Is a Townhome a Smart Buy?

For many first-time buyers, purchasing a single-family home can feel out of reach right now. A townhome may not be where you imagined starting, but it can be a practical way to get your foot in the door and begin building equity through homeownership.

Townhomes can also appeal to buyers who want less exterior maintenance or a home that better fits their budget and lifestyle.

A Place to Start Building Equity

When you own a home, you have two potential ways to build equity: your property may increase in value over time, and you can pay down your mortgage balance.

For example, if a $300,000 townhome appreciated by 3% in one year, its value would increase by $9,000. Appreciation is never guaranteed, and home values can also go down. Still, the example shows how owning a home can give you an opportunity to build equity over time.

In a way, homeownership can be like a forced savings plan. Rather than trying to set aside thousands of dollars each year while also keeping up with rising home prices, you can work toward building equity while living in a home you can make your own.

A townhome may not be your forever home, but the equity you build could help you take the next step when the time comes.

What to Consider Before Buying

As with any home purchase, it’s important to look at the full picture. A townhome payment may be higher than rent, especially after adding association dues, insurance and other expenses.

Before making a decision, consider:

- Your monthly payment: Make sure the mortgage, taxes, insurance and association dues fit comfortably in your budget.
- Your savings: Keep money set aside for unexpected expenses and any costs you’re responsible for as an owner.
- The association: Review what the dues cover, the association’s finances and any upcoming assessments or major repairs.
- Your timeline: Buying and selling come with costs, so think about how long you plan to stay.

An Opportunity for Buyers

Right now, the townhome market is softer. In fact, there are 23% more townhomes currently on the market vs. the same time last year. This gives buyers more time, options and potential negotiating opportunities. If you’ve been waiting to purchase a single-family home, it may be worth looking at whether a townhome could meet your needs in the meantime.

At the Sandy Erickson Real Estate Team, we can help you explore your options, understand the costs and decide what makes sense for your goals. Contact us to start the conversation!