Is a Semi-Detached Home Worth It?
Is a Semi-Detached Home Worth It?
In Canada, our housing situation is all over the place. The pandemic created a bump in the cost of building materials and that bump is being passed all the way to people looking to buy homes. If it was only that our problem would be relatively simple, but when you take into account large companies buying up homes all over the country and creating upward pressure on all housing costs, things can seem rather dire.
Townhouses and semi-detached homes are typically seen as great starter homes. These properties are, compared to a fully detached house, more affordable and still allow you to build equity for a future move.
However, with how things are panning out lately, there is a legitimate question you need to ask yourself when looking at the average price of semi-detached properties or townhouses over fully-detached properties. Prospective buyers all across Canada need to think about this too. Is buying a semi-detached house too much of a gamble?
What is a semi-detached home?
Before we go any further, it's important to get some definitions out of the way. First, what are semi-detached houses?
A semi-detached house is a type of housing that is shared between two families. Each family has its own unit, but the two units are attached to one another.
This can be a great option for families who want to live close to one another but don't want to share a wall. The problem though is that unless both families are on the house hunt together and are willing and able to buy both sides of a semi-detached house then it means that the two homeowners won't know each other.
Essentially, a semi-detached home is a single house that has been reflected along a wall creating two mirror images as individual units.
What's the difference with a townhouse?
Semi-detached houses have one shared wall, the metaphorical mirror between the two units. Townhouses on the other hand are flanked by both sides by other homes.
A townhouse will basically have shared walls on either side.
Sharing a wall is one thing but sharing more can quickly become annoying. Between the lack of privacy and the lack of a private backyard, a townhouse with a similar location as a semi-detached house will tend to be cheaper.
Townhomes are a great opportunity to be closer to city centres compared to the average semi-detached house.
Is the worth of semi-detached homes expected to go down?
Here's the issue with the housing market of Canada in early 2022: massive uncertainty. We're waiting for a possible pop of a bubble but what would that mean to homeowners that took on a mortgage? Would the value of their home go down?
On one hand, it's a good idea to build equity early on. On the other hand, no one wants to be under the water with their mortgage - meaning that their property is worth less than the mortgage payments reflect.
The truth is that we don't know for sure. And it would not be a good idea to make a move based on a blanket prediction across Canada. Even across a single province, it may be a tough call.
What should someone do if they are ready to move on up?
It would be a cop-out to say that buying a single-family property like a detached home is better if you have the money because that's what most people would do if they had the budget for it. No connecting wall, more yard space, a dwelling that you can walk around in its entirety without running into your neighbour's Christmas decorations in May.
Different housing types, whether we like to admit it or not, correspond to different budgets and lifestyles.
The question many people are asking themselves is whether it's the right time to move on up to semi-detached houses. These people could be living in a condo, renting an apartment, or even looking to get out of their parent's home. That question is whether it's time to make the leap or not.
More equity means a better chance to move on up to a better house down the line. In the grand scheme of things the cost savings of one common wall while retaining some privacy in the 'outer' parts of the home can be very enticing.
If you have your heart set on moving out then you need to do two things before you reach out to an agent.
The two things a prospective homeowner should do in a volatile housing market.
Solidify your priorities.
Do you need more space urgently? Would a townhouse do? Do you need a home that allows for renovations easily? How comfortable are you with neighbours making noise? How much can you sacrifice to squeeze into a good school district? Are tall homes a problem?
If your real estate agent didn't ask those questions then you need to bring the answers to them asap. These are essential when you're trying to decide on what your move should look like.
When making that list of priorities, rank them in terms of urgency. As in, ask yourself when these issues will become critical.
Planning makes things go smoother, smooth means swift, and swift means money saved.
Plan beyond the next move.
If your current desire is to move to a semi-detached property, ask yourself if it is the wisest move once your mortgage is up.
Think of the maintenance, the yard work, the structural limitations that make renovations a headache, and so on. That one wall separating the two units is not a simple separation, it comes with a lot of strings attached.
Once the mortgage is paid off, is the equity you built going to be enough to help finance your next move?
Semi-detached homes tend to be a stepping stone to something bigger, and something without a common wall - hopefully. In short, think of what you will do with the home once you are ready to move on to something else like a single-family home.
It's a balancing act.
Between time and money, buying a property solely to build equity is not a good idea unless you can shoulder the cost easily.
For most people right now, with how uncertain things are, it will come down to how the area where you're planning to buy a home reacts to changes. If it's a robust market with a long history, an investment into a semi-detached home will be more likely to pay off in the future.
On the other hand, if it seems risky even without factoring in the fact that we live in interesting times (to say the least), then it would be best to hold onto your capital or look into something different like a condo.
If you plan to turn the house around and rent it, however, then it's a leap of faith that can start generating money far sooner thanks to things like Airbnb. The only issue would be the cost of turning such a home into something rentable and knowing where you will live in the meantime.
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