A growing surplus of condos for sale could open opportunities for originators, but falling prices aren't necessarily translating into easier deals. Rising homeowners association fees, insurance costs, and stricter condominium financing requirements are complicating purchases even as sellers become increasingly willing to negotiate.
An estimated 197,248 condo sellers nationwide were listed in September, compared with just 88,460 buyers, according to a Redfin report released Monday. That represents 123% more sellers than buyers, the widest gap in records dating back to 2013, and up from 95.5% a year earlier.
The imbalance marks a dramatic reversal from September 2021, when buyers outnumbered sellers. Since then, the number of condo buyers has fallen 54%, while sellers have increased 36%.
Price Cuts Aren't Enough
The national median condo sale price fell 0.8% year over year to approximately $339,000 in September, its first annual decline in five months.
About 37% of condos sold during the month had undergone a price reduction, compared with 16% five years earlier. The typical condo spent 63 days on the market before going under contract, up from 35 days in September 2021.
Yet lower prices aren't necessarily delivering lower monthly housing costs.
Rising HOA fees, insurance premiums, and special assessments are eroding affordability, particularly in Florida and Texas. Those expenses can offset savings from a negotiated purchase price and affect a borrower's debt-to-income ratio.
"For renters who have saved for a down payment and are ready to build equity, these buyer-friendly conditions are an opportunity," said Asad Khan, a senior economist at Redfin. "Buyers have more options and a better chance of finding a place they like. Although condo prices and HOA fees remain relatively high, buyers have more room to negotiate price cuts, and condos are still generally more affordable than single-family homes."
Condo Financing Adds Another Hurdle
The market slowdown comes as lenders adjust to changes in Fannie Mae and Freddie Mac's condominium project review standards.
Fannie Mae eliminated its Limited Review option for applicable condo loan applications beginning Aug. 3, 2026, increasing reliance on more comprehensive project reviews.
Additional changes scheduled for January 2027 will raise the minimum annual reserve allocation from 10% to 15% for applicable projects, putting greater attention on association budgets and long-term maintenance funding.
An AD Mortgage analysis found that approximately 30% of manually reviewed Florida condo projects had reserve funding below the upcoming threshold.
That does not automatically make those properties ineligible for financing, but it adds another consideration for lenders and borrowers in an already struggling market.
Insurance coverage, deferred maintenance, special assessments, and association finances can all affect project eligibility. NMP previously covered those challenges in its condo review changes.
Texas and Florida Face The Biggest Imbalances
Texas recorded some of the nation's widest gaps between condo sellers and buyers in September.
San Antonio led the 50 largest metropolitan areas with 459% more sellers than buyers, followed by Houston at 322%. Miami ranked third at 274%, while Austin recorded a 258% surplus.
Nine of the 10 markets with the largest seller surpluses were in the Sun Belt, where higher ownership costs, new construction, and competition from single-family homes are weighing on condo demand.
"San Antonio condos may have an attractive purchase price, but buyers are looking at the total monthly payment. Because we have so many affordable single-family homes available, many buyers choose a house when the payments are close," said Derrell Skillman, a Redfin Premier agent in San Antonio.
Skillman also pointed to builder incentives, financing restrictions, softer investor demand, and a seasonal slowdown in military-related moves.
Not every market is struggling. Nassau County, New York, was the only metro Redfin classified as a condo seller's market, with 32% fewer sellers than buyers. Chicago, Milwaukee, Newark, New Brunswick, and San Francisco had balanced markets.
What It Means
The expanding condo inventory creates opportunities to reach buyers who may have been priced out of single-family homes. But qualifying the borrower is only part of the transaction.
Higher association dues can weaken affordability even after a price reduction, while project-level insurance, reserve, and maintenance issues can affect whether a loan meets agency or investor requirements.
With additional reserve requirements approaching in January, reviewing a condo project's financial condition early could help originators identify potential obstacles before borrowers commit to a purchase.
