Condo prices drop year over year, led by Florida declines

It's a tough time to be a condo owner, particularly in Florida, and most especially if you're trying to sell.

That's the upshot of a new report from Redfin. Condo prices dropped 2.2% year-over-year in May. That's the second-sharpest decline since the brokerage began tracking condo data in 2012. While the broader housing market has cooled, condos are faring worse: national condo sales are down nearly 12% from a year ago, compared to a 3.7% drop for single-family homes.

"It's a slow housing market across the board, but condos have been hit particularly hard," said Aditi Jain, a Redfin Premier real estate agent in the Boston area.

The condo slump is most acute in Florida, where sales are down more than 30% in some areas, according to Redfin. This has caused sales prices to fall across the state. Of the 10 biggest metros with price drops, seven are in Florida, with sales prices down 32.2% in Deltona, Fla., and 19% in Tampa.

A combination of factors are turning off would-be buyers and pushing down prices. For the past few years, builders have been on a construction spree as they rushed to keep up with demand. That demand has dropped off in the past year, leaving the state with excess supply. At the same time, rising insurance costs and HOA fees have made condos expensive to own. 

A Florida law passed in the wake of the 2021 Surfside collapse required condominium associations to do structural surveys and perform costly repairs, as well as create a financial reserve for future maintenance. This led to many owners facing heftier association and maintenance bills. Many condos in Florida have even been blacklisted by Fannie Mae in particular because of worries about safety and insurance coverage.

Florida Governor Ron DeSantis signed legislation last month aimed at easing the burden for some condo associations by giving them more time to perform the structural studies and build up funding reserves. 

While Florida is in the eye of the metaphorical hurricane bearing down on the condo market, other states are feeling the pinch, too. Sales are down in Texas, which saw a similar post-pandemic construction craze, with Dallas seeing a drop of more than 33% from last year. Sales prices have fallen 23% in Houston and 11% in Austin.

There are a few bright spots, though, according to Redfin. Markets in the Northeast saw sales prices jump year-on-year, with New Brunswick, N.J., and Pittsburgh seeing increases of more than 14%. This comes as supply continues to be limited in many areas across this region.