Why Condo Prices Are Falling and What Savvy Buyers Should Check

Condo prices fell through 2025 on rising HOA fees, insurance costs, and special assessments. Statewide averages have since flattened, so the risk now sits at the building level. Savvy buyers separate discounted buildings from distressed ones by checking the HOA documents.

What separates a discounted condo from a distressed one comes down to the Warrantability Checklist: the six Fannie Mae criteria that decide whether a building can still be financed conventionally. A building that fails any of them loses access to the largest pool of buyers, because what is left is cash and portfolio lending, and the price follows the shrunken demand down. Run The GoverningDocs 5-Number HOA Health Check before you make an offer to tell which is which. The result shows up as the GoverningDocs HOA Health Grade on every property report.

How do I tell a discounted condo from a distressed one?

A "discounted" building has temporarily soft pricing (rate sensitivity, slow comp area, oversupply) but passes the 5-Number Health Check: percent funded ≥ 30%, delinquency under 15%, contribution rate ≥ 10%, single-entity ownership under 20%, and adequate insurance. A distressed building fails one or more. The discount is real but the underlying balance sheet supports a recovery once macro conditions improve.

A "distressed" building fails one or more 5-Number checks AND fails at least one item on the Warrantability Checklist. Conventional buyers can't finance it, the buyer pool collapses to cash + portfolio loans, and prices keep falling until either the association fixes the underlying problem (years) or the inventory clears at cash-buyer prices. Tampa, Miami, and parts of Orange County have a growing share of distressed inventory disguised as discounted listings.

Or it could be a building about to hit every owner with a $40,000 special assessment.

Condo discounts are still there, and they are real. But not every discount is a deal. Some buildings are cheap because the market is soft. Others are cheap because the building is in trouble. Statewide averages have stopped falling without telling you which of the two you are standing in, and the difference is in the HOA documents. Here's how to tell which is which.

What's Happening to Condo Prices Right Now?

The statewide decline has stopped. Florida's condo median was flat year over year in July 2026. The discount moved into time on market and terms, and it varies building by building.

Updated September 2026. This post originally reported a falling market, which is what the 2025 data showed. The statewide numbers have since turned, and the section below now reports both the decline and where it stands today.

The decline was real and it was steep. The national median condo price dropped 2.2% year-over-year in mid-2025, the second-largest decline on record according to Redfin data going back to 2012. Single-family homes rose 0.5% over the same period. Florida was the epicenter, with prices and sales down more than 30% in some metros according to the same Redfin data.

That is no longer what the statewide data says. In Florida Realtors' July 2026 monthly summary for townhouses and condos, the statewide median sale price was $295,000, exactly where it sat a year earlier. Closed sales rose 11% year over year, the eleventh consecutive month of annual gains, and active listings fell 12.9%. Months of supply dropped from 9.6 to 7.8.

What has not closed is the gap against houses, and it now shows up in terms rather than in the headline price. Reading the July 2026 condo summary beside the single-family summary for the same month, condo sellers received 93.0% of their original asking price against 96.0% for single-family homes, and waited a median of 76 days to contract against 47. Just over half of condo and townhouse sales closed in cash, 4,176 of 8,194, against roughly a quarter on the single-family side.

For context, agents generally treat four to six months of inventory as a balanced market. Florida condos sat at 7.8 months in July 2026 while single-family homes sat at 4.5. Buyers still have leverage in the condo market that they do not have in the house market.

Why Condos Are Falling While Houses Hold Steady

A perfect storm of rising HOA fees, insurance costs, special assessments, and tighter lending rules is hitting condos. Houses don't have these problems.

Single-family homes and condos are diverging because condos carry costs that houses don't. Four forces are compounding at once.

HOA Fees Nearly Doubled

Since the Surfside condo collapse in 2021, HOA fees have surged across Florida. In Miami-Dade County, the median monthly condo fee went from $567 in the spring of 2019 to $900 in the spring of 2024, a jump of more than 59%, according to Redfin data reported by the Miami Herald. Florida led the way after Senate Bill 4-D required milestone structural inspections and reserve studies in 2022. In the year to July 2024, Tampa fees rose 17.2%, Orlando 16.7% and Fort Lauderdale 16.2%, the three steepest increases among the 43 metros Redfin tracked, against a median of 5.7% nationally.

Owners used to be able to vote to skip funding reserves, and many did. That option is largely gone. For any budget adopted on or after December 31, 2024, owners in a Florida condo building that needs a structural integrity reserve study, which means most residential buildings three stories or higher, can no longer vote to underfund the structural items that study covers: the roof, the structure, plumbing, electrical, fireproofing, waterproofing and exterior painting, and windows and exterior doors (Fla. Stat. 718.112(2)(f); a multicondominium with an alternative funding method approved by the state is the narrow exception). For buildings that deferred maintenance for years, fees had to spike to catch up.

