Condo prices make record slide as crisis hits breaking point

Daily Mail​

7 days ago

Condo prices across the US are plummeting — with some areas seeing values sink by a staggering one-third in just a year.
The average condo sale price in the US fell 2.2 percent year over year to $354,100 in May, a new report shows — making it the second largest drop in records dating back to 2012.
The only steeper drop occurred in April 2023, shortly after the market's post-pandemic peak, according to Redfin.
The biggest condo price drops are hitting Florida and Texas. In May, Deltona, Florida saw prices fall over 32 percent year-over-year — the steepest decline nationwide.
Crestview, Florida (down 32 percent), Houston, Texas (down 23 percent), Tampa, Florida (down 19 percent), and Oakland, California (down 20 percent) also faced sharp drops.
Seven of the top ten metros with the largest price declines were in Florida, two in Texas. Sellers in parts of Florida have had to drop prices below $10,000.
Sales are sliding just as fast. Markets like Dallas, Palm Bay, Port St. Lucie, and Orlando saw condo sales drop over 30 percent year-over-year, with Florida again dominating the list of hardest-hit areas.
Condo prices are falling for a number of reasons. One major factor is that the market is flooded. There are 80 percent more condo sellers than buyers.
Many owners are racing to offload properties due to soaring HOA fees, skyrocketing insurance costs, and in some cases, hefty special assessments imposed by homeowners' associations.
On the other side of the table, potential buyers are hesitant — deterred by the very same costs and financing hurdles.
'It's a slow housing market across the board, but condos have been hit particularly hard,' said Aditi Jain, a Redfin agent in Boston. 'A lot of condo associations don't allow buyers with FHA loans, which is limiting sales.
'Two of my clients who want to buy a condo have had to back out of a purchase because they couldn't get financing.'
The Federal Housing Administration (FHA) offers a type of mortgage geared toward borrowers with lower credit scores or who otherwise don't qualify for a conventional mortgage.
Condos, often thought of as the affordable route to homeownership, are now viewed as an increasingly risky investment in many parts of the country.
As a result, they take longer to sell than they did in the past. The typical condo that went under contract in May did so in 46 days—the longest for any May since 2015 and up seven days from a year earlier.
By comparison, the typical single-family home went under contract in 38 days—the longest for any May since 2020 and up six days from a year earlier.
Because condos are sitting on the market, listings are piling up. The total supply of US condos for sale (active listings) hit the highest level in a decade last month, while the supply of single-family homes for sale was at the highest level since 2019.
With prices falling and listings lingering on the market, condo buyers in many cities may be able to find sellers who are willing to give concessions or sell for less than their asking price.
Florida and Texas have seen their housing markets slow in recent years due to an influx of supply ushered in by the pandemic homebuilding boom.
Rising HOA dues and insurance costs have exacerbated the slowdown for condos.
In Florida, natural disasters and heightened building regulations also contributed. The 2021 collapse of a condo building in Surfside, FL, led to a new law that requires condo buildings to undergo structural inspections and shore up reserves.
Many HOAs have been hiking fees and doling out hefty special assessments to comply with the new rules, reducing demand for condos.
Condos were doing better in the Eastern US.
New Brunswick, NJ saw condo prices rise 14.9 percent year over year in May—the largest jump among the metros analyzed.
It was followed by Montgomery County, PA (14.1 percent), Pittsburgh, San Francisco, and Ocean City, NJ.
Many markets in the east are still grappling with a supply crunch, which may be buoying prices.
Condo sales are holding up best in Indianapolis, which posted a 27.3 percent year-over-year increase. Next came Portland, ME, Charleston, SC, and Ocean City, NJ.
Meanwhile, David Podein, a real estate attorney at Miami-based Haber Law, has been on the front line of the condo crisis in Florida since the collapse.
He is directly involved in helping associations across South Florida navigate the legal, financial, and construction challenges that come with special assessments and capital repairs of condos.
To date, he has secured over $100 million in bank loans for condo associations to fund urgent improvements and avoid displacement of residents, especially older people.
He also advises lenders, boards and contractors on structuring these deals.
Podein says Florida is going through a 'tale of multiple markets,' that's seeing buyers looking for newer, up to code builds rather than condos more than 30 years old.
For these older condos, many filled with retirees and older people, have lost their appeal.