional experience, it is essential not to put too much emphasis on one aspect or the other. To focus solely on the financial side runs the risk of missing the most enjoyable parts of homeownership－the emotional ones.