Roughly two-thirds (68.4 percent) of condos sold in February sold for less than their original asking price, up from 63.3 percent a year earlier and the highest February level in five years, according to a new report from Redfin.
The share of townhouses that sold below their original asking price also hit the highest February level in five years, rising to 59.4 percent from 54.7 percent a year earlier — but that’s smaller than the uptick for condos. The share of single-family homes selling for less than list price hit the highest February level in two years, climbing to 64.2 percent from 61.2 percent a year earlier — also smaller than the uptick for condos.
Across all property types, the share of homes selling for less than their original list price has been returning to pre-pandemic norms, according to Redfin. But condos are closest to reaching that benchmark; the share of condos that sold for less than list price in February was 3.5 percentage points below February 2019 levels, while single-family homes and townhouses were short a respective 4.1 and 4.9 percentage points.
The housing market has been cooling as inventory has climbed and elevated prices and mortgage rates have dampened demand, according to Redfin. This has given buyers who are in the market more bargaining power, often allowing them to negotiate a lower price. Redfin agents say the condo market has been slowing especially quickly — particularly in Florida — as rising insurance costs and new safety regulations cause homeowners association (HOA) fees to soar.
It is becoming more common for condos to sell for below their list price. Condo sellers are also seeing a bigger gap between their sale and list prices than they were in the past, according to Redfin. The typical condo that sold in February had a sale-to-original-list-price ratio of 95.4 percent, meaning it sold for 4.6 percent less than the owner listed it for. That’s down from a ratio of 96.4 percent a year earlier and nearly 100 percent three years earlier.
Many people have been priced out of the condo market, which Redfin said was once seen as the affordable way to break into homeownership.
“The Florida condo market is in uncharted territory,” Orlando metro-area Redfin real estate agent Tim Harper said in a release.
In the Orlando metro area, 84.8 percent of condos that sold in February went for less than their original asking price.
“We’re seeing a massive influx of condo inventory because a lot of senior citizens on fixed incomes can no longer afford their monthly payments, and a lot of other condo owners just want to move because they’re tired of dealing with rising HOA fees and special assessments,” Harper explained.
Condo listings in Orlando jumped 30.7 percent year-over year in February — double the 15.3 percent nationwide gain — and the typical condo that sold there had a sale-to-original-list-price ratio of 90.8 percent, compared with 94.1 percent a year earlier. That means it sold for nearly 10 percent less than its original asking price.
Other condo markets are softening, too, according to Redfin. In Denver, 77.2 percent of condos sold for less than their original list price in February, up 17.2 percentage points from a year earlier — the biggest increase among the metros Redfin analyzed. It was followed by Virginia Beach, Va. (+16.2 ppts) and Charlotte, N.C. (+15.3 ppts).
“Oh condos. Poor condos,” Sacramento, Calif., Redfin Premier agent Alison Williams said. “HOA dues are just going up and up and up, primarily because insurance costs for homeowners associations are going up. When you buy a $400,000 condo, it often means paying a $500 monthly HOA fee, so for many people, it’s not really that affordable anymore. Some buyers are looking to small single-family homes instead because there’s no HOA.”
But it’s not all doom and gloom in the condo market, said Redfin Senior Economist Asad Khan.
“The good news if you're a prospective condo buyer is that sale prices are now falling in some areas, and sellers are offering up concessions, meaning you might be able to get a good deal,” Khan said. “If you've been priced out of owning a condo, know that rents are hovering below their pandemic highs thanks to an apartment building boom, so renters may also find success asking for concessions.”
Redfin agents strongly recommend that sellers pricing their condo fairly from the get-go so that they find a buyer quickly. If the condo ends up sitting on the market, it can scare buyers off.