As inventory piles up and buyers stay on the sidelines, condo prices are falling in Florida and Texas metros. The increase in inventory comes as high HOA fees and insurance costs make condos tough to sell, according to a new Redfin report.
The number of condos for sale in Tampa jumped 57.2% in July from a year earlier, while pending sales dropped 18.9% and the median sale price fell 4.9%. In Houston, condo inventory is up 35.9%, pending sales are down 35.3%, and prices are down 6.5%. There’s also more supply than demand for single-family homes in Florida and Texas, but the market is faring a bit better, and prices are generally increasing, Redfin points out.
While condo inventory is increasing and pending sales are falling nationwide, Florida and Texas are seeing the largest surge, which is partly related to skyrocketing insurance costs. Redfin says that climate disasters are contributing to soaring insurance premiums, and some buyers in Florida and Texas find it hard to secure coverage at all.
Rising costs are scaring off condo buyers and motivating condo owners to sell, Redfin notes. And investors have also backed off. Nationwide, investor purchases of condos fell 3% year over year in the second quarter of 2024.
Another contributing factor to the increase in inventory is the construction boom that has happened in Texas and Florida. Both states are building more new homes, including multifamily, than anywhere else in the nation, according to Redfin. This includes condo buildings that were built in the wake of the Surfside condo collapse, which highlighted the need for many older condo buildings to be replaced.
“The condo market isn’t moving,” says Steven Weiss, a Redfin Premier agent in Tampa. “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 HOA fees rise and people grow more wary of buying in a waterfront building.”
Across the country, pending sales of condos fell 5.5% year over year in July, dropping to the lowest level of any July on record. The number of condos for sale rose 27.1% from July 2023, a major increase but much less than what Florida and Texas are seeing. Yet, the mismatch in supply and demand hasn’t yet pushed down prices nationwide as the median condo sale price is up 3.9% year over year.
