After the housing market cooled, one of the hot new markets started seeing the turn down first, and is still pulling up the rear in the industry those three story town homes.
During their hay day there was a lot of talk, and questions as to what was the big draw to all of those three story town homes popping up all over Greater Indianapolis. Until very recently, I am not sure that there has been a very good answer. Now we see the damage done by too many mistakes by developers and builders as well, leaving them, and their customers holding the bag.
When the first community went up and sold well, most other builders took a "me too" approach and jumped in with their own versions to get in on the action. However, I don't think that any of us really understood what made them attractive, we all tried to work off of the old paradigms we used in building any community, to keep the land price as low as possible, to keep the overall price as low as possible, and worry about the floorplans. I become aware that was the exact opposite of what is required to build a successful townhome community.
I was given a great opportunity for me to get a real handle on the town home market. I was our contact person for any lead coming in for Gunstra Builder's community in Carmel, Monon and Main, and their newest one in Broad Ripple, The Townes of Winthrop until I turned them over to a sales person when they were officially opened. I then took over sales for their Zionsville community, Manchester Square, This enabled me to speak with more potential town home buyers than maybe anyone else in our market.
Through this one on one discourse with several hundred potential town home buyers it taught me so much that I really don't believe any builders, Realtors, or most clients understand about what the keys to success in a town home community truly is. I wish we could take credit for being smarter than most but the truth is I was able to just see a large sampling and was able to listen to buyers.
What finally drove the message home to me was another family vacation to Washington D.C., one of our families favorite places to go. During this summer where I was just dealing with all of these townhome buyers, their comments were rolling around in my head while I was on vacation. All of a sudden it hit me, one of the things we love about visiting D.C. is the lifestyle of walking out our rented condo to restaurants, activities, and the Metro to go anywhere we want. Rarely do we ever start our car again once we get into D.C., we walk or ride the Metro. That is what the draw to a townhome buyer, that walk out your door lifestyle.
It became crystal clear that while the key to all Real Estate is Location, Location, Location, when you are looking at town homes multiply that by 20. The overriding key to having a successful town home community is determined by if once you arrive home and put your car in the garage in the evening or weekend, you don't have to get back into your car to go to dinner, out to drinks, entertainment, shopping, or to recreation activities. In other words everything has to be within walking distance or the town homes aren't in the right location. I guess one clue is that the word Town is in Townhome, and they need to be in town not the suburbs.
The new (old idea) concept of mixed use zoning has brought the opportunity to live, work, have recreation, and social life all within walking distance. There is a connection happening with baby boomers on this that I think is happening at a subconscious level. It is like going home again, but not to any we have known since our youth. Where you knew your neighbors, had chats as you went about the community, you knew the local business people and they knew you. In other words, pretty much how most of us boomer grew up before zoning rules in the 70's segregated every portion of our lives, isolating people from each other to the point we live in subdivisions not neighborhoods. When people get a taste of this town home living it is something that touches them at a very deep level.
Of course a lot of singles, or newly singles with children, have gravitated to town homes, but also both young professional couples and empty nesters as well. Many thought we wouldn't see the empty nesters with three story town homes, but it isn't the floor plans that draw them to their new homes, it is the location, the lifestyle within walking distance. The young couples are saying that they want to "do this for them" while they can, before the suburbs and minivans come into their lives. The empty nesters are saying that they are "doing this for them" while they are young enough to handle the stairs and they are forced to consider a one story lifestyle. However, it is all about "doing it for yourself" if only for a few years.
What became clear is that very few people buy a three story townhome because they love the floorplan, they will buy one in spite of the floorplan if it is located in the heart of their desired lifestyle and allows them to afford to live in a very pricey area. The concept of building a townhome in a cornfield dooms it to struggle to find an owner, they might make good rentals if bought priced low enough though.
One word of caution to anyone looking to buy a townhome, or condo in today's market. Be sure that it is a PUD (planned unit development) and not a HPR (Horizontal Property Regime.) I will do a blog on this later in detail, it is just a great deal more complicated getting a mortgage on an HPR if the community is under 75% sold out.