My Friend Is Struggling to Sell Her Townhouse. Here's Why

In 2021, when mortgage lenders lowered their rates, my friend and her husband were eager to take advantage by purchasing a townhouse. At the time of their purchase, which was during the summer that year, the average 30-year mortgage rate was still under 3%. As such, they decided to move forward despite the home being priced at a higher number than what was typical for the community they bought in.

Fast forward 2.5 years later, and my friend and husband are looking to sell. They're aiming to expand their family and feel they'll outgrow their townhouse quickly once that happens. And they'd also like the benefit of more privacy.

Meanwhile, home inventory is low these days on a national level. As of the end of November 2023, there was only a 3.5-month supply of available homes, according to the National Association of Realtors.

Because of this, my friend assumed their home would fly off the market. Three months later, she still hasn't found a buyer. And she thinks these are some of the reasons why.

1. Buyers will only pay so much for a townhouse

For what my friend paid for a townhouse, she almost could've gotten a standalone house in the same vicinity had she been willing to wait longer to buy. But since no one knew how long mortgage rates would remain low a few summers ago, she opted to take the opportunity to buy something.

My friend's real estate agent says she should, in theory, be able to command the price she wants for her townhouse. In reality, buyers don't seem to be biting. And my friend suspects it's because they don't want to pay her asking price when for just a small amount more, they could have a detached home with more privacy.

2. She doesn't have an end unit

When you're buying in a townhouse community, it's generally a good idea to try to purchase an end unit. That way, you won't share a wall with as many neighbors.

Since inventory was slim when my friend was looking to buy, she had to settle for a unit with neighbors on both sides. Thankfully, she's been fortunate to have considerate neighbors who don't disturb her. But she can see why a buyer may not want to take that same chance.

3. Her HOA fees are expensive

On top of her monthly mortgage payments, my friend pays dues to her homeowners association (HOA) for things like exterior maintenance. And those dues are on the high side.

Now, my friend's townhouse community offers a number of benefits, including a pool that's open seasonally, a playground, and a clubhouse. The more amenities a given HOA provides, the higher the dues are likely to be. But given that she's not asking a small amount for her home and that mortgage rates are pretty high right now, she can see why buyers may not want to take on the added expense of HOA fees.

Be careful when buying a townhouse

For many people, a townhouse can serve as a nice starter home. It can also be a suitable option for people who don't want to spend a lot of time on maintenance, since exterior items are commonly covered by the HOA a townhouse is a part of.

But the one issue you might run into with a townhouse is struggling to sell it -- especially if you end up wanting to sell at a time when the borrowing environment isn't so favorable for buyers. So if you're going to buy a townhouse, make sure you intend to stay put for at least a few years so you can build some equity. Also, try to buy at a time when that home is competitively priced. Otherwise, you might really struggle to get your money back at resale.

For now, my friend is holding firm on her home's asking price since she's not necessarily under pressure to move -- it's more of a want. But if it sits much longer, she may have to go that route, which isn't ideal at all.