NAHB consumer preference data suggests that like prior generations, Gen-Xers and Millennials desire homeownership, and for a variety of reasons, townhomes fit the bill.
All those cranes that you see around Denver are also a common sight in cities across the country...and along with new apartment buildings, hotels, and other commercial construction...many of those projects are Luxury Condos aiming to accommodate homebuyers who want a single-family feel with better walkability. They are also looking for amenities like rooftop pools and decks, concierge services, and lock-and-leave ability to accommodate frequent travel.
“They want a suburban-type feel, but the one thing that may have changed, particularly for Millennials, is they want a little bit more walkability,” says Dietz. “So the townhouse development sort of checks the box.”
New townhome construction has been on the rise since 2009. Over the last four quarters, ending with the third quarter of 2018, townhouse starts totaled 123,000, 24% higher than the previous four quarters. The current market share of townhouses stands at about 14% of single-family construction, a post-recession high.
“I do think that over the next five years that 14% share is going to continue to rise and probably approach 20% over that time period,” says Dietz.
Townhouse construction is set to expand further given the demographics of Millennials transitioning from rentership to homeownership as well as ongoing land constraints and the demand for walkable neighborhoods.
“If you’re in a development where you’ve got higher-density housing, you’re going to have greater opportunities for retail and commercial that’s walkable,” explains Dietz. “It’s a neighborhood where you don’t have to buy a gallon of gas to buy a gallon of milk. You can walk to that retail. Single-family attached townhouses provide that kind of higher density.”