Condo prices are still high, but they’re down in some large markets and more affordable than other property types. Plus, buyers have significant leverage.
Even with lower mortgage rates, softening home price growth and more bargaining power, many buyers still can’t make the numbers work for a single-family home purchase — but they might be able to get a deal on a condominium.
A new Redfin study found that there are nearly 109,000 more condo sellers than buyers across the country. It’s the fifth straight month with at least a 70% gap between sellers and buyers — in April, it was above 80% — making it the strongest buyers market for condos since 2013.
That’s a lot of leverage — but potential buyers aren’t necessarily jumping in. Despite the lopsided market conditions, condo prices haven’t dropped that much, according to the report. In August the median price was $350,000, down just 1% year-over-year.
Other challenges include costly new rules, rising insurance prices and investor cash-outs.
Climate and insurance factors: With about one-fifth of the nation’s condominiums, Florida is a strong driver of condo market trends. Following the 2021 Surfside condo collapse, the state added several new HOA regulations, including more stringent inspection requirements and increased reserve funding.
Additionally, buying and selling condo units in areas prone to natural disasters, such as Florida, Texas and California, has become more challenging due to a Fannie Mae mortgage “blacklist” — a list of buildings deemed underinsured — that can make it difficult to find an insurance provider.
And even if obtaining homeowners insurance is not a problem, buyers in Florida face steep premiums and fewer options as more insurance companies pull out of the state.
A glut of supply: Florida not only has an outsized share of condos, it has a surplus of listings. According to Redfin, 5 of the 10 largest metro areas in the U.S. with the biggest gap between sellers and buyers are in Florida.
That’s good news for buyers: Condo prices have fallen more significantly in the Sunshine State compared to the rest of the country. The median condo sale price in Florida was $310,000 in the second quarter, according to the Florida Realtors association, down 6.1% year-over-year.
A move-up opportunity for renters: Despite the insurance challenges and other issues, condos could be a good first step for renters who’d like to start building equity.
“Even though condo prices are still fairly high and HOA fees are rising, condos are still more affordable than single-family homes,” said Asad Khan, a senior economist at Redfin.
“That’s especially true for people planning to hold onto their condo for several years. With some would-be condo sellers pulling back, buyers may not have this much negotiating power for long,” Khan added.
The $350,000 national median price for condos is below the median price for townhouses ($378,000) and single-family homes ($460,000). Redfin estimates there are 37.6% more sellers than buyers in the townhouse category and 29.7% more in the single-family market.
Regional differences: San Antonio had the biggest disconnect between condo sellers and buyers. In August there were 585 condo sellers compared to just 120 buyers. Miami had the next biggest gap, with 11,486 sellers and 3,270 buyers.
Tampa (241% more sellers) was third on the list, followed by Nashville (225% more sellers) and Austin (224% more sellers).
Of the 50 largest metro areas, seven — mostly in the Northeast — have more condo buyers than sellers. Nassau County, New York, tops the list with nearly twice as many buyers as sellers, followed by Montgomery County, Pennsylvania; Newark, New Jersey;and New Brunswick, New Jersey.
