Home Buying in 95129>Question Details

Brad, Home Buyer in San Jose, CA

Hello, I am a first time buyer. Townhouse/SFH?

Asked by Brad, San Jose, CA Wed Feb 9, 2011

I have a budget of $350,000. I got recently married, so it's just two of us now..planning to have a kid in a few years. I am looking for a house in Santa Clara, Central/West SJ areas. I have been looking at some SFH's and townhouses that I think I can afford, what is a better option? I work in Sunnyvale, so I want to be close by and would prefer SFH, but they are too old and I can't afford for any more renovations. Townhouses look better for the price I want to pay but am not sure if it'll have good returns. Please advice.

Help the community by answering this question:


Hello Brad and thanks for your post.,

In the $350,000 price range and based on your desire to have a home that does not require major renovations, in the areas in which you're most interested, you will need to concentrate on homes within either condominium communities or planned developments (attached housing). I am reluctant to use the term "townhouse" because it actually refers to an architectural style akin to what is also called a "row house" on the East Coast, but it says nothing about the type of ownership you would actually buy. In short, when you purchase a condominium, you are purchasing (usually) a "box of air" bounded by the perimeter walls of the building. You own everything inside that "box of air," and the homeowners association owns the building, the land, and the common area grounds. This is why the condominium fees are often so much higher than when the home is located in a planned development. A planned development is a community where the homeowner owns the building, the land or "lot" for that property, and all the items inside the building. The homeowners association may paint or reroof the buildings to keep the appearance uniform, but the homeowner must maintain all of the other components. Because the homeowners association doesn't own the building, the monthly assessments can be a lot lower. Townhomes can be either a condominium or a planned development--your agent should know the difference and be able to explain this to you in greater detail, if not, find someone who can because knowing what you own and how it will affect you and your wallet is essential even before you purchase a property.

Regarding returns on your investment, there are many factors that will influence how valuable a home might be in the future, not the least of which will include: 1) HOA dues and the HOA's overall financial health; 2) the location of the property; 3) school district and school performance; 4) condition of the property, upkeep and improvement; 5) number of foreclosures in the community and if there is any litigation; and 6) economic recovery. On the average, however, know that condominiums (first), planned developments (second) and single family detached homes NOT in a common interest development (third) will decrease and increase in value iin the order in which I've just noted. The greatest fluctuations in pricing will occur on homes with a lower price point, and the fastest recovery in pricing will come to the same group.

As for finding a good home, work with a great Realtor to assist you in your search. Remember to find someone who knows the difference between planned developments and condominiums and who can help you determine the overall investment quality of your home.

Good luck!

Grace Morioka
Area Pro Realty
1 vote Thank Flag Link Thu Feb 10, 2011
It all depends on your actual goals as a homeowner, Brad. If appreciation is your primary consideration, SFH generally do better than TH/Condos. If containing your monthly & repair costs is more important and you can afford a newer TH/Condo, that may work best. There are lots of good options, just be sure to talk with a real estate consultant who can help you prioritize so you make the best choice for you.
0 votes Thank Flag Link Wed Mar 16, 2011
A town home will get you more of an option in terms of area. A SFR will be harder to find in a nice area vs. a condo at the price
0 votes Thank Flag Link Sun Mar 6, 2011
I think your budget is out for Santa Clara 3 BR townhomes also. Try San Jose, CA
Keep in mind you will have 4 residents.
0 votes Thank Flag Link Sun Mar 6, 2011
Hi Brad:

Congrats on getting married recently.

Yes prudent to get pre-approved first and now since you are married determine what is it
that you can afford and what the loan costs will be.

Then prudent to go with a Townhouse in Sunnyvale or Santa Clara.

Best regards
0 votes Thank Flag Link Sat Feb 12, 2011

Definitely get the mortgage advice first, so you know how much you can spend and how much money you'll need for the down payment and closing costs. Again, remember that "townhome" can mean condominium or planned development and, typically, it is a bit more desirable to be in a planned development where you own the home and land rather than in a condominium where you'd own only the box of air. And, really, you do own "more" when you own a home in a planned development.

Again, your Realtor should (must) be able to tell the difference and be able to tell you HOW to figure out what you have. Remember, a townhome is simply an architectural "style" and says NOTHING about the most important factor in your purchase--what you own. 9 times out of 10, agents and people in the HOA business get it wrong, so be careful that you know what you're buying and your maintenance responsibilities to the home.

Good luck!
Grace Morioka
Area Pro Realty
Co-Author: Homeowners Associations: A Practical Guilde for Leadership
0 votes Thank Flag Link Fri Feb 11, 2011
Thank you all for the responses, looking at all the options, I am thinking townhouse would be a good choice for my budget and also location. I am just getting started, so I think I'll first get pre-approved and start looking.
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Brad - Congrats on getting married recently!

For a stater home your on the right track by think about a Townhouse. You will be able to get a little more for your money when buying a townhouse and the living style usually is similar to a home. In that I mean you will typically have a garage and a small private patio/yard area. Though you will have an HOA fee that a home will not but you wont have to do lawn/pool work on the weekend.

Many buyers start with a great town-home in the areas that they want to live in because homes are priced too high in these same spots. If you buy a town-home in a desirable area than you should expect a good return when you go to resell.

Take for example this property below. It is located in one of the most desirable areas with a large park and downtown Campbell all within walking distance. At it's peak town-homes in this area sold for well over these current prices because of their location and desirability.

