In October, prices for U.S. condos posted their biggest annual decline since 2012, reports The Wall Street Journal. While single-family home values have also slowed their growth, they're still up year-over-year. Condo prices, however, fell by 1.9%.
And this drop in condo values is only being made worse by the rising costs facing many owners.
As with most aspects of real estate, the extent of the problem depends on conditions in local housing markets. And many areas of the country have largely escaped falling condo values.
However, those who are affected can face real issues. And Florida, in particular, is being hit hard.
South Florida Is the Epicenter of the Condo Crisis
Last summer, The Miami Herald reported, "Especially those in older, ill-maintained buildings in South Florida are finding themselves ... caught between the closing walls of increasingly unaffordable ownership costs and a wary market, wherein to sell quickly they’d need to do so at a steep loss."
Also, last summer, the Federal Reserve Bank of Atlanta explained how and why the crisis emerged in the state:
"The residential real estate market in South Florida boomed in the wake of the pandemic, driven by a surge in migration from residents seeking sunshine and relief from widespread business shutdowns. But, in June 2021, the tragic Surfside building collapse ushered in a new era of challenges for the condominium segment of the market."
Following the Surfside condominium disaster, the Florida legislature took action to improve building safety through numerous legislative reforms. For condo owners, however, these changes have resulted in rising insurance costs, steep special assessments, and higher homeowners' association (HOA) fees.
It's Not Just Florida: Decline in Other Markets as Well
While the condo crisis may be worst in Florida, nationwide averages suggest other states and areas have been affected, too.
"More than one in 10 condos had a lower estimated value in November than their most recent sale price, according to a Zillow Group analysis," reports the WSJ.
The Journal cites Austin and San Antonio in Texas as badly hit owing to few buyers and an oversupply of condos, while downtown districts in San Francisco and Portland, where condos were previously most popular, lost some of their appeal during the pandemic.
Overall, more than 25% of condos in nine metro areas are reportedly worth less than their most recent sales price.
Soaring Insurance Costs
Nobody needs to be told that homeownership costs are rising for everyone. Insurance, whether as an individual policy paid directly to an insurer or as a building policy paid through a homeowners' association (HOA), is a particular issue for many.
The J.D. Power 2025 U.S. Home Insurance Study, published last September, reported, "Almost half (47%) of homeowners insurance customers in the United States have experienced a premium increase in the past year, the highest rate of insurer-initiated rate raises in more than a decade."
CBS News confirmed the dire news, also in September: "Average homeowners insurance costs have risen nearly 70% over the past five years, according to data from ICE Mortgage Technology. On average, single-family homeowners with a mortgage now pay $2,370 a year for their property policy."
This rise, according to CBS, is highest in Los Angeles, CA, where premiums have risen 19.5% year-over-year. The steepness of that particular rise may be a result of L.A.'s disastrous January 2025 wildfires.
The Insurance Information Institute’s (Triple-I’s) December 2025 Issues Brief offers some hope for the future, finding that "despite these pressures, the homeowners insurance market is beginning to show early signs of stabilization."
"The U.S. homeowners segment is projected to post double-digit net written premium (NWP) growth in 2025, with a return to overall profitability expected in 2026, a development that could help, over time, improve market resilience and support more stable pricing for consumers," continued Triple-I.
Skeptics, however, might read that as, "Don't hold your breath."
Other Costs Are Higher, Too
HOA dues have increased in most places and soared in some. "Dues are rising faster than inflation for many of the roughly 76 million residents of communities that keep shared pots to pay for expenses," said The Wall Street Journal in November.
The WSJ also mentioned that in some areas, such as Seattle, WA, HOA costs have increased by an average of more than 100% over the previous year.
Meanwhile, property taxes and maintenance and repair costs have all been rising as well.
"Homebuyers need to earn an annual income of $74,508 to afford the median-priced home in rural U.S. counties," said Redfin in November. "That’s up 105.8% from before the pandemic, when rural buyers needed to earn $36,206."
Redfin goes on to write that the income needed to buy in suburban counties has increased by 90.9%, while the income needed in urban counties was up 87.5%, compared to pre-pandemic levels.
Of course, higher costs are being shouldered by owners of single-family homes, as well as condos. But at least the former continue to see their home values rising, though at a slower rate than before. The average condo owner, however, faces higher expenses and falling property prices.
For some, that spells crisis.
