- US condo investor purchases dropped 13% YoY in Q4, sinking to the lowest level for that quarter since 2012.
- Florida saw the steepest decline, particularly in cities like Orlando, Tampa, and Miami, due to hurricanes and rising insurance fees.
- The investor pullback in condos contrasts with rising interest in small multifamily properties, with acquisitions up nearly 3%.
- The Florida state law mandating structural studies and maintenance funding in older condos has led to a surge in listings, pushing prices down significantly.
- Nationwide, total investor home purchases fell 4% due to high mortgage rates, economic uncertainty, and concerns about profitability.
Investor demand for US condominiums has dropped, with condo purchases falling to their lowest level in over a decade, per Bisnow.
According to a recent report by Redfin, investors bought just 8.22K condos in Q4, down 13% YoY—and marking the lowest number for any Q4 since 2012.
Ain’t No Sunshine
The declining interest in condo buying was especially sharp in Florida, where the aftermath of two hurricanes and rising costs for older buildings have spooked investors.
In Orlando, investