US condo sellers outnumber buyers more than 2 to 1 as rising fees drive buyers away

Higher insurance premiums and homeowners association fees are making condos harder for many shoppers to afford, according to a Redfin report, which identified more than two sellers for every buyer in the United States in September.

Here's what to know

Redfin estimated that just over 197,000 American condo sellers were seeking deals, while only 88,500 buyers were looking to purchase, Real Estate News reported.

Owners already navigating a slow housing market faced another hurdle: Condo buyer numbers had reached a 13-year low.

The seller surplus grew from 95.5% a year earlier to 123% in September, reaching its widest spread since 2013.

Redfin expected condo prices to keep falling after September's median sale price dropped 0.8% year over year to $339,000.

Price cuts had also become more common. 

Around 16% of condos sold five years earlier had been marked down, compared with 37% of those sold in September.

More background

Rising insurance premiums and HOA costs were discouraging first-time buyers in particular, Redfin found, contributing to weaker demand.

Natural disasters have contributed to the cost increases, putting financial pressure on condo ownership in Texas and Florida.

Redfin found that San Antonio had 459% more condo sellers than buyers, the biggest imbalance among American metropolitan areas. 

Houston and Austin also ranked near the top. The report identified Texas as the state offering buyers the most negotiating power.

Miami's September figures also favored buyers. Redfin estimated that the city had 274% more condo sellers than buyers.

What can be done?

Redfin senior economist Asad Khan posited that buyers who can cover a condo's ongoing expenses could use the slower market as leverage for a lower purchase price.

"For renters who have saved for a down payment and are ready to build equity, these buyer-friendly conditions are an opportunity," Khan explained. "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."

Still, HOA restrictions have been known to block money-saving home updates, including rooftop solar panels and native plant lawns.

For homeowners encountering association restrictions on solar panels or native landscaping, working with an HOA can lead to changes to association rules.

Redfin Premier agent Cecilia Cordova in Miami advised owners to price their condos below competing listings in the same building if renting out the unit was not an option.

"It's not time for you to try to experiment with a higher price," she warned.

Where can I learn more?

The same costs deterring condo buyers are squeezing owners, too.

• A condo buyer's financing deal collapsed when low HOA reserves pushed rates near 10%.

• Fannie Mae's tighter condo lending comes as prices slide in Florida, Texas, and Arizona.

• In Florida, rising condo fees intended to prevent another Surfside disaster are displacing seniors.

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