Elven in Falathlorn, Dwarven in Thorin's Gate, Hobbit in The Shire and Man in Bree-lands. These houses are not restricted by race though, as you can have your Hobbit live with the Elves, or whatever you'd like. Each homestead area has up to 250 instanced neighborhoods, each with 4 kinship houses, 10 deluxe houses and 16 standard houses.
The type of house you buy is completely up to you, as each standard, deluxe and kinship house is basically the same size in each homestead, with different layouts and scenery. That's where your personal preference comes in. If you're big on fishing, you can buy near a lake or stream. If you need to be on higher ground to overlook the rest of the neighborhood, you can buy on a hilltop. You may also want something that is close to the neighborhood's bank and other NPCs, for the sake of convenience. Be aware though that those houses in scenic areas go for a bit more than the exact same house on a flat lot with minimal scenery.
Once you've decided which one is for you, it's time to make the purchase>>