US condo prices fall as rising fees eat into affordability

Condo prices are falling across much of the United States, but the drop in the purchase price does not tell the full story for buyers. Data from Intercontinental Exchange, reported by CNN, showed condo prices fell 1.1% nationally over the past year. Over the same period, single-family home prices rose 1.5%. The gap between the two parts of the market shows how different the condo market has become from the market for detached houses.

The decline in condo prices was broad. Prices declined in 99 of the 100 largest housing markets in the country. Seattle recorded a drop of nearly 7%, the largest fall among the markets cited in the report. A fall in 99 of 100 markets is a national pattern, not a problem confined to one city or one region. For a buyer who has been priced out of a single-family home, a lower condo price can look like a way back into ownership.

Why condo prices are falling

Condo prices are falling in part because the monthly cost of owning a condo has risen, which hurts housing affordability even where the sale price has dropped. A condo owner pays a mortgage and also pays monthly homeowners association fees. That fee covers shared costs such as building upkeep, insurance, common areas and reserves for future repairs. When the fee rises, the total monthly payment rises with it, and a buyer must qualify for that higher total even if the asking price is lower than it was a year earlier.

How condo prices and fees interact with new rules

New Fannie Mae and Freddie Mac requirements, with Fannie Mae setting the reserve standard alongside Freddie Mac, taking effect in January 2027, will require condo associations to maintain larger financial reserves for repairs and maintenance. The measures aim to reduce risks exposed by the deadly 2021 Surfside building collapse in Florida. Reserves are money set aside before a repair is needed, so a building can pay for roof work, concrete work or other major repairs without a sudden bill for every owner.

The new reserve rules are likely to push fees higher in buildings that have not saved enough. Real estate agents warn that associations may raise monthly homeowners association fees or impose substantial special assessments to meet the requirements. A special assessment is a one-time charge to owners for a specific project. For a buyer, a special assessment can arrive soon after purchase, and for a current owner it can be a reason to sell before the bill arrives.

That timing shapes how condo prices move. A buyer who learns that a building faces a large assessment will offer less, or walk away. A seller who knows an assessment is coming may accept a lower price to close before the charge is set. In both cases, condo prices fall, but the fall reflects a cost that has moved from the sale price into fees and assessments. The buyer pays less upfront and more over time.

What falling condo prices mean for buyers

Buyers who are looking at condos should read the association budget and the reserve study before they judge a price. The budget shows current fees and planned spending. The reserve study shows what major repairs are due and whether the building has saved for them. A condo with a low price and a thin reserve fund can cost more in the first few years than a condo with a higher price and a well funded reserve.

Lower purchase prices may not translate into cheaper ownership for prospective buyers, the report notes. That point is the heart of the current condo market. A price cut helps only if the monthly fee and any coming assessment stay within the buyer's budget. Buyers who stretch to buy at the lower price and then face a fee increase can end up with the same monthly payment they were trying to avoid.

For now, condo prices point in one direction and ownership costs point in another, and that split is a housing affordability problem for buyers. The national fall of 1.1% gives buyers more room to negotiate, and the coming reserve rules give them a reason to ask hard questions about fees. A condo can still be a sound purchase, but the purchase price alone no longer answers the question of whether it is affordable.