Home ownership is a cornerstone of the American dream, which means real estate has a special place in many of our hearts. But there is so much more to this sector than white picket fences and two-car garages.
There are four basic categories of real estate properties:
Residential. Single-family homes make up most of this category, but it also includes multi-family homes and condominiums, among others.
Commercial. From strip malls to office buildings to rental apartment buildings, commercial real estate is pretty much any property that is designed to produce income.
Industrial. Warehouses, factories and fulfillment centers are all examples of industrial buildings, which are used for the research, production, storage and delivery of goods.
Land. Just what it sounds like, this category includes vacant land, farmland, and ranchland.
Some experts group the final three categories under one type labeled as “commercial,” meaning you can think of any property as being either residential or commercial.
Most people are focused primarily on residential properties. These are the homes we live in, the vacation homes we visit (also called “second homes”), and rental properties we buy as an investment. In fact, more than a third of all housing units in the U.S. are for rent.1
Within residential real estate, there are five kinds of properties:
Single family home
These properties can be attached or detached, meaning they are free-standing or share a wall with another property, as with a duplex.
Condos are large buildings that house multiple single units that are owned by individuals. These individuals are often part of an association that shares the cost of upkeep for the building’s common areas.
Co-ops are similar to condominiums. The big difference: All of the residents of a co-op together own the whole building.
These are a sort of hybrid between attached single-family homes and condos. They often share walls with other homes, and they may have a shared maintenance agreement or homeowners’ association.
As the name implies, a multi-family is a single building that houses multiple families in separate apartments. Each unit typically has its own bathroom, kitchen and entryway. Multi-families with more than four units are considered commercial properties.
From one year to the next, most homes stay with the same owners. But many new homes are built each year. This turnover provides new opportunities for individuals looking to buy their first home, or to realize the potential gains in their real estate investment. Here’s a quick breakdown of existing home versus new home sales in the U.S.
Newly constructed homes sold in the U.S. in 2019, with another 327,000 still for sale at the end of the period3
To figure out whether owning property fits your financial situation, consider reaching out to a lender. A loan officer can help you evaluate your options and get you a step closer to your own piece of the American dream.
1 U.S. Census Bureau, American Housing Survey 2017 (https://www.census.gov/programs-surveys/ahs.html)
2 National Association of Realtors (https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics)
3 U.S. Census Bureau (https://www.census.gov/construction/nrs/pdf/newressales.pdf)
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