Bigger. Better. Bolder. Inman Connect is heading to San Diego. Join thousands of real estate pros, connect with the Inman Community and gain insights from hundreds of leading minds shaping the industry. If you’re ready to grow your business and invest in yourself, this is where you need to be. Go BIG in San Diego!
Buying a condo has traditionally been considered the budget-friendly way to enter homeownership, but in today’s market, buyers are thinking twice. In February, according to a new Redfin report, 68.4 percent of condos sold below their asking price — the highest share in five years. That’s a jump from 63.3 percent last year, signaling a cooling condo market.
TAKE THE INMAN INTEL INDEX SURVEY FOR MARCH
In addition to that, the gap between list and sale prices is widening. The average condo sold for 4.6 percent less than its original listing price, a decline from 3.6 percent the previous year and nearly full price three years ago.
According to Redfin, all housing types, including condos, townhouses and single-family homes, are seeing price adjustments, but condos led the way.
Redfin
Redfin experts point to high mortgage rates and rising home prices as major factors in the slowdown. With more condos lingering on the market, buyers have more leverage to negotiate lower prices.
Alison Williams | Redfin Premier Agent in Sacramento, CA
“Oh, condos. Poor condos,” Alison Williams, a Redfin Premier agent in Sacramento, California, said in a statement. “HOA dues are just going up and up and up, primarily because insurance costs for homeowners associations are going up. When you buy a $400,000 condo, it often means paying a $500 monthly HOA fee, so for many people, it’s not really that affordable anymore. Some buyers are looking to small single-family homes instead because there’s no HOA.”
Florida’s condo market has been hit especially hard. Insurance costs and new safety regulations — prompted by natural disasters — have pushed HOA fees even higher. In Orlando, condo listings jumped 30.7 percent year over year in February. The typical condo there sold for nearly 10 percent below its original asking price, and a staggering 84.8 percent of condos sold for less than list price.
Tim Harper | Redfin Premier real estate agent in Orlando, FL
“We’re seeing a massive influx of condo inventory because a lot of senior citizens on fixed incomes can no longer afford their monthly payments,” Tim Harper, a Redfin Premier real estate agent in Orlando, said. “Other condo owners just want to move because they’re tired of dealing with rising HOA fees and special assessments.”
Other metro areas are also seeing similar trends. In Denver, 77.2 percent of condos sold below asking price — an increase of 17.2 percent from last year. Virginia Beach, Virginia (+16.2 ppts) and Charlotte, North Carolina (+15.3 ppts) saw similar spikes.
Redfin Senior Economist Asad Khan sees an opportunity for buyers in this current market state.
Asad Khan | Redfin Senior Economist
“The good news if you’re a prospective condo buyer is that sale prices are now falling in some areas, and sellers are offering up concessions, meaning you might be able to get a good deal,” Khan said. “If you’ve been priced out of owning a condo, know that rents are hovering below their pandemic highs thanks to an apartment building boom, so renters may also find success asking for concessions.”
