Condo Owners Can't Sell as HOA Fees Spike and Mortgage Rates Hit 6.95%

Will Hudson bought a two-bedroom condo in Golden, Colorado, for $260,000 in July 2024, sight unseen, figuring he'd recapture some good memories from his 20s. Now he wants out. His monthly HOA fee has climbed to nearly $470, on top of special assessments, and his building has had two-day stretches without water or sewer service, according to MarketWatch's Aarthi Swaminathan writing for Yahoo Finance.

He's been watching a similar unit in his complex sit on the market for over a year. Listed at $270,000 in May 2025, it's now under contract, but only after the asking price was slashed to $149,000 by mid-September 2026, a drop of nearly 45%. The deal hasn't closed yet.

Hudson isn't an outlier. Condo and co-op sales fell 2.7% year-over-year in August, according to the National Association of Realtors. In the Bright MLS region running from New Jersey to Virginia, condos now make up 15% of active listings, up from under 10% before the pandemic, ua.news reported, citing the same MarketWatch data.

Insurance and Special Assessments Are the Culprit

The median HOA fee nationwide hit $135 a month in 2025, up from $108 in 2019, according to figures cited by ua.news. In Miami-Fort Lauderdale-West Palm Beach, the median fee reached $617 a month on a home priced at $425,000, up from $401 in 2019.

The driver is insurance. Carriers are hiking premiums or dropping coverage for condo associations outright because of hurricane and disaster losses, higher reinsurance costs, and aging buildings needing expensive repairs. If a building loses its master insurance policy, buyers often can't get a conventional mortgage at all, because Fannie Mae and Freddie Mac require associations to carry coverage that meets their standards.

Special assessments are compounding the problem. According to Vantaca, an HOA-management platform, 8.5% of buildings built before 2000 levied a special assessment in 2025, with the typical bill running nearly $2,500 per unit. Realtor.com data shows median condo listing prices have fallen almost 17% in Louisiana, nearly 11% in Washington, D.C., and close to 10% in Colorado between 2021 and 2026.

A reasonable buyer looking at these numbers isn't being irrational by walking away. When a $250,000 condo carries $600-plus a month in fees plus the risk of a $2,500 surprise bill, it can cost more to own than a detached house with a yard. That's the calculation scaring off buyers.

Mortgage Rates Are the Other Half of the Squeeze

While condo owners are stuck, would-be single-family buyers are getting hit from a different direction. The average 30-year fixed mortgage rate reached 6.95% on Thursday, September 17, according to Freddie Mac, up from 6.76% the week before and the highest reading since January 2025. Rates have now risen for 11 straight weeks.

Thomas Louis, 34, of Asbury Park, New Jersey, told CBS News he and his wife have made 15 offers over three years, offering above asking price and waiving inspections, and still don't have a house. He called himself "despondent."

Jake Krimmel, senior economist at Realtor.com, said about 80% of the weekly movement in 30-year mortgage rates tracks the 10-year Treasury yield, which hit its highest level since 2007 this week amid inflation concerns tied to the Iran war, geopolitical tension and rising federal debt. Matt Schulz, chief consumer finance analyst at LendingTree, called the rate climb something that's "not a great thing for anybody."

The Federal Reserve raised its benchmark rate by a quarter point on Wednesday, September 16, its first hike in three years, and signaled it may raise rates again depending on inflation data. Some economists expect two more quarter-point hikes at the Fed's October and December meetings, according to CBS News.

Construction Is Slowing Down Too

Even the supply side is retreating. Zillow's senior economist Kara Ng found that detached single-family home completions fell 2.5% in 2025 to about 817,000, the third straight annual decline and the lowest since 2020. Residential permits are down 1.7% over the year ending July 2026 and are running 19.4% below the pre-pandemic trend line, the furthest below that mark this decade, according to Zillow's September 14 analysis.

The pullback is concentrated in Sun Belt markets that led the pandemic building boom. Austin permits fell 25.3% over the past year, the biggest drop nationally, followed by San Antonio at 24.1%. Meanwhile permits are surging in San Jose (up 122%), Seattle (35.8%) and Los Angeles (30.6%), where construction had lagged.

Ng warned that builders pulling back now, while understandable given soft demand, risks a tighter market and higher prices later if buyers return and the pipeline stays thin.

For now, the market is stuck on both ends. Condo owners like Hudson are watching a neighbor's fire-sale listing to decide their next move, buyers like Louis are still submitting offers, and mortgage rates have already climbed for 11 straight weeks, with no sign yet of which direction the next Freddie Mac reading will break.