Before You Buy That Discounted Condo, Real Estate Pros Say Watch for These Red Flags

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Condominium prices in the U.S. are declining—marking one of the few soft spots in a housing market that has otherwise remained steep. The average condo price in May was $354,100, down 2% from a year earlier, according to Redfin Corp. (NASDAQ:RDFN). That’s the second-largest year-over-year drop since the real estate firm began tracking the data in 2012.

Mortgage rates that peaked at 8% in October 2023 stalled many new buyers, particularly from younger generations, according to Fortune.

“This window could represent an opportunity for younger buyers who’ve been sidelined by pricing wars or rising interest rates,” Miami-based Douglas Elliman realtor Jaclyn Bild told Fortune. “Inventory has increased slightly, and days on the market have ticked up, giving buyers more leverage than they’ve had in recent years.”

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Condo prices are dropping because homeowners have gotten fed up with high homeowners association and insurance fees, according to Redfin.

“In many cases, this isn’t a demand issue,” Bild told Fortune. “It’s the cost of ownership pushing people out.”

In Tampa, median monthly HOA fees rose 17.2% year-over-year as of August 2024, compared to a national average of 5.7%, according to Redfin. Meanwhile, a study by Insurify found that home insurance costs are expected to rise 8% nationally this year, with some states seeing spikes as high as 27%.

“Buyers are looking at not just the purchase price, but the total monthly outlay—and if those numbers don’t work, they’re walking away or negotiating more aggressively,” Bild said.

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Condo prices in parts of Colorado have dropped 2.6% over the past year, falling from $416,000 to $405,000, Fortune reported.

“This could still be a good entry point for Gen Z or millennial buyers who understand the risks and are willing to do their homework,” Denver-area realtor Brett Johnson told Fortune. He warned that most risks arise in older or underfunded buildings.

“I’ve helped buyers take advantage of these price dips, but I always tell them to dig deep into the HOA’s financials, look out for special assessments, and understand what they’re signing up for,” he added. “Some of these condos are still great deals, but only if you know what you’re getting into.”

Bild said, “It’s a numbers game and buildings with transparency, maintenance history, and financial health are coming out ahead.”

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This article Before You Buy That Discounted Condo, Real Estate Pros Say Watch for These Red Flags originally appeared on Benzinga.com