In a packet, this shows up in the budget. Find the reserve schedule and check whether the structural line items are funded at the amount the building's reserve study recommends. If the association waived reserves in an earlier year, the minutes for that vote will say so, and the catch-up is still ahead of you.

Insurance Is the Most Expensive in the Country

Florida is the most expensive state in the country to insure a home. The average annual premium reached $8,292 in 2025, an 18% jump over 2024, with another 2% projected for 2026, according to Insurify's 2026 Florida home insurance report. No other state is close.

For a condo buyer that cost lands twice. The association insures the building under a master policy and bills you for it inside your monthly fee, and you insure everything from the walls in with your own HO-6 policy. Some buildings have lost coverage entirely and ended up with Citizens, the state's insurer of last resort. Ask the association for the master policy declarations page and the premium line in the current budget, then compare it to last year's. That single line tells you whether another fee increase is already in motion.

When insurance costs rise, monthly ownership costs rise. When monthly costs rise, what buyers can afford to pay for the unit itself drops.

Special Assessments for Deferred Maintenance

Buildings that skipped maintenance for decades are now paying for it all at once, and the bill arrives as a special assessment on top of the regular fee. In our analysis of 1,900+ HOA documents, special assessment language is one of the most common red flags. The buildings that deferred the most are getting hit the hardest.

Ask the association in writing whether any assessment has been voted on, proposed, or discussed at a board meeting in the past year, and read the minutes yourself rather than taking the answer on faith. An assessment the board has discussed but not yet levied will not show up on an estoppel certificate, which reports what is owed or already scheduled to come due. It is still coming to you.

Financing Is Getting Harder

Fannie Mae and Freddie Mac tightened condo financing rules in 2026. Fannie Mae's reserve minimum rises from 10% to 15% of annual budgeted assessment income for loan applications dated on or after January 4, 2027, where the lender is running a Full Review, under Lender Letter LL-2026-03. Buildings with too many investor-owned units, high delinquency rates, or active litigation can be flagged as non-warrantable. Non-warrantable means no conventional mortgage. Buyers need cash or a portfolio lender at higher rates. That shrinks the buyer pool and pushes prices down further.

The 30-year fixed mortgage averaged 6.71% in Freddie Mac's survey released September 3, 2026, up from 6.50% a year earlier. That survey moves weekly, so treat it as a reading rather than a level. Higher rates compound the affordability squeeze for condo buyers already facing rising HOA fees and insurance.

The Two-Tier Market: Deals vs. Traps

Well-funded, compliant buildings hold value and attract financing. Underfunded, non-compliant buildings trade at deep discounts with major hidden risks.

Not all condo discounts are created equal. The market is splitting into two tiers, and the difference comes down to what's in the HOA documents.

Tier 1: Compliant, well-funded buildings. These buildings completed structural inspections early. Reserves are above 70% funded. Insurance is current. Maintenance is on schedule. Prices in these buildings are softer because of general market conditions, not building-specific problems. These are the real deals.

Tier 2: Non-compliant, underfunded buildings. These buildings are behind on inspections, have reserves below 30%, face pending special assessments, or have insurance issues. The deep discount isn't a deal. It's a warning. The price is low because informed buyers are walking away.

The problem is that both tiers look the same on Zillow. The listing doesn't tell you whether the building is 80% funded or 15% funded. It doesn't mention the $50,000 assessment the board discussed at last month's meeting. You have to read the documents.

How to Calculate the True Cost of a Discounted Condo

Add the purchase price, likely assessments, HOA fee trajectory, insurance increases, and any financing premium. The "true cost" is often $30-50K more than the sticker price.

A $240,000 condo is not a $240,000 purchase if the building has problems. Here's how to calculate what you're actually paying.

Same true cost. Completely different risk profile. The "discount" disappears once you factor in the hidden costs that the HOA documents would have revealed.

5 Things to Check Before Buying a Discounted Condo

Check percent funded, meeting minutes for assessment discussions, insurance status, SIRS compliance (Florida), and HOA fee history over the past 3 years.

1. Reserve Study: Percent Funded

This is the single most important number. It tells you how much the building has saved compared to what it should have saved. Under 30% means the building is significantly underfunded and a special assessment is likely. Over 70% means the building is in good shape.

Fannie Mae's minimum reserve contribution rises from 10% to 15% of annual budgeted assessment income for loan applications dated on or after January 4, 2027, and applies where the lender is running a Full Review. A building below that threshold may lose conventional financing eligibility, shrinking the buyer pool when you want to sell. We walk through the arithmetic, including which line items are excluded from the calculation, in the Fannie Mae 15% reserve rule explained with the actual math.

Upload a reserve study here to get percent funded, deferred maintenance items, and major expenses coming in the next 5 years.

