The condominium market is buckling, real-estate experts say

In some markets, sellers of units in condominiums are more likely to cut prices than sellers of single-family homes, one economist said.

When Will Hudson bought his condominium unit in Golden, Colo., two years ago, the last thing he expected was to be trapped with the real-estate equivalent of a lemon.

With fond memories of living in the condominium complex in his 20s, the 43-year-old public employee decided to buy a two-bedroom unit, sight unseen, for $260,000 in July 2024. At the time, he was living with his fiancée in Bordentown, N.J., and wanted to give Colorado a try.

That purchase quickly turned out to be "the greatest mistake of my life," Hudson told MarketWatch. Within a year of moving in, he wanted to sell, because multiple issues - from water shutoffs to flooding in common areas - made living there difficult.

But a similar property in the complex was already on the market and wasn't selling, prompting him to hold off on listing his. After cutting the asking price from $270,000 in May 2025 to $149,000 in mid-September 2026, the other owner is finally under contract, but the sale has yet to close. Hudson is watching that listing closely while he decides whether to put his unit on the market.

Hudson said he wants to sell in part because he's fed up. His homeowners-association fees have been creeping up to nearly $470 per month, and that's on top of expenses stemming from special assessments he's had to cough up. Living conditions haven't been great; over one recent weekend, his unit had no water or sewer service for two days.

Hudson's frustration mirrors the plight of many owners of condominium units across America.

As home-insurance premiums hit new highs, condo-unit owners are seeing surging HOA fees as their buildings' rising insurance costs are passed on to residents. Special assessments, one-time fees that owners pay to fund shared expenses, are also on the rise. They're more commonly levied on older buildings and communities with shrinking financial reserves, according to Vantaca, an HOA-management platform that works with property-management companies.

For instance, 8.5% of buildings constructed before 2000 had a special assessment in 2025, with the typical owner footing a bill of nearly $2,500 per unit. Across all buildings, the median special assessment bill has risen from $930 to $1,100 in the last four years.

And monthly assessments and other fees are poised to go up even more. More than half of community associations (54%) plan to increase their fees to cover expenses like insurance costs and to help meet new standards for financial reserves that go into effect in 2027.

Even if a unit in a condominium comes with a lower price tag, relative to a detached property, selling one has become more difficult as buyers get spooked at the prospect of bearing ever-rising costs. At a time when home sellers across the country are struggling, owners of condo units have it particularly bad.

"It used to be that a condo would allow you to enter the market because they typically were at a lower price point, and were easier to qualify for," said Ashley Harris, director of home-buyer education at Neighbors Bank, a mortgage lender. But now, with surging HOA fees, "a condo might be more expensive per month" than a single-family home, she said.

In August, condo and co-op sales were down 2.7% compared with the same month last year, according to the National Association of Realtors.

Weakening demand has led to more condominium units on the market. For example, in the area from New Jersey to Virginia served by the multiple-listing service Bright MLS, condo units now account for 15% of active inventory - up from less than 10% prior to the pandemic, Bright MLS Chief Economist Lisa Sturtevant told MarketWatch.

"In our market, condo sellers are having to make price adjustments more often than single-family-home sellers," Sturtevant said.

HOA fees are rising fast

In 2025 the median HOA fee nationally was $135, up from $108 in 2019. In Florida, they've gone up even more; in the Miami-Fort Lauderdale-West Palm Beach metro area, a median-priced $425,000 home came with a $617-per-month HOA fee, up from $401 in 2019, according to a report by Realtor.com.

And it's getting increasingly hard to find a house that's not in an HOA. In 2025, 44% of homes for sale in the U.S. required owners to pay HOA fees, up from 34% in 2019, Realtor.com found.

