Condos, townhomes, and houses oh my! What are all the different types of homes and what do they mean? If you’re new to homeownership or just getting ready to begin your homebuying journey, it may surprise you to know that not all homes are created equal. There are many types of residences, each with their own unique benefits and disadvantages. Let’s explore the definitions of these different types of homes and make homeownership SLIGHTLY EDUCATIONAL.
Defining Different Types of Homes
What is a Manufactured Home?
A manufactured home, also commonly known as a mobile home, is a prefabricated home that is often assembled off-site before being moved to its site of use. Manufactured homes are exponentially cheaper than building a home onsite. Beyond that, older truly mobile homes can be moved if ever needed, although this can be a costly endeavor. Many modern manufactured homes are not designed to be moved once delivered and may not have a chassis with wheels beneath the home.
While mobile homes get a bad rap, I often find myself really impressed with listings I have found online, often not even realizing they are manufactured homes until looking at the details. Often the mobile home will have support structures or stones built around the home to make it appear as if it is a house built on-site.
There are a few elements of manufactured homes that make me really nervous though. Manufactured homes found in “trailer parks” do not own the land they sit on, which limits your appreciating assets and your control. While a manufactured home is going to be cheaper, it may have very high land lease costs and you have no control over landlords that may raise prices indiscriminately. Be very careful about– buying a manufactured home on property you don’t own and be sure to do your research.
Why buy a manufactured home: Manufactured homes have a low barrier to entry and have become increasingly customizable in recent years. Just be sure you understand the risks associated prior to buying one.
Why avoid a manufactured home: Potentially carries a high land lease and you do not gain the appreciation of the land value.
What is a Condominium?
A condominium, or a condo, is a large property divided into individual units and sold independently. Condos usually consist of community property that is controlled by the condominium management. The easiest way to think of a condo is that it is similar to an apartment except you own it instead of renting the unit.
Condos usually include homeowner association (HOA) fees to help take care of the shared community amenities such as community pools, parks, landscaping, security, upkeep, etc. HOAs can be a costly monthly addition to your mortgage, but it is great for owners who don’t want to personally manage the upkeep of the property.
Additionally, often condos will have walls connected to their neighbors (although detached condos do exist), limiting privacy. When you buy a condo, you are buying the airspace of your unit, but you will not solely own the land the building is on.
Why buy a condo: Condos are often the cheapest form of homeownership and are perfect for homeowners who want to limit upkeep and have a sense of community.
Why avoid a condo: You will not own the land the condos are built on, HOA fees could be high, and if you enjoy your privacy this may not be the property for you.
What is a Townhouse?
A townhouse is a narrow, multilevel residence that is attached to the neighbor’s residences. Similar to condos, townhouses often have HOAs that take care of the upkeep of community pools, parks, landscaping, security, upkeep, etc. However, unlike condos, the homeowner of a townhouse also will often own the land the house is situated on. In a lot of cases (not all though) townhouses will have a larger backyard and more privacy than a condo.
Why buy a townhouse: Townhouses are a perfect compromise for homeowners who want more responsibility in ownership than a condo, but not quite as much as a single-family home. Townhouses also often are more affordable options for first-time homebuyers.
Why avoid a townhouse: Townhouses often share walls with neighbors so you might not have as much privacy as you’d prefer.
What is a Single-Family Residence?
A single-family residence (SFR) is the typical home most people think about when starting their homebuying journey. An SFR is defined as a structure maintained and used as a single dwelling unit. This means that it doesn’t share any common walls with neighbors, has no shared property and is built on its own property, and technically only has one kitchen.
Single-family residences are often the most sought after because they boast the most privacy, control, and ownership. However, these benefits carry a higher price tag and may often be challenging for first-time homebuyers to find one within their budgets.
While the purchase price is often higher than condos and townhouses, most SFRs, dependent on the community, usually do not have homeowner association (HOA) fees which will help bring down your monthly payments.
If you’re struggling to find a single-family residence in your budget, you may want to look into an attached single-family residence (SFRA). SFRA is a unique type of home where there may be little to no space between the interior walls of the houses, but both homes are still free-standing. An SFRA could be unaffected if its neighbor’s home was to be ripped down. These are great options to get all of the benefits of an SFR, but at a potential discount.
Why buy a single-family residence: While owning any type of property is an accomplishment, this type of home truly offers the most flexible ownership rights and provides levels of privacy you will not get in other living environments. Not to mention, if you can afford it, you will get more land and hopefully a bigger backyard with SFRs.
Why avoid a single-family residence: These types of homes tend to require the most upkeep and tend to be more expensive than other types of homes.
Now What?
Decide Between Starter Home vs. Dream Home
Now that we have a good sense of the different types of homes available to you, how do we decide which is going to be the best financial investment and ideal living situation for our families? We’ve simplified this decision down to a common dilemma…starter home vs. dream home. Picking the right home is a deeply personal decision, but we’ve outlined some key considerations to help you pick the perfect house.
Start Your Homebuying Journey
Once reviewing the starter home vs. dream home consideration guide, we’re ready to kick off our homebuying journey! Considering this is likely the largest purchase we will ever make, the buying process can be confusing and feel overwhelming. It involves finding a realtor, securing a mortgage, finding the perfect home, negotiating terms, and closing the transaction. This may seem like a lot, but like all things in life, when taken step-by-step is actually very manageable. To help make the homebuying process SLIGHTLY EDUCATIONAL, we’ve created a Beginner’s Guide to Homebuying.
Good luck on your homebuying journey and enjoy the process!
Check out additional topics to make personal finance SLIGHTLY EDUCATIONAL on our Personal Finance page.
