The condominium market is lagging due to an imbalance between supply and demand, with some parts of the country feeling the struggles more acutely than others.
That’s according to a new report from Redfin, which noted that pending sales of condos are down 5.5% annually in July. The drop brought pending condo sales to the lowest level of any July ever recorded by Redfin; for context, pending sales of single-family homes were essentially flat year over year in the same timeframe, per Redfin’s data.
The national condo market is flagging in large part because of slumps in major markets like Florida and Texas, where many metros are seeing inventory vault and pending sales plummet. Moreover, while condo prices in the national market are generally holding steady or slowly rising, the two Sun Belt states are seeing sales prices slide.
In Tampa, for example, the number of condos for sale surged by 57.2% year over year in July. Pending sales of condos, meanwhile, plunged 18.9%, while median condo sales prices are down 4.9% annually. In Houston, condo supply was up 35.9% in July, while pending sales are down 35.3% and prices are down 6.5%.
“The condo market isn’t moving,” said Steven Weiss, a Tampa Redfin agent. “Most of today’s buyers want move-in ready single-family homes. It’s much more difficult to sell a condo.
“Buyers are aware we’re at somewhat of a tipping point for condos, and that their value may continue to decline as [homeowners association] fees rise and people grow more wary of buying in a waterfront building.”
Indeed, HOA fees are solidly on the upswing in the Sunshine state, with a Redfin analysis finding that association dues are up by more than 15% in Tampa, Orlando and Fort Lauderdale compared to last summer. HOA fees are rising in Florida partly because the tragic 2021 collapse of 12-story Champlain Towers South in Surfside brought about new maintenance requirements for condos.
Additionally, climate catastrophes in Florida, Texas and other states in the South are contributing to surging insurance costs, another driver for growing HOA fees. Meanwhile, investors have left the condo market: Investor purchases of condos nationwide decreased 3% year over year during the second quarter.
Redfin’s findings fall in line with recent data from Intercontinental Exchange, which found that the gulf between single-family home prices and condo prices continues to widen. Per ICE data, single-family home prices were up 3.7% in July, while condo prices grew just 2.3%.