To be clear, HOA fees are not exclusive to condominiums. Townhouse and single-family-home owners also pay HOA fees if the property is part of a homeowners association. About a third of single-family homes have HOAs, Realtor.com found - but the share is significantly smaller than the 85% of condo units and townhouses that fall under the jurisdiction of an HOA.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

Related: HOA fees are becoming more common for single-family homes - and top $500 a month in these hot spots

Insurance is a big factor behind the HOA-fee increases for condo-unit owners. While some insurers are charging higher premiums, others are dropping condo HOAs and their owners altogether due to rising losses from natural disasters, such as hurricanes and wildfires, and increasing reinsurance costs. The rising cost of repairing damage, particularly in older buildings, is also driving some insurers to drop or limit coverage.

Some states are stepping in to address the issue. In 2025, following multiple complaints that condominium buildings' master policies were either being canceled or not renewed, Missouri's Department of Commerce and Insurance told insurers to avoid doing so.

A condominium losing its master policy can have severe consequences for owners of units, sellers and even potential buyers, because it leaves the entire building uninsured. That means that if the building's elevator collapses or there is a fire that severely damages the building, homeowners are on the hook for the repairs. The people who own units in the building potentially face large out-of-pocket costs.

Chris Colgan, a Virginia-based real-estate agent with the Real Brokerage, told MarketWatch that a client whom he helped buy a home a few years ago called him up recently and asked if a special assessment levied on owners of units in the condominium, coupled with an increase in monthly fees, was legal. It was.

"He wants to move soon, in the next couple of months, and he was worried about the [rising fees] hurting his resale value," Colgan said. The reason for the increase in fees and the special assessment of around $2,500 was that the association needed more money to keep its insurance policy.

"At some point, some of these condo-association dues are [becoming] more than a car payment," Colgan noted, even as some older buildings don't have sufficient amenities to justify the higher fees stemming chiefly from insurance costs.

Condo units without the right insurance become unsellable

Lack of insurance also affects mortgage financing - and whether prospective buyers can get a loan.

When a buyer wants to purchase a home with a conventional mortgage, that loan is generally backed by Fannie Mae (FNMA) or Freddie Mac (FMCC). The two government-sponsored enterprises require condo associations to maintain a master insurance policy that covers 100% of the units' replacement-cost value estimate, among other standards.

When buildings can't pay for or lose the master policy, it makes it tough to sell a unit because prospective buyers wouldn't be able to qualify for a traditional mortgage.

Changes at the federal level are poised to make purchases in condominiums even more complicated. In March of this year, Fannie and Freddie announced new, stricter financing standards that will require more scrutiny of a condo building's finances.

The upshot is that it's harder for buyers to get mortgages, and the new lending standards are "affecting demand for condo units across the country, especially in the places where insurance issues are more pronounced," Joel Berner, a senior economist at Realtor.com, told MarketWatch. "It's already hurting resale values."

In Colorado, Hudson is facing an insurance issue. When he was buying his unit, the lender he initially approached had been unwilling to give him the loan because the HOA's master insurance policy covering the roof was inadequate and didn't meet federal guidelines. At his real-estate agent's urging, he found an alternative lender, but he had to put down 20%.

Now he might not be able to find a buyer when and if he puts the unit up for sale, Hudson said, because a buyer might not be able to get a mortgage for the same reason that initially blocked him.

Condo buildings are quietly losing value

In New Orleans, a federal contractor told MarketWatch that the condo unit he paid $90,000 for in 2005 would fetch at most $110,000 two decades on if he were to sell, by his estimate.

Not only is the building within a flood zone, but many residents weren't paying their HOA fees, leaving the HOA underfunded and potentially unable to pay for structural repairs if there were an emergency.

"No amount of cajoling or liens will scare" the owners who don't pay, the former U.S. Marine, who wanted to remain anonymous, told MarketWatch. He pays about $400 a month in HOA fees and plans to move next year, but he is aware that selling will be a pain. He is hoping for a cash sale so that he can at least pay off the remaining $25,000 balance on his mortgage.

"It could take months or years to find a buyer," the veteran added, because the lack of insurance is going to be a big issue.

Would he buy in a condominium again? "Hell no," he said.