Bigger townhouse or smaller single family in HCOL area

General
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I’m struggling with indecision so hoping some objective internet strangers can help :slight_smile:

My husband and I have two young kids and live in a HCOL area, currently in a 1500 sq ft townhome. The kids share a room and generally like it but I can tell they’re wanting more space. In addition we don’t have any yard so we go to lots of parks (nearest one is a 10min walk). We also have a small dog who is used to getting her exercise on walks and at the parks.

We’ve worked hard to save for our next house and have also done a lot of upgrades to our current house to build equity. Now that we can afford a larger downpayment, we’re trying to decide if we should go for a 2500 sq ft 1.2M townhouse with a great layout for the kids to have their own bedroom and play space, shared yard, small community pool and park 5min walk away. This house is in good shape and would mostly just need cosmetic updates to modernize. The alternative is a single family home with a small private yard, 2050 sq ft 1.5M and ok layout but obviously a bit less room for everyone (the play room in particular is about half the size), no pool. The house would need much larger updates to modernize, which we aren’t afraid of doing to build more equity and make it comfortable but with the larger downpayment, we’d have less going to savings for house projects.

We’d keep this next house for 5-10 years. So which makes more sense with kids AND from an investment perspective? Is it risky buying a townhouse when it comes to reselling later on? Is an older single family risky with the amount of work needed and less space for everyone?

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It depends on whether you like living in townhouses. I prefer having some distance between me and my neighbors, even if it is just 20-feet.

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The townhome likely makes more sense from a livability perspective.

The sfh likely makes more sense from an investment perspective.

Unfortunately, you need to decide which provides more value. Personally, I would optimize for happiness.

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Upgrades don’t add equity. They only make it a little easier to sell.

One thing that might matter is the ownership structure. Is the townhouse fee simple like the detached home? Or with the shared yard and pool part if a condo regime?

Personally I find the tradeoffs come out in the wash, but it’s a notable difference if it exists.

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Id go townhouse imo. That space is important. I don’t have a dog, so I’m rarely outside. Only reason I’d spring for the sfh is if I want a garden.

Also I like being close to my neighbors, buts that’s a personal preference

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I don’t think people should buy homes as investments but that’s just me

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