Single-Family House vs. Townhouse - How to Decide

Many homebuyers may find themselves at a crossroads when buying a house. There are many styles to choose from, each with its own pros and cons for buyers. To start your home search off right, you’ll need to decide if you prefer a single-family house or a townhouse. 

There is unparalleled privacy with a single-family home but more property stewardship. A townhouse may offer easy care and upkeep but can also have certain restrictions. Narrowing down a choice can be tough, as each style of home comes with its particulars, and the final decision comes down to your lifestyle and future goals.

Below we share a detailed guide on the key distinctions between townhouses and single-family homes.

What is a single-family house? 

A single-family house is a standalone property that the homeowner has complete responsibility over; you own the dwelling and the land underneath it. 

You’re also free to customize the home however you want, whether it’s different paints, materials, or specific designs. So long as you have the space, you can put a garden in the backyard or a swimming pool. 

If you purchase an older home, you can tear it down and build a whole new building on the plot, so long as it meets local codes. Beyond town ordinances, you can design and care for your home as you see fit.

What is a townhouse? 

A townhouse can be a standalone vertical home with multiple units within it, or it can be a property within a HOA-managed community. Homes in these communities typically have a similar character and are maintained by the HOA, which cares for the upkeep of the homes and shared spaces.

The dwellings within can be free-standing single-family home townhouses or have a shared interior and exterior wall connecting a row of properties. Usually, townhouses have less square footage than single-family homes, giving them a more affordable purchase price. In addition, there are HOA rules, known as CC&Rs, or Covenants, Conditions, and Restrictions, that residents must follow.

Depending on the type of development, townhomes can sometimes be clustered within a gated community overseen by a security guard to ensure that only residents and their guests can enter the private neighborhood.

Key differences of single-family houses vs townhouses

• Privacy
• Sizing 
• Property value
• Maintenance responsibilities 

Privacy 

A single-family house often includes plenty of space and privacy. 

Besides a front and back yard, most single-family homes have some space on the sides of the house separating it from the neighbor's property. Depending on the plot size, you may be able to equip the backyard with a pool, outdoor kitchen, and fencing.

Conversely, a townhouse may give buyers enough room to have friends out back but may not allow owners to have a private pool in the adjoining backyard areas.

While you may sometimes lack private outdoor space, townhome communities offer common areas like small parks, courtyards, and other amenities, all meticulously managed by a homeowners' association.

Sizing

Single-family houses are generally larger than townhouses due in part to the plots of land they reside on.

On average, a single-family home offers homeowners about 2,500 square feet of space. Even if you buy a small house on a larger land parcel, you can add to the home to expand its footprint and value. 

On the other hand, the size of a townhouse depends on the community itself. Some resemble regular neighborhoods and offer free-standing structures. On average, a townhouse is usually about 1,000- 3,000 square feet. 

But there are other communities where townhouses are clustered together on small plots of land and come in rows with a shared wall between properties. These dwellings usually have a shared backyard or small patio accessible by sliding doors.

Property value

Historically, single-family homes cost more than townhouses and generally have a higher appreciation rate over time. This is because you’re getting a private plot of land and a home you can customize as you see fit. 

Conversely, townhouses often have a lower price point, as the homes have a bit less square footage and privacy due to shared walls. 

For many first-time buyers, a townhome is an affordable way to get onto the property ownership ladder. 

Maintenance responsibilities 

Owning a single-family home means maintenance and upkeep are your responsibility. 

While this independence grants creative freedom in personalizing the property, it also demands a commitment to repairs as they become necessary. That means taking care of the yard work, periodic power washing for the driveway, and other outdoor chores. 

However, if you lead a busy social life or have hectic work hours, you may yearn for a different type of home ownership. Not all managed townhome communities are the same, but generally, a management company takes care of the exterior upkeep, landscaping, and shared amenities, such as a pool, gym, or clubhouse. In exchange, residents pay monthly HOA fees, known as a common charge.

Pros and cons of buying a single-family house

• Pro: Free to modify your home - Individuality takes center stage in single-family homes, offering homeowners more design flexibility. Owning your home and the land outright means you can make additions to the structure, such as a connected garage to store all your gear and tools. 
• Pro: Higher resale value - Because of the larger plot of land and freestanding nature of the dwelling, single-family homes usually have a higher resale value than townhomes. Plus, any modifications you’ve made to the property can potentially increase its value and net you a higher sale price. 
• Con: Burden of upkeep - Building a home tailored to your lifestyle and family planning goals can be exhausting. Though certain maintenance tasks can be easy to handle, major fixes, such as a roof replacement, fall squarely on your shoulders. 
• Con: Higher property taxes - Because single-family homes usually have more value than a townhouse, this means paying higher property taxes each year. Local governments use the assessed value of a home to set the tax rate. So, if the home is assessed at a high value, you may have a hefty expense to worry about.

Pros and cons of buying a townhouse

• Pro: Approachable price point - A townhouse is generally more affordable than a single-family house. This means taking that first step on the property ownership ladder can be easier. 
• Pro: Sense of community - Shared spaces like gyms, pools, and clubhouses can help foster a stronger sense of community among townhouse residents. This can be a great way to meet your neighbors without having to go out of town. 
• Con: Monthly HOA charges - While a townhouse in a managed community means less upkeep and plenty of amenities, you also have to pay HOA fees with your fellow residents. You also may have to contribute to special assessments, which are charges that help cover the cost of major repairs and renovations in the community. 
• Con: Rules and regulations - Most HOAs have an extensive list of rules, ranging from how many cars you can park on the property to what colors your house must be. If you want full control, finding a single-family home might be best for you.

Mortgage financing for single-family houses vs townhouses

Generally speaking, most home loan options for borrowers are similar for houses and townhouses. But there are a few scenarios to keep in mind. 

When buying a single-family house, various mortgage products are available with low down payment options depending on the borrower’s qualifications. 

When you’re purchasing a townhouse, those requirements may differ if the townhouse is organized as a condo or part of an HOA community. In these scenarios, the homeowner’s association may have a minimum down payment threshold, such that the aspiring townhouse owner needs to make a down payment of at least 10% of the purchase price. This is often known as a maximum financing limit of 90%.

The financing limits protect the community as a whole from potential delinquencies on common charges. Make sure to speak to your real estate agent and mortgage provider before putting any offers out on a townhouse to understand if such financing limits exist. 

How to decide which property type is right for you

Sometimes, picking the right home type comes down to your personal preferences and financial situation. 

If you’re just beginning your homeownership journey and affordability is an issue, it can be worthwhile to consider a townhouse. Just make sure you factor in HOA fees, monthly mortgage payments, and property taxes to make sure you can handle the expenses. 

Remember that townhouses may not always give you the flexibility to expand if you need more space down the line. 

Folks who want the responsibility of owning their own home and have the capital to cover the purchase should look at a single-family house. The opportunities to grow are limited only by your property lines and budget. But if you don’t have the time or interest in managing the exterior upkeep, then a townhouse might be best. 

How to save money when you buy a single-family house or townhouse

Buying a piece of real estate is expensive, regardless of what home style you choose. You’ll pay a lot for a single-family house or townhouse, from down payments to closing costs. 

But you can save a substantial amount of money at closing by working with a buyer’s broker that provides a commission rebate. Sometimes called a commission refund, the process allows a broker to provide a portion of the buyer’s agent commission back to new homeowners at closing. 

Prevu Real Estate offers one of the most sizable rebates in the country, which can total thousands of dollars depending on the sale price of the home you’re considering. These funds can go a long way towards saving up for any remodeling projects you have for your single-family house or cover the cost of furnishing in your new townhouse.