There is a definitely a time and place for high priced luxury townhomes in certain desirable urban centres. Unfortunately that time is not now, and the place is not here. Toronto/Vancouver for sure. Not so much Calgary. That doesn’t stop builders from continuing to build them though. They don’t care what I think of their proforma. They don’t believe me when I tell them their ridiculously ambitious valuation is a fantasy. They don’t seem to grasp that the final product cost of a high end townhouse will be basically the same or similar enough as a semi detached product that offers many advantages.
here is my list of reasons not to do it
cost per sq ft - the townhouse always costs more to build per sq ft that a comparable detached product and much of that additional cost is invisible or offers no value to the buyer.
buyer preference - common walls are not your friend. How much will your proforma be undermined when the middle unit needs a big discount to sell?
the city - way worse to deal with the city. You will get screwed, sorry I mean scrutinized way more heavily and have many costly processes to go through that inevitably suck time and money, again these offer no value to the buyer.
Leverage can work against you - you need to sell 4,6,8,10 of these. That takes a long time so the investor is tied up in the project for a long time.
condo fees suck - the condo fees are a source of buyer suspicion. 400$ a month on condo fees can cover $100k of financing. That means you could spend more on a detached house but the total monthly economic outlay is the same once you factor in the condo fee (or lack of).
garage space - garages are nice and townhomes rarely accommodate larger vehicles. Sometimes they can but this is the exception.
regardless of how high end the interior finish is the townhouse In this market is not as good for resale. There are so many new competing products that a five year old model will inevitably look dated and isn’t likely to resell at a premium.
the rental market - the townhouse doesn’t rent for enough to make it a good investment. This may apply to any new build today but for sure it applies to the townhouse. See condo fees. A $700k townhouse will never rent for enough to justify the purchase price here. This may be because of our warped financial system that rewards owners with cheap loans or just that rents are too low and demand is low or nonexistent for $4500 per month leases.
pets - people like pets too much. Townhouse not great for pets and outdoor space is much less suited to dog ownership
property tax - the way our system values property the inner city townhouse dweller pays more than the owner of a detached suburban home in an area with little to no services or infrastructure. Hard to reconcile that imbalance when a buyer is deciding where to live.
this is my somewhat exhaustive list suggesting luxury new build townhouse projects aren’t a good bet. There are likely more reasons I’ve not mentioned. Townhomes just are not on my radar now (High end ones). The market is possibly better in the ultra high end for calgary townhomes. Those I have seen work at 1.5 million despite me thinking it was crazy and there’d be zero buyer pool. I consider a townhome high end if it crosses $600k for the purpose of this discussion in the Calgary inner city market. We can reevaluate this in a year or two and see where we are in the market.
The DOM tells the tale on this high end townhome.