Survival Guide for Townhome and Condo Sellers in a Cooling Market

The hierarchy of housing vulnerability becomes starkly apparent when markets begin to cool. Rowena Patton pulls back the curtain on why condominiums, townhomes, and second homes consistently take the first hit during economic downturns, revealing patterns that smart buyers and sellers need to understand.

At the heart of this vulnerability lies the monthly HOA fee – that additional financial obligation beyond the mortgage that suddenly feels burdensome when people tighten their belts. Though these fees cover valuable services like insurance and maintenance, they significantly impact buyer psychology. Given a choice between similar properties, buyers consistently choose the option without the additional monthly expense, dramatically shrinking the pool of potential purchasers for condos and townhomes.

The rental cap dilemma further complicates matters for owners of these properties. When HOA rules limit the percentage of units that can be rented, owners facing financial hardship have fewer options. Without the ability to generate rental income to cover mortgage payments, many owners face impossible choices that too often end in foreclosure. This cascading effect intensifies market pressures for these property types.

For sellers navigating these challenges, aggressive pricing strategies become essential. Successful selling requires positioning your property to stand out among similar units, understanding how to leverage the concentrated showing patterns typical in condo communities, and working with agents who truly understand the unique dynamics of these property types. Call Rowena at 828-333-4483 for personalized guidance on maximizing your outcomes in today's shifting market – whether you're buying, selling, or making critical holding decisions for townhomes, condos, or second homes.

Chapters

• 0:00 Market Trends for Condos and Townhomes
• 1:40 HOA Challenges and Rental Caps
• 2:48 Pricing Strategy for Sellers
• 4:10 Final Advice and Closing

Transcript

Speaker 0: 0:17

Hey, it's your friend in real estate, rowena Patton, here and I want to talk about what happens with house and condo prices and also the second home market. So when the market turns down, certain property types take the hit first. Condos, townhomes and second homes are usually at the front of the line. Here's why, when people tighten their belts, that monthly HOA fee starts to feel heavy. Yes, it covers insurance, exterior maintenance and maybe even amenities, but most buyers see it as one more bill stacked on top of their mortgage. If they can choose a house with no HOA versus a townhome with a $350 a month fee or even more, of course, whatever the fees are or maybe it's less the house usually wins out. That shrinks the buyer pool and when demand drops, prices follow. We know it's all the basic supply and demand in real estate. We saw this very clearly during the last decline in house and condo prices.

Speaker 0: 1:24

A lot of condos and townhomes had rental caps written into their HOA rules. That meant that when owners had to move, whether for a job change, a hardship or just because they couldn't afford the payment, they weren't allowed to rent the place out to cover the mortgage. With no rental option and no buyers, many of those properties went straight into foreclosure. And there are owners that think about renting out because they haven't quite reached the rent cap, which is usually 10 or 15%. That means no more than 10 or 15% of the homes in that neighborhood can be rented out. So some of people now are trying to rent them out and they're not getting a renter in. And you have to be careful that rent cap doesn't get hit, because if you don't have somebody in there paying the mortgage and you've already moved out, if you can't then get a renter in, it's squeezing you even more. So condos and townhomes can be a great lifestyle choice and things are really moving around for buyers now where prices are declining in them, so you could get some good buys. However, as a seller, history shows, are the first to get squeezed in a declining market.

Speaker 0: 2:39

So what to do about all of this? You know me, I'm the how can you, girl, if you're selling a townhome or condo or, for that matter, a second home because you often get hit in a similar way as people are squeezing their belts get advice from your agent and price it aggressively? You can give me a call. It's Rowena Patton at EXP All-Star Powerhouse 828-333-4483. I've got a huge network throughout the company and country whereby because for me it's all about the best agent for the job, whomever they work for that I can help you with this.

Speaker 0: 3:18

Look closely at other condos and townhomes in your building or complex with similar amenities and understand you may need to price aggressively. That means just below them to stand out. And the thing is, when you've got a few for sale, that can be a good thing, because if they're going to see you know the one next door or the one on the lower floor, they're probably going to see yours as well, because it's in the same building. They're not going for half an hour to see a different one. In a market like this, ask your agent for solid pricing guidance. It's critical to get ahead of the curve with this property type. That was my puppy, penny, who's a mini Dachshund, and she obviously agrees. I'll see you next time. Thanks for listening.