Florida and Texas Condo Supply is Piling Up As Sales Slow Amid High HOA, Insurance Costs

Rhea-AI Summary

Redfin reports a significant slowdown in the condo market across major Florida and Texas metros, with rising inventory and declining sales. Key findings include:

• In Tampa, condo inventory increased 57.2% year-over-year in July, while pending sales dropped 18.9% and median prices fell 4.9%.
• Houston saw a 35.9% increase in condo inventory, a 35.3% decrease in pending sales, and a 6.5% price drop.
• Factors contributing to this trend include surging HOA fees, increasing insurance costs due to climate disasters, and a new construction boom.
• Investors are less interested in condos, with nationwide investor purchases falling 3% year-over-year in Q2.

While the national condo market is also slowing, with pending sales down 5.5% year-over-year in July, prices are still up 3.9% nationally.

Positive

• National median condo sale price increased 3.9% year-over-year
• New construction boom in Texas and Florida, including multifamily buildings

Negative

• Condo inventory in Tampa increased 57.2% year-over-year in July
• Pending condo sales in Houston decreased 35.3% year-over-year
• Median condo sale price in Houston fell 6.5% year-over-year
• Investor purchases of condos nationwide fell 3% year-over-year in Q2
• Rising HOA fees and insurance costs in Florida and Texas markets
• Nationwide pending sales of condos fell 5.5% year-over-year in July

Insights

Real Estate Analyst

The condo market in Florida and Texas is facing significant headwinds, with inventory surging and sales declining across major metros. This trend is particularly concerning as it diverges from the national average, where condo prices are still rising despite slower sales.

Key factors driving this downturn include:

• Surging HOA fees (up 15% in some areas) due to increased maintenance requirements post-Surfside collapse
• Skyrocketing insurance premiums linked to climate disasters
• Reduced investor interest, with some now trying to offload properties
• A boom in new condo construction adding to inventory

The median sale price drops in cities like Tampa (-4.9%) and Houston (-6.5%) year-over-year are red flags for the market. This could signal a potential shift in the real estate landscape, with implications for developers, investors and homeowners in these regions.

Insurance Specialist

The impact of climate-related risks on the condo market in Florida and Texas is profound. Soaring insurance premiums are not just a cost issue; they're reshaping the entire market dynamic. Some key points:

• Insurance companies are exiting these high-risk states, limiting coverage options
• Waterfront properties, especially condos, face disproportionately high premiums
• The insurance crisis is causing a ripple effect, influencing HOA fees and overall property desirability

This situation underscores the growing importance of climate risk assessment in real estate. It's likely we'll see a continued shift in buyer preferences towards more resilient properties, potentially impacting long-term property values in vulnerable coastal areas.

Market Strategist

The condo market downturn in Florida and Texas presents both challenges and opportunities. While the current trend is negative, it's important to consider potential market corrections:

• The surge in inventory (80.7% in Jacksonville, 63.4% in Fort Lauderdale) could lead to price stabilization as the market adjusts
• Decreased investor activity might open doors for primary homebuyers, potentially shifting market dynamics
• The new construction boom could address outdated housing stock issues, improving overall market health long-term

Investors and developers should watch for potential policy interventions or insurance market reforms that could alleviate current pressures. The market may be approaching a reset point, which could present buying opportunities for those with a long-term outlook.

Redfin reports condo inventory is soaring and pending sales are dropping in major Florida and Texas metros like Miami, Jacksonville, Austin and San Antonio, causing prices to decline

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Condo prices are falling in major Florida and Texas metros as inventory piles up and buyers back off, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. This comes as high HOA fees and insurance costs make condos a tough sell.

In Tampa, for instance, the number of condos for sale soared 57.2% from a year earlier in July, pending sales dropped 18.9% and the median sale price fell 4.9%. In Houston, condo inventory is up 35.9%, pending sales are down 35.3% and prices are down 6.5%. There’s also more supply than demand for single-family homes in Florida and Texas, but the market for them is faring a bit better, and prices are generally increasing.

Nationwide, condo inventory is increasing and pending sales are falling—though not as much as in Florida and Texas—and prices are still rising.

Condo market summary: Texas and Florida, July 2024 Texas and Florida metros that are among the 50 most populous U.S. metros
	Median sale price	Median sale price, YoY	Pending sales, YoY change	Sales, YoY change	New listings, YoY change	Active listings, YoY change
Austin, TX	$380,000	-1.9%	-12.9%	-11.1%	4.2%	28.6%
Dallas, TX	$270,000	-0.8%	5.7%	-0.9%	7.9%	61.7%
Fort Worth, TX	$217,000	8.0%	-3.9%	-33.3%	-1.7%	65.4%
Houston, TX	$159,000	-6.5%	-35.3%	-26.3%	-8.0%	35.9%
San Antonio, TX	$199,000	-2.2%	-15.4%	-48.5%	1.2%	58.3%
Fort Lauderdale, FL	$230,000	-4.2%	-18.0%	-13.9%	14.7%	63.4%
Jacksonville, FL	$270,000	-6.6%	-15.9%	-14.3%	27.6%	80.7%
Miami, FL	$403,000	-2.9%	-12.9%	-7.9%	13.0%	39.9%
Orlando, FL	$218,500	-0.7%	-22.6%	-17.3%	-6.6%	67.5%
Tampa, FL	$237,750	-4.9%	-18.9%	-8.1%	0.1%	57.2%
West Palm Beach, FL	$265,000	1.9%	-11.2%	-8.6%	4.0%	42.0%
U.S.	$355,073	3.9%	-5.5%	1.1%	2.8%	27.1%

