Rising Inventory and Falling Prices: Condo Market Struggles in Florida and Texas
As inventory levels rise and buyers hesitate, condo prices are declining in major metro areas across Florida and Texas. According to a recent Redfin report, the surge in inventory is being driven by high HOA fees and increasing insurance costs, making condos challenging to sell.
In Tampa, the number of condos for sale rose 57.2% in July compared to the previous year, while pending sales decreased by 18.9%, and the median sale price dropped by 4.9%. Houston experienced a 35.9% increase in condo inventory, a 35.3% decline in pending sales, and a 6.5% decrease in prices. While single-family homes in these states also face more supply than demand, they are performing better overall, with prices generally on the rise, according to Redfin.
Although condo inventory and pending sales are declining nationwide, Florida and Texas are experiencing the most significant increases, largely due to rising insurance costs. Redfin notes that climate-related disasters are contributing to skyrocketing insurance premiums, and some prospective buyers in these states are struggling to obtain coverage altogether.
Redfin highlights that rising costs are deterring buyers and motivating current condo owners to sell, with investor interest also waning. Nationally, investor purchases of condos declined by 3% year-over-year in the second quarter of 2024.
Another factor contributing to increased condo inventory is the construction boom in Florida and Texas. Both states are leading the nation in new home construction, including multifamily developments, as older condo buildings, especially those built in the wake of the Surfside collapse, are replaced.
“The condo market isn’t moving,” says Steven Weiss, a Redfin Premier agent in Tampa. “Most of today’s buyers prefer move-in-ready single-family homes. Condos are more difficult to sell, especially as HOA fees rise and concerns about waterfront buildings grow.”
Nationwide, pending sales of condos fell 5.5% year-over-year in July, marking the lowest level recorded for any July. Although the number of condos for sale increased by 27.1% from July 2023, this rise is less pronounced compared to Florida and Texas. However, despite the imbalance between supply and demand, condo prices have not declined nationally, with the median sale price rising 3.9% year-over-year.