Residents of a complex in Ocean City, Md., were hit with a special assessment of $70,000 per unit in 2024
Condo prices have softened, but some owners aren't prepared for the community-association fees that help maintain their building.
Condos are becoming cheaper as inventory swells - but experts warn that the list price doesn't paint the full picture.
More than half of community associations (54%) plan to increase regular assessments - the recurring fees that condo owners pay to help cover expenses like building maintenance, insurance and landscaping - because of rising insurance costs and to build up cash reserves to meet new lending standards, according to a May 2026 survey from the Foundation for Community Association Research. A smaller percentage (14%) plan to issue special assessments, which are steep one-time fees to cover large expenses or emergencies.
In March, Fannie Mae (FNMA) and Freddie Mac (FMCC) announced that community associations - entities, like a homeowners association or condo board, created to govern and maintain residential communities - must fund reserves at a minimum of 15% of their total annual budgets (up from 10%) starting in 2027. If they don't meet this threshold, banks will stop approving home loans for anyone trying to buy in the building.
This policy change, along with rising insurance premiums, aging buildings and inflated construction costs, has created a perfect storm that's pushing condo boards to hike these ancillary fees. Because of this, experts say it's important for buyers to fully understand a building's financial health before buying.
"Condominiums remain an important pathway to homeownership, but buyers should look beyond the purchase price," said Dawn Bauman, CEO of the Community Associations Institute, a membership organization for community associations. "Understanding an association's budget, reserve study, and approach to long-term maintenance provides valuable insight into the financial health of the community."
Condo prices are falling faster than single-family homes
In a housing market where affordability is a challenge for many buyers, condos are something of a bright spot. As of June 2026, there were about 15% more condos for sale than in June 2019, according to Realtor.com Senior Economist Joel Berner, while single-family-home inventory fell 13.8% over the same time period.
"While the single-family-home market is still recovering from the COVID-era shock, the condo market has overshot its baseline considerably," Berner said.
List prices show the market divergence too: Condo prices have dropped 6% since March 2022, Realtor.com data show, while single-family-home prices have risen 7.5%.
(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)
Those looking to break into the housing market, but who fear the hidden costs of condo ownership, can do a few things to assess a community's financial and structural health before buying:
-- Request the community association's reserve study. This is the long-term budget and planning tool used by homeowners associations and condo boards that evaluates the condition of a property's assets, the cost of repairing or replacing them over time, and the board's cash reserves. Communities that update their studies at least every three years see half as many special-assessment recommendations as those updated every five years, according to a 2026 report from Association Reserves, a company that prepares reserve studies for community associations.
-- Understand homeowner responsibilities versus community-association responsibilities. For example, maintaining a sliding glass door on a balcony might be the homeowner's responsibility, while the beams actually holding up the balcony could belong to the association.
-- Check the FiPhO score. A FiPhO health score is a number from 0 to 100 that assesses the financial, physical and operational health of a community association, similar to how a FICO score reflects a person's creditworthiness. Potential buyers can purchase the report from fipho.com.
-- Request board-meeting minutes about upcoming repairs and ask about any current or pending special assessments.
In extreme cases, special assessments can cost five figures - per unit
Digging into community-association records might seem tedious, but doing so can help potential buyers avoid unexpected fees later on that can be financially devastating.
In one extreme case in Ocean City, Md., the association for a five-unit condo operated with zero reserve funds for more than 35 years to keep monthly assessments low. But when a 2024 reserve study and subsequent inspections revealed extensive structural decay, the association was faced with a $600,000 repair bill, according to a report from the Foundation for Community Association Research.
'It's been on the market for a year': I'm under contract on a condo, but I'm worried I'm overpaying. Can I back out?
The board passed a catastrophic special assessment of $70,000 per unit over two fiscal years, with an additional assessment of $50,000 to $75,000 anticipated for 2026. Additionally, the board increased regular assessments by 33%.
"For decades, many association-governed communities kept the monthly assessments artificially low by quietly underfunding their reserves," said Robert Nordlund, the founder and CEO of Association Reserves. "But Mother Nature and Father Time remain undefeated, and the 'deterioration bill' is now coming due."
Florida's emergence from condo chaos
While the rest of the country is feeling the squeeze of aging infrastructure and stricter lending guidelines, Florida - the state with perhaps the most volatile condo ecosystem - is beginning to emerge on the other side.
In the wake of the 2021 Champlain Towers South collapse in Surfside, Fla., politicians enacted sweeping regulatory changes, including Structural Integrity Reserve Study (SIRS) mandates. These laws forced condo associations to address safety issues and establish proper, transparent reserve funds.
Historically, a condo inspection was a superficial affair that only evaluated what was wrong within the four walls of an individual unit. Today, Florida's new laws force boards to pull back the curtain on the physical and financial health of the entire facility.
While the increased assessments needed to meet new standards deterred buyers for a few years, Florida condo statistics from May 2026 indicate the condo market is beginning to recover. Median sales prices, pending sales and closed sales are up year-over-year, while inventory is finally starting to trend down.
"Buying a condo now, I love it, because I know what I'm buying," said Jeff Lichtenstein, a real-estate broker in southeast Florida who owns the luxury residential brokerage Echo Fine Properties. "Whereas before, I don't know if I'm going to get hit with some balcony assessment that these condo commandos are hiding."
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-Genna Contino
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(END) Dow Jones Newswires
July 07, 2026 08:30 ET (12:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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