I wish you luck with your search and life!
Danielle Contreras
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Brad, a townhouse is a good starter home. That was my first purchase also. If you can find a SFH for < $350k in a decent neighborhood, it is most likely going to need ALOT of work. My recommendation is to get a townhome with low HOA fee (300/mo. or less) and with at least a 1-car garage. There should also be unit supplied laundry hookups either inside the home or in the garage. Townhomes with the attributes I mention should have a better resale position when you are ready to move-up to a single family home. If you would like me to email you some active listings, please contact me through my Trulia profile. Kind regards.
0 votes Thank Flag Link Thu Feb 10, 2011

All else being equal (same size, same neighborhood), single family homes will cost more but will also retain their value/appreciate more than condos or townhomes. There are other aspects to this that you need to consider as well. Planned development projects will have monthly HOA fees that cover a lot of maintenance that you would have to do yourself or hire a professional for in a single family home, and there can be alteration restraints that don't apply to sfh properties.

Find the best agent/broker you can, hopefully one who understands remodeling costs and/or has resources with appropriate professionals if remodeling is involved to look at options and advise you on the best approach according to your needs and life plans.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
0 votes Thank Flag Link Thu Feb 10, 2011
Brad, there is so much more to this question then we here can answer conclusively. As you have received answers encouraging you to get an agent to guide you. One who comes from a consultative approach will ask you many more questions than you even know to ask. From that meeting you will have a clearer idea of your options and where you will focus.

Meeting with a mortgage professional is also a part of the process. If your income is within a certain range you may qualify for local programs which may help you buy a bit more.

Congratulations on your new beginnings. Sounds like 2011 is going to be a very exciting year for you.
Web Reference: http://terrivellios.com
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Brad,
The advice you have been given by the other realtors is excellent, I would like to add a couple of points,
First off your observation that the SFH homes is spot on, in your price range they most usually need extensive renovations and if they don't you will have VERY stiff competition and a bidding war on that home.
Second as Grace and others have pointed out, you need to work with an agent that will know what to look for in a Townhome and complex so that you are protected, get the area that you want with the best potential for resale value and can provide you the options (such as loans VA? FHA? regular loan? ie: ) that you may need so that you get the most for your money.
I believe any one us realtors who are local and have answered your question can help you achieve your goal.
I have been working mostly as a buyers agent and would be happy to work with you on your goal.
Feel free to contact me with any questions.
At your service,
DRE# 01397256
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Brad,
You are going to be the one that answers the question but I will try to offer some opinions. A SFH will generally offer the highest appreciation and just like you most buyers would prefer that, one fixed up and one close to work. If the old-ness and distance from work is important in your decision that information might be directing you to the townhome.

When you are in a complex with HOA you will be affected by the other owners and in today's market that means are they paying their HOA dues on time? What is the condition of the HOA? How many of the units are rental units?
Web Reference: http://www.patchadwell.com
0 votes Thank Flag Link Thu Feb 10, 2011
Hi Brad,
Congratulations on your marriage! You should start working with an agent so he or she can answer all your questions and concerns in a short time. After one or two appointments, your agent will know what your needs are and show you only the homes that you can afford and are interested in.
Good luck!

0 votes Thank Flag Link Thu Feb 10, 2011
There are many things for you to consider beyond the type of property. Your credit, cash reserves and lifestyle should be looked at first. Since you’re looking at starting a family location is important when considering schools, parks and family activities. Considering the actual property, how functional is it when you just want to stay home. $350k is the lower end of the market in the areas you mentioned. Some work will most likely be required if you're looking with a future family in mind. This is a good time to buy, but only buy when it’s a good time for you. I have several resources on my website to answer many of your questions. I also have a personal lifestyle calculator for clients to help them understand what it really takes to own a home.

I'd be happy to go over all the deals to help you determine what's right for you.
-- David Sciplin
Better Homes and Gardens Real Estate
0 votes Thank Flag Link Wed Feb 9, 2011
It depends on the area really. HOA dues can knock down your qualifying sales price anywhere from $30k to $70k depending on the sales price
0 votes Thank Flag Link Wed Feb 9, 2011
A lot of factors go into return of investment on homes/townhomes. There may be factors on a townhome that may be out of your control at time for resale like home owners association litigation, the complex not being FHA approved, or low home ownership occupancy. With an SFR the neighborhood could be riddled with homes that are under kept that could affect future value. I always advise first time home buyers to purchase with budget and expectations. It appears a townhome, in the areas you are looking, seems to be the best option for you and your family. You should sit down with a Realtor to go over your specific needs to make sure you are seeing all properties in your budget and location to make the best decision. Good luck!
0 votes Thank Flag Link Wed Feb 9, 2011

You should look at both the options, and then make a list of top 10 things you must have related to the new house. Then rework the list and mark the 5 must haves for the house. This list should deal with cost of the new home, distance from work, location, condition of the house, amenities in the house. How long you plan to stay in that location (accordingly what kind of school you will need with your child). Once you have been over this list a few time, you will have a better idea of what suits you best. The ultimate decision for your new home is yours. Talk to an experienced Realtor like myself who can help you reach your goal.

It is hard to give you a clear picture in this forum, until you have looked at and compared multiple options.

Monica Goyal
0 votes Thank Flag Link Wed Feb 9, 2011
Brad -

Part of the answer depends on your lifestyle. Will you want a yard? Do you want a pool that may be offered by living in a complex? Are you looking for good school assignments?

Based on a quick search, I didn't find any detached homes but found about 30 or some condo/townhomes.
If Santa Clara, Sunnyvale area is essential, your options may be limited to townhouse/condos.

Even in San Jose, single family homes are pretty much on the East Side very South. I do not see any in the area of West San Jose.

Many homes in the price range will be older and will also need, at a minimum cosmetic updating.

Let me know if there is more specific information I can help you with.

Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Wed Feb 9, 2011
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