Should Millennials Buy A Single Family Home, Townhouse, or Condo?

The time-old question has always been: single-family home, townhouse, or condo? Each of the three comes in style and goes out of style every couple of years, popular with certain generations and demographics over others. Although there are conflicting numbers being reported by the likes of the Wall Street Journal and Realtor.com, articles do confirm that millennials are into single-family homes, as well as townhouses today (sorry condos).

According to Realtor.com, townhomes are the fastest-growing segment of the single-family housing construction market right now. Construction levels were up 17.8% in 2015, according to the National Association of Home Builders. Last year, they made up 12.4% of all new construction, fueled by millennial desires. 

Why Townhouses?

The secret of the townhouse popularity lies with first-time homebuyers, the majority of whom are millennials today. These are younger individuals on tight budgets, saddled with debt and low-paying starter jobs and internships. Townhouses are row homes sell at about 12% less than detached single-family homes, providing a chance at owning a “home” without funding the total isolation of a single-family home.

According to another survey by Realtor.com, about 33% of millennials want to buy a townhouse this year. “Townhouses are indeed the affordable solution to expensive land in more and urbaner areas,” said Jonathan Smoke, Chief Economist at Realtor.com. “For many people, it can be the most affordable way to buy a home and get into a more desirable neighborhood.”

Townhouses offer the best of both worlds to millennials, being found both in the suburbs as well as the urban sections of cities. Millennials value urban living in their 20s but want to move into the suburbs when it’s time to start a family. Therefore, they can pick between townhouses for both of these scenarios, developing a type of comfort with the real estate structure.

The Single-Family Home Dream

However, most millennials who own or plan to own a townhouse state that they see it as a “bridge to better things.” Millennials aren’t necessarily enamored with their townhouse. They see it as practical and affordable for what they really want in the future: a single-family home. The number one reason millennials aren’t able to snatch up these homes right away is their finances. Unlike other generations, millennials actually believe you shouldn’t attempt to own something you can’t afford yet. Since this generation value experiences over material possessions, they’re willing to forgo the single-family home dream until a little later.

Nevertheless, millennials are the number one portion of first-time single-family homebuyers today.