The American condominium market is facing its most severe downturn in over a decade, with prices recording their most significant annual fall since 2012. This slump starkly contrasts with the more resilient single-family home segment, highlighting a major shift in housing preferences and economic pressures.
Market Data Reveals a Sharp Downturn
According to data from Intercontinental Exchange (ICE), a financial technology and data firm, condo prices in September and October fell by 1.9% compared to the same period a year earlier. This marks the most substantial decline witnessed in over ten years. A Zillow Group analysis further underscored the weakness, revealing that in November, more than one in ten condos had an estimated value lower than their most recent sale price.
The situation was even more dire in nine major metropolitan areas, where over 25% of condos were estimated to be underwater compared to their last sale price. Markets like Austin and San Antonio in Texas are grappling with an oversupply of units, which continues to weigh down prices.
Key Factors Driving the Condo Slump
Several interconnected factors are contributing to this prolonged softness in the condo market. A primary driver is the sharp rise in homeowner-association (HOA) dues. These monthly fees, which cover building insurance, maintenance, and amenities, have surged due to skyrocketing insurance premiums and increased maintenance costs. For many potential buyers, this added financial burden is a deal-breaker.
"The rise in those condo HOA dues is giving a lot of buyers pause," said Kirby Arkes, a real-estate agent in Portland, Oregon. "Homes are just taking so much longer to sell."
Furthermore, the fundamental appeal of condos, often located in urban downtowns, has diminished in the era of hybrid and remote work. With fewer people commuting daily, the convenience of a city-center location holds less value. Condos are also popular in second-home vacation markets, which have experienced a noticeable slowdown in demand after a pandemic-fueled boom.
In Florida, markets including Cape Coral are facing a double whammy of soaring insurance costs and hurricane risks, which are spooking potential buyers. The tragic 2021 Surfside condo collapse, which killed 98 people, has also had a lasting impact, particularly in Florida. New state mandates requiring structural soundness checks for older buildings have added costs and complexity. "Lenders have really been watching condos closely since Surfside," noted Laurie Kane, a Dallas-area real-estate agent.
Sellers in a Quandary: Cut Prices, Rent, or Wait?
Faced with a slow market, condo sellers are struggling with difficult choices. Many are forced to repeatedly cut prices, rent out their units, or simply wait indefinitely. Janice and Edward Grimm, who listed their vacation condo in Murrells Inlet, South Carolina, in August, have had to reduce their asking price to $295,000—less than what they paid in 2022—with no offers in sight.
"We're going to lose big time on this condo when we sell it," Janice Grimm said, attributing the slow market to high monthly fees and abundant choice for buyers.
This sentiment is echoed by sellers like Sandra Phillips and Dennis Green in Flagler Beach, Florida, who delisted their townhouse in July after failing to sell. They plan to relist it in January for around $200,000, roughly their 2020 purchase price. "It's very, very disappointing. Flagler Beach is saturated with places for sale," Phillips lamented.
Data from Redfin shows that in September, almost 7% of condo sellers removed their properties from the market—the highest rate for that month since 2015. These delisted units had typically been listed for over 120 days.
However, it's not all bleak. Zillow's chief economist, Mischa Fisher, points out that many owners with low or no mortgages can opt to rent out their units instead of selling at a loss. Conor and Susan Buckley took this route in Park City, Utah, after their condo sat unsold for five months. "People weren't really pulling the trigger on purchases," Conor Buckley observed, citing economic uncertainty and high interest rates.
Despite the current downturn, most condo owners still hold significant equity. Zillow estimates the typical condo is worth 43% more than its most recent purchase price. This allows sellers like Herbert Roskind in Phoenix, who has had his condo listed since 2023, to be patient. "I think there's a bit of a standoff here, where the sellers are not anxious and the buyers aren't either," he said.
The standoff in the condo market, driven by high costs, shifting demand, and economic caution, signals a challenging period ahead for this segment of the American housing landscape.
