Utah housing markets are scorching, which is evidenced by a sustained rise in property prices. The driver of real estate growth remains to be the significant imbalance between demand and supply. Mortgage rates are also high in an attempt to curb property speculation to prevent any housing bubble from forming.
While this is good news to owners and sellers, homebuyers have few reasons to be happy about the status quo. If you want to get a foothold in one of the state’s hot housing markets, turn your attention to new-build townhomes in Herriman, Riverton, St. George, or Draper.
A townhome might not be as attractive as a detached single-family house, but it is the sensible choice to avoid stretching your finances too much to attain homeownership.
It Is Affordable
A townhome is generally less costly to buy than a freestanding house in the same location. What does this mean for you? Many things.
First, you need to take out a small mortgage to make a desirable townhome your own. Second, if the price of the property is not that big, you might only have to prepare a smaller down payment. Third, you will have a more manageable monthly mortgage payment even if the interest is not exactly low.
It Costs Less to Maintain
As a general rule, a smaller property entails less maintenance. Since you will pay regular homeowners’ association dues for the upkeep of communal amenities, you have fewer property features to worry about.
Sharing one or two walls with your neighbors might come with disadvantages, but it helps eliminate the need for specific home improvements you otherwise have to pursue periodically.
It Appreciates More Quickly than a Condo
Unlike a condo, a townhome comes with the land on which it is constructed. In real estate, the land is the true asset of the property and the structure is the liability. In other words, land usually grows in value passively while the structure deteriorates over time, which is why routine maintenance is necessary.
If you choose to buy a townhome in a location where land is scarce, which is usually the reason why it was built there in the first place, there is a good chance you can grow your wealth fast with home equity.
Historically, real estate appreciation is no match for the performance of the stock market, which is why you should not consider your property an investment. Nevertheless, a townhome is a better purchase than a continually depreciating asset like a condo.
It Helps Keep a Mortgage from Going Underwater
When you combine all of the financial benefits of owning a townhome, it is clear to see it is a safe piece of real estate to own in case another housing bubble in America pops.
A relatively small mortgage payment helps keep you from defaulting and free up more cash to spread your wealth in other investments. Unless you tap your home equity in the future, you will be less likely to have an underwater loan in the event of an economic disaster.
Homeownership is somewhat overrated since security is its only real benefit. If you intend to buy, though, be wise and select a townhome.