My first home purchase was in 1993; interest rates were 7% and I was a first-time home buyer with limited funds. After consulting with a local lender and talking with a local REALTOR®, I settled on a maximum purchase price of $70,000. The two options at that price point, in the area I targeted, was either a semi-attached home (townhome, half of a duplex) or a detached home.
The detached homes I looked at for $70,000 or less were typically in need of significant repair, for which I had no money or time to spare. The townhomes were, on average, $15,000 to $20,000 less expensive than the detached homes, but they were smaller and had no yard. I settled for a one-story townhome which was move-in ready and provided the convenience and low maintenance I was looking for.
From my research, I knew that townhomes were marketable, but they still typically sold for a discount vs. the least expensive detached home. Last year, we had just over 4,000 homes sales in our local multiple listing service, with attached unit sales (condos and townhomes) representing 21% of the total sales volume.
I decided I would check on the value of the same townhome vs. the same home 23 years later. When I researched sales as similar as possible to what I was looking at in 1993, the spread is still about $20,000 between the two options. The affordable townhomes in our market should continue to gain in popularity in 2017, as all indications point to steadily rising home value and interest rates.