There are several reasons why demand for condos is falling and inventory is piling up in Florida and Texas:

• Surging HOA fees in Florida. A separate Redfin analysis found that HOA dues are up more than 15% from last summer in Tampa, Orlando and Fort Lauderdale. They’ve also risen more than the nationwide average in West Palm Beach and Jacksonville. HOA fees are increasing because the Surfside condo collapse led to additional maintenance requirements for condos, and because of rising insurance costs.
• Climate disasters contributing to soaring insurance premiums. On a related note, frequent and intense natural disasters in Florida and Texas are a major factor in skyrocketing insurance costs, which contributes to surging HOA fees in condo buildings as maintenance costs are passed on to unit owners. Some buyers in Florida and Texas struggle to find homeowner coverage at all as insurance companies leave the states. Those rising costs, along with the natural disasters themselves, are scaring off condo buyers and motivating condo owners to sell. Rising insurance costs also impact single-family homes, but condo owners are hit particularly hard because many condo buildings are on the waterfront, where insurance costs are higher. Owners of single-family homes on the waterfront are more likely to have enough money to pay high insurance costs or pay cash to avoid insurance altogether.
• Investors have backed off. Real estate investors are less interested in condos than they used to be; nationwide, investor purchases of condos fell 3% year over year in the second quarter. Florida Redfin agents are reporting investors aren’t buying condos anymore; instead, those who bought condos to rent them out a few years ago are trying to offload them.
• New construction boom. Texas and Florida are building more new homes, including multifamily buildings, than anywhere else in the country. That includes many new condo buildings, some of which were built in the wake of the Surfside condo collapse, which revealed that many older condo buildings on the Florida coast needed to be replaced. That’s adding to the surge in condo inventory, which is piling up as buyers turn away.

“The condo market isn’t moving,” said Steven Weiss, a Redfin Premier agent in Tampa. “Most of today’s buyers want move-in ready single-family homes. It’s much more difficult to sell a condo. Buyers are aware we’re at somewhat of a tipping point for condos, and that their value may continue to decline as HOA fees rise and people grow more wary of buying in a waterfront building.”

Nationwide, condo sales are slow but prices are holding up

Zooming out to the U.S. as a whole, pending sales of condos fell 5.5% year over year in July, dropping to the lowest level of any July on record. For the sake of comparison, pending sales of single-family homes were essentially unchanged from a year ago.

The number of condos for sale rose 27.1% from a year ago, a major increase but substantially smaller than what Florida and Texas are seeing. The mismatch in supply and demand hasn’t yet pushed down prices nationwide; the median condo-sale price is up 3.9% year over year.

The downturn in the national condo market is being driven by the downturns in the major Florida and Texas metros discussed above, as well as other Sun Belt metros like Phoenix and Nashville, TN.

But Redfin agents in other parts of the country report slow condo markets, too, partly because of rising HOA fees. In San Jose, CA, for instance, condo inventory is up 50.7% year over year, and prices are down 3.2%. In Denver, pending sales of condos are down 25.4% and prices are flat.

To view the full report, including an additional chart, please visit: https://www.redfin.com/news/condo-supply-rises-florida-texas-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240904949547/en/

Redfin Journalist Services:

Angela Cherry

press@redfin.com

Source: Redfin

FAQ

How has the condo market in Tampa, Florida changed according to Redfin (RDFN) in July 2024?

In Tampa, Florida, the condo market saw significant changes in July 2024. Redfin (RDFN) reported that condo inventory increased by 57.2% year-over-year, pending sales dropped by 18.9%, and the median sale price fell by 4.9%.

What factors are contributing to the slowdown in condo sales in Florida and Texas according to Redfin (RDFN)?

Redfin (RDFN) reports several factors contributing to the slowdown in condo sales in Florida and Texas: surging HOA fees, increasing insurance costs due to climate disasters, reduced investor interest, and a new construction boom adding to inventory.

How have condo prices in major Florida and Texas metros changed according to Redfin's (RDFN) July 2024 report?

According to Redfin's (RDFN) July 2024 report, condo prices are falling in major Florida and Texas metros. For example, in Houston, prices are down 6.5%, in Jacksonville, prices fell 6.6%, and in Tampa, prices decreased by 4.9%.

What is the national trend for condo sales and prices in July 2024 as reported by Redfin (RDFN)?

Redfin (RDFN) reports that nationally, pending condo sales fell 5.5% year-over-year in July 2024, reaching the lowest level for any July on record. However, the median condo sale price increased by 3.9% year-over-year despite the slowdown in sales.