T
he US condominium market is experiencing a rapid decline, with the median sale price falling 2.2% year-over-year to $354,100 in May. This marks the second-steepest annual drop since Redfin began tracking data in 2012, outpaced only by April 2023's 2.9% plunge.

    The slump is driven by an imbalance between condo sellers and buyers, with roughly 80% more sellers than buyers on the market. Rising insurance premiums, soaring homeowners' association (HOA) dues, and special assessments are pushing current owners to exit, while deterring new buyers from entering the market.

    "It's a slow housing market across the board, but condos have been hit particularly hard," said Aditi Jain, a Redfin Premier agent in Boston. "Many condo associations don't allow FHA loans, which is cutting off a big segment of potential buyers."

    While single-family home prices still showed a 0.5% gain in May to a median of $462,206, the condo sector is falling at a faster clip. Sales of condos plummeted 11.9% year-over-year in May, with active listings reaching a 10-year high.

    The deepest cracks are appearing in Florida and Texas, where median condo prices collapsed by double-digit percentages in several major metro areas. In Deltona, FL, prices dropped 32.2%, while Houston saw a 23% decline. Rising HOA fees and insurance costs have driven buyers away from these markets.

    However, parts of the Northeast are bucking the trend, with New Brunswick, NJ leading all metros with a 14.9% jump in median condo prices. Sales were also strongest in the East and Midwest, with Indianapolis posting a 27.3% surge in condo transactions.

    As prices soften and properties linger on the market, more sellers are offering price cuts and concessions. For opportunistic buyers, especially in oversupplied markets, the condo downturn could be a chance to negotiate a deal – provided they can stomach the fees and insurance premiums that come with the keys.