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In cities around the country, the market for condominium units constructed more than a decade or two ago is in a deep slump. High monthly fees and potential special assessments are probably to blame.
Vantaca, an HOA management software company, crunched the numbers and found that owners of older condos pay more than double the annual fees that newer condo owners do. Median fees for a condo constructed before 2000 were $11,431 per year, compared to $5,012 for a condo built in the last decade.
Older condos tend to sell for less than more recently constructed units and single-family homes. Historically, their lower cost made them appealing to first-time homebuyers and older downsizers. But the higher fees and risk of special assessments are changing the math, real estate agents around the country have told Yahoo Finance.
After a 40-year-old condo building in Surfside, Fla., partially collapsed in 2021, killing 98 people, many older condos needed to spend heavily to catch up on deferred maintenance, cover rising insurance costs, and meet higher reserve minimums. Those costs ended up being passed on to owners in the form of fee hikes and special assessments.
In the last year, nearly 12% of pre-2000 condos on Vantaca’s platform levied a special assessment — one-time extra fees that typically go toward major repairs or deep reserve shortages — with the median bill coming out to $2,041. Condos built between 2000 and 2015 also saw similar special assessment rates and bill sizes, while condos that were less than a decade old avoided them entirely.
Kelsey Earl, a Realtor with Keller Williams South Valley in South Jordan, Utah, said she typically advises clients against buying condos because of the fee risks, and because condos typically appreciate more slowly than single-family homes.
She worked with one prospective seller of an older unit who wanted to sell after his fees jumped. But other owners had the same idea. When list prices fell below what he owed, he decided to stay put.
“There are so many risks involved with an HOA,” Earl said.
Fee increases and special assessments have been particularly aggressive in recent years after mortgage giants Fannie Mae and Freddie Mac tightened lending rules for condos in response to the Surfside disaster.
In the last five years, the median regular assessment on condos built before 2000 more than doubled, according to Vantaca. Special assessment rates tripled, and the median special assessment bill ballooned from $244 to $1,801.
