Townhouses vs SFH question
Hello everyone,
I've been trying to figure out an answer to this question for while now with no luck. I'm really hoping there is someone here that can help. I'm tentatively looking to buy (depending on where the market goes in the next few months) and I've been leaning towards getting a townhouse. Overall it would be a good fit for me, but I'm really concerned with the resale value down the road. I know that, long term, SFH will appreciate in value and finding a buyer a few years down the road should not be a problem. How do townhouses compare? I've read nationally that they appreciate at a slower rate then SFH, but not significantly. What about the Seattle market? Just by looking around I see that there are a bunch of newly build ones everywhere, but hardly any older ones (even 5-7 years old) for sale. Why is that? What I'm really trying to avoid is getting stuck with something that will be impossible to sell a few years later. If anyone has any info on this, I'd really appreciate it.
I've been trying to figure out an answer to this question for while now with no luck. I'm really hoping there is someone here that can help. I'm tentatively looking to buy (depending on where the market goes in the next few months) and I've been leaning towards getting a townhouse. Overall it would be a good fit for me, but I'm really concerned with the resale value down the road. I know that, long term, SFH will appreciate in value and finding a buyer a few years down the road should not be a problem. How do townhouses compare? I've read nationally that they appreciate at a slower rate then SFH, but not significantly. What about the Seattle market? Just by looking around I see that there are a bunch of newly build ones everywhere, but hardly any older ones (even 5-7 years old) for sale. Why is that? What I'm really trying to avoid is getting stuck with something that will be impossible to sell a few years later. If anyone has any info on this, I'd really appreciate it.
Comments
That said, the one thing you do have with townhomes in Seattle today is leverage--there are a ton on the market right now, a ton more still being built, they are all exactly alike, and they are being sold by builders who don't have an emotional attachment to them. Just keep making lowball offers and I expect you'll find several takers.
My guess, given the glut, ubiquity and low-quality of the newer townhomes, they will take the biggest bath of all. 50%-off in 5 years, (infl. adj).
I popped into a open-house down the street last week. The realtor was bored, and just started chatting about how he thought that townhouses were the biggest scam going. Extremely poorly built and they don't wear well at all. He was finding it impossible to move them without completely remodeling them even after only 5 years.
I recommended to my mom that she sell her house outside Portland and move into the city and rent, as she claimed she wanted to get closer in. She said "great idea!"
So what does she do, after discussing it with a "Real Estate Professional?"
Buy an over-priced new townhome, and rent out her old house.
To her irresponsible ex-boyfriend.
Ughh.
What amazes me is the small price difference between a townhome and a larger SFR. In Issaquah low-quality 1400 sq. ft. townhomes were listed for $400K at the same time a nicely maintained 1900 sq. ft. split-level on a nice lot & closer to "downtown" Issaquah was asking $440K. I guess granite countertops are worth $200K.
You just described virtually every subdivision built in the last few years as well. Take a drive through Orting sometime. It's the same house after house after house.
Thanks for responses! I think my concern is exactly that, with so many new townhouses being build, would I be able to sell 5 years down the road. Does anyone know if there is any site or resource that has resale statistics for townhouses in this area? I'd like to see some historical data before deciding on anything.
I know I'm going to be in this area for at least 5 years (there is a descent chance I could end up staying here longer), so if I can at least break about even, I would rather buy then rent.
About the price range, I know there are some townhouses that do cost as much as SFH in the same area, but that's what I'm looking at. I saw a 3 bdrm townhouse in the Ballard area with something like 1000 sq feet for about 310K, there are defiantly no SFH anywhere there that would even come close to that. Of course, on the other hand with only 1000 sq feet the price per square foot seems steep. If I was going to get a SFH for that price, the only descent places I've seen is in the Maple Valley area, which is quite far away.
Before we moved in to one, we looked at dozens and it became immediately clear that there was quite a bit of variation in the quality of the neighborhoods especially with age. Undercapitalized HOA's seemed to be a major problem as the buildings grow old.
Units with adequate greenspace and away from major roads generally held up the best. Even within the same neighborhood, the "back rows" furthest from the arterial can be considerably nicer than the ones near the entrance. In my neighborhood, the townhomes are all part of planned developments. There is no "infill" the way there is in Seattle. Hence it's extremely rare to find a new residential 6-plex shoehorned in next to a gas station and an autobody shop.
Unfortunately in Seattle, most of the townhomes built during the latest boom have quite a few of the negatives I'd see associated with the dilapidated developments in my area.
- on or near major arterials. Seattle has zoned most of the land along the main roads for multi-family hence that's where you find most of the townhomes. It's no coincidence that the infill development tends to be in areas where the original structures on the lot fell into disrepair. People tend not to keep up buildings in undesirable locations. Once the shiny new granite loses its lustre it's reasonable to expect that these buildings will deteriorate much like the old one did.
- no HOA's. A significant # of the new townhomes don't just have an undercapitalized HOA, they have 0-lot line parcels with no HOA at all. All fine and dandy when new, but once major repairs are needed there won't be and funds to fall back on.
- bad construction. Once the building hit the 10 year mark and start to need more maintenence it's easier for owners to just let it go and rent it out rather than trying to correct what wasn't done right to begin with.
Another difference is what separates the units. Ours has a brick wall from basement to attic. Most of the ones I've seen in Seattle have no barrier at all. Hearing your neighbors every move can get old real quick.
Townhomes can be a really convenient SFH alternative if done right. Finding one in Seattle that is done right AND not still ridiculously overpriced is no easy task.
steves, since we are looking in the same neighborhood, I'll offer the same advice I'm following, which is sit tight, find a nice rental. I'd wager you could rent an equivalent townhouse for less than it would cost for a mortgage. I'd suggest you setup a search on Redfin and have it send you the daily updates for the area you are most interested in. I've been doing this for the past week and a half and the price drops have outnumbered everything else. Builders are highly motivated to sell, which also puts pressure on other home sellers. (There have also been just as many places go from contingent to active as vice-versa -- people are making offers, but can't sell their current homes.)
If you are really heart set on buying soon, you should ask yourself if you would be willing to loose money if you have to sell in 5 years. Remember that there is still a lot of new construction happening and probably will be for the next 2 years at least. It's conjecture of course, but I just don't see prices appreciating over the next couple years vs where they are today. I'd put a higher probability on them being lower 3-5 years from now.
The only time that I'll buy a house is when I'm pretty sure I'll be staying there, and it's at least close to fair value vs renting a similar place. The market has gotten out of whack on that second criteria, but it is gradually starting to correct.