A Popular Bridge to Homeownership for Younger Buyers

Filed in Economics, Homeownership by on February 23, 2018 1 Comment

Even though millennials had the largest increase in homeownership rate among all age groups in 2017, many would-be buyers continue to feel stuck on the sidelines because of the limited number of entry-level homes.

Most builders know there’s strong demand for entry-level homes, but the rising costs of construction are making it much more challenging to generate large enough margins to build smaller, single-family detached homes.

Enter the single-family attached homes — aka townhomes. A growing number of buyers are drawn to the relatively large amount of space in a typical townhome, and the potential to still be located within a medium-density, urban neighborhood.

More builders are recognizing the cost benefits of townhomes as well. According to NAHB analysis of Census data, townhome construction in 2017 was up 7% from 2016.

“After a soft patch [in mid-2017], the market share [of new townhouses] is rising again,” wrote NAHB Chief Economist Robert Dietz in the Eye on Housing blog. “I expect future gains as townhouses are a useful bridge from rentership to homeownership for younger prospective home buyers in high-cost markets, among other market opportunities.”

After a dramatic decline during the recession of the late 2000’s, townhouse starts have experienced a steady resurgence. For more analysis, go to Eye on Housing.

 

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  1. Entry level homes in the Middle Tennessee area has been a challenge for some time now, with pricing and inventories as the main hurdle. There is an increase in interest for townhomes for new buyers, however we are still not meeting the supply demand locally. Nice Article!

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