Condo market cooling notably as sales prices plunge
A new report from real estate brokerage Redfin reveals that the condo market is experiencing a significant slowdown, with 68.4% of US condos selling below their original asking price in February. This marks a five-year high and represents an increase from 63.3% a year earlier.
The cooling trend extends across property types but is most pronounced in the condo sector. By comparison, 59.4% of townhouses and 64.2% of single-family homes sold below list price in February, both showing smaller increases than condos when compared to the previous year.
Industry experts attribute the condo market’s particular weakness to surging insurance costs and homeowners’ association (HOA) fees, which have substantially reduced affordability in what was traditionally seen as an entry point to homeownership.
“The Florida condo market is in uncharted territory,” said Tim Harper, a Redfin Premier agent in Orlando, where nearly 85% of condos sold below asking price in February. “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.”
The gap between listing and sale prices is also widening. The typical condo sold in February went for 4.6% below its asking price, compared to a ratio of 96.4% a year earlier and nearly 100% three years earlier. In Orlando specifically, condos sold for nearly 10% below original list price.
Regional variations show Denver experienced the most dramatic shift, with a 17.2-percentage-point increase in condos selling below asking price compared to last year. Virginia Beach and Charlotte followed closely behind.
Sacramento agent Alison Williams highlighted the impact of rising HOA costs: “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.”
According to the report, the cooling condo market reflects broader housing trends as inventory increases and elevated mortgage rates dampen demand, giving buyers more negotiating power. Condo inventory nationwide jumped 15.3% year-over-year in February, with Orlando seeing an even steeper increase of 30.7%.
Despite these challenges, Redfin senior economist Asad Khan sees potential opportunities: “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.”
For sellers facing this challenging market, Redfin agents emphasize the importance of fair initial pricing to avoid having units linger on the market, which can further deter potential buyers.
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