Buyer Preference for a Detached Home Remains Strong
A recent study by NAHB on home buyer preferences*, it was revealed that two out of every three buyers still prioritize purchasing a single-family detached home. A significantly smaller percentage express interest in purchasing a townhome (16%), a multifamily home (10%), or a manufactured home (5%).
According to the NAHB, in the face of such strong preference for a detached home, and given the significant growth in home prices and lot values in recent years, the study aimed to understand what size discount would give buyers a strong enough incentive to buy a townhouse instead of a detached home. The question specified a critical assumption: the townhouse would be in the same location as the detached home, have the same square footage of finished space and include the same quality materials. In other words, the townhouse would be comparable to the detached home in every practical way except for the size of the land around it.
Our findings show that, on average, buyers would need a 30% discount to consider buying a (mostly) comparable townhouse instead of a detached home. Yet previous NAHB research has shown that the finished lot only accounts for about 18% of the price of a new detached home. This means that in most cases, it is simply not feasible for builders to offer a 30% discount for a townhouse of the same size, quality and location as a detached home– even one sitting on the smallest possible plot of land.
