Potential homeowners seeking to purchase a condo could have the strongest negotiating power in more than a decade.
A Nov. 9 Redfin report showed that sellers in the condo market outnumbered buyers by an estimated 123 percent in September, up from 95.5 percent in the same month last year and marking the biggest seller surplus since 2013.
This is a significant reversal from the COVID-19 pandemic years when there were 25.1 percent fewer sellers than buyers in September 2021, according to the report.
The estimated number of condo buyers was about 88,460 in September—a 2.5 percent decline from August and the lowest level in at least 13 years. Meanwhile, there were 197,248 condo sellers—an uptick of 0.9 percent from August.
The report said rising insurance premiums, homeowners’ association (HOA) fees, and special assessments are eroding the affordability advantages condos have over single-family homes for first-time homebuyers, particularly in hurricane-prone states such as Florida and Texas.
An Oct. 16 report from Hippo Insurance estimated that, nationally, condo owners typically pay lower insurance premiums than a standard homeowner’s policy for single-family homes because the HOA master policy covers the building structure.
However, condo owners in Florida pay annual insurance premiums of $600 to $1,400, the highest in the country, compared with $200 to $380 in Arizona, the lowest nationwide.
“The factors that move your price most are location risk, how much personal property coverage you choose, and how much interior dwelling coverage you carry based on your HOA’s policy type,” the report noted.
According to HOAFeeCalculator.com, an online financial tool, HOA fees can vary substantially across states, depending on weather conditions, structure type, state mandates, and regional labor rates.
Hawaii had some of the highest HOA fees, averaging $790 per month, followed by New York at $480 and California at $450. Mississippi and Arkansas had the lowest average fees, at $140 and $145 per month, respectively.
“Although condo prices and HOA fees remain relatively high, buyers have more room to negotiate price cuts, and condos are still generally more affordable than single-family homes,” Redfin senior economist Asad Khan said.
“For renters who have saved for a down payment and are ready to build equity, these buyer-friendly conditions are an opportunity.”
The report noted the national median sales price for condos declined by 0.8 percent to about $339,000 in September—the first annual decrease in five months.
It also indicated that sellers were lowering asking prices to attract more buyers. Nearly 37 percent of condos sold in September had price reductions, compared with just 16 percent during the COVID-19 pandemic.
Regionally, San Antonio, Texas, had the widest gap between sellers and buyers, with an estimated 459 percent more sellers than buyers. Houston, Miami, and Austin followed with 322 percent, 273.6 percent, and 258 percent more sellers than buyers, respectively.
Miami, Florida, also has a significant seller surplus in the condo market, with about 274 percent more sellers than buyers.
Meanwhile, Nassau County, New York, was the only metro area considered a seller’s market among the 50 analyzed. The Long Island county had 32 percent fewer sellers than buyers.
Redfin also noted that the single-family market mirrored the condo trend in September, with sellers outnumbering buyers by 53.7 percent, although the gap was much narrower.