2. Board Meeting Minutes: Assessment Discussions

Special assessments don't appear overnight. They get discussed in board meetings for months before they're voted on. If the minutes mention "deferred maintenance," "engineering report," "special assessment options," or "reserve funding shortfall," an assessment may be coming.

Ask for the last 12 months of board meeting minutes. Read them. Or check our guide to red flags in meeting minutes.

3. Insurance: Coverage Status and Premium Trends

Is the building's master policy current? Has any carrier dropped the building? What's the deductible? If the building lost its primary insurer, owners may be on a last-resort policy with worse coverage and higher costs. This affects your HO-6 policy costs too.

4. SIRS Report (Florida Buildings)

If you're buying in Florida, check whether the building has completed its Structural Integrity Reserve Study (SIRS). It applies to buildings three stories or more, and the deadline depends on which kind of building you are buying into. For a condo it was December 31, 2025, pushed back a year from December 31, 2024 by HB 913 (2025). For a co-op it was December 31, 2024, and that one was never extended, so a co-op that has not done the study is a year further behind than a condo in the same position. Condo associations that pair the SIRS with a section 553.899 milestone inspection have until December 31, 2026. A building that has not started is behind. A building that completed it early is ahead. The SIRS report will reveal exactly what structural work needs funding.

5. HOA Fee History: 3-Year Trend

A single HOA fee number tells you nothing. The trend tells you everything. Ask for the fee schedule from the past three years. If fees jumped 15-20% annually, more increases are coming. If fees have been stable with gradual 3-5% increases, the building is managing costs well.

Red Flags That Turn a "Deal" Into a Disaster

Deep discounts combined with low reserves, pending litigation, SIRS non-compliance, or insurance non-renewal are warning signs, not buying opportunities.

Any one of these alone might be manageable. Two or more together means the discount is probably not enough.

• Price below market + reserves under 30%. An assessment is coming. The seller knows it. That's why they're selling.
• Long time on market + litigation in meeting minutes. Active lawsuits scare lenders and buyers. If the building is suing its developer or being sued by owners, financing becomes harder and resale value drops.
• "Motivated seller" + SIRS non-compliance. In Florida, a building that hasn't started its SIRS process is facing mandatory reserve funding and potential structural repairs. The seller may be trying to get out before the bill arrives.
• Deep discount + recent insurance non-renewal. A building that lost its insurance carrier is in trouble. Premiums will spike on any replacement policy. Some buyers won't be able to get a mortgage at all.

Green Flags: When the Discount Is Actually a Deal

Buildings with 70%+ reserves, completed inspections, recently paid assessments, and sellers relocating for personal reasons offer real buying opportunities.

Not every discounted condo is a trap. Some buildings are priced down purely because of market conditions. Here's what "good discount" looks like.

• Building completed SIRS or structural repairs early. The pain is behind them. Costs are known. No surprises.
• Reserve funding over 70%. The building has been saving responsibly. Special assessments are unlikely.
• Recent assessment already paid. If the building just went through a major assessment and completed repairs, you're buying after the correction, not before it.
• Seller relocating for personal reasons. Job transfer, family situation, downsizing. The building is fine. The seller just needs to move.
• Market timing only. Soft demand, high inventory, buyer leverage. No underlying building problems. These are the deals that look obvious in hindsight.

Market Outlook: When Will Condo Prices Recover?

The statewide stabilization TD Economics forecast has shown up in the data. Florida's condo median was flat year over year in July 2026 with eleven straight months of sales gains. The recovery is uneven building by building.

TD Economics saw "scope for Florida's condo market to begin finding firmer footing by late 2026." That has broadly happened at the statewide level. Closed sales have risen year over year for eleven consecutive months through July 2026, active listings are down 12.9%, and the median sale price has stopped falling.

The recovery is not spread evenly, and the pattern shows in the price bands. Florida Realtors chief economist Brad O'Connor points to affordability supporting demand at the lower end and stronger household finances supporting sales higher up. Sales below $500,000 rose nearly 8% year over year in July, sales between $500,000 and $1 million rose 24%, and sales above $1 million rose more than 31%.

For buyers, this means the window is open but narrowing. Compliant buildings with strong financials recover first. Distressed buildings may take years to stabilize. If prices rise while HOA costs also rise, the window to buy a well-managed building at a discount closes from both sides.

How to Check Before You Buy

Every data point in this article comes from HOA documents. Reserve studies reveal percent funded and upcoming expenses. Meeting minutes reveal assessment discussions and litigation. CC&Rs reveal rental restrictions, amendment processes, and insurance requirements.

The problem is that these documents are 200-400 pages of dense legal text. Most buyers don't read them. The ones who do often don't know what to look for.

Upload your CC&Rs or reserve study to GoverningDocs. The tool extracts the key numbers, flags red flags, and tells you what's actually in the documents. Free. No signup.

In a market where the typical Florida condo seller is taking 93% of their original asking price, the real question is whether the discount is hiding something.