Survival Guide for Townhome and Condo Sellers in a Cooling Market

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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.

Episode Transcript

Speaker 0 (00:00):
Hey, it's your friend in real estate, rowena Patton,
here and I want to talk aboutwhat happens with house and
condo prices and also the secondhome market.
So when the market turns down,certain property types take the
hit first.
Condos, townhomes and secondhomes are usually at the front

(00:22):
of the line.
Here's why, when people tightentheir belts, that monthly HOA
fee starts to feel heavy.
Yes, it covers insurance,exterior maintenance and maybe
even amenities, but most buyerssee it as one more bill stacked
on top of their mortgage.
If they can choose a house withno HOA versus a townhome with a

(00:44):
$350 a month fee or even more,of course, whatever the fees are
or maybe it's less the houseusually wins out.
That shrinks the buyer pool andwhen demand drops, prices
follow.
We know it's all the basicsupply and demand in real estate
.
We saw this very clearly duringthe last decline in house and

(01:05):
condo prices.
A lot of condos and townhomeshad rental caps written into
their HOA rules.
That meant that when owners hadto move, whether for a job
change, a hardship or justbecause they couldn't afford the
payment, they weren't allowedto rent the place out to cover
the mortgage.
With no rental option and nobuyers, many of those properties

(01:30):
went straight into foreclosure.
And there are owners that thinkabout renting out because they
haven't quite reached the rentcap, which is usually 10 or 15%.
That means no more than 10 or15% of the homes in that
neighborhood can be rented out.
So some of people now aretrying to rent them out and
they're not getting a renter in.

(01:51):
And you have to be careful thatrent cap doesn't get hit,
because if you don't havesomebody in there paying the
mortgage and you've alreadymoved out, if you can't then get
a renter in, it's squeezing youeven more.
So condos and townhomes can bea great lifestyle choice and
things are really moving aroundfor buyers now where prices are

(02:13):
declining in them, so you couldget some good buys.
However, as a seller, historyshows, are the first to get
squeezed in a declining market.
So what to do about all of this?
You know me, I'm the how canyou, girl, if you're selling a
townhome or condo or, for thatmatter, a second home because
you often get hit in a similarway as people are squeezing

(02:35):
their belts get advice from youragent and price it aggressively
?
You can give me a call.
It's Rowena Patton at EXPAll-Star Powerhouse 828-333-4483
.
I've got a huge networkthroughout the company and
country whereby because for meit's all about the best agent

(02:57):
for the job, whomever they workfor that I can help you with
this.
Look closely at other condos andtownhomes in your building or
complex with similar amenitiesand understand you may need to
price aggressively.
That means just below them tostand out.
And the thing is, when you'vegot a few for sale, that can be
a good thing, because if they'regoing to see you know the one

(03:20):
next door or the one on thelower floor, they're probably
going to see yours as well,because it's in the same
building.
They're not going for half anhour to see a different one.
In a market like this, ask youragent for solid pricing
guidance.
It's critical to get ahead ofthe curve with this property
type.
That was my puppy, penny, who'sa mini Dachshund, and she

(03:42):
obviously agrees.
I'll see you next time.
Thanks for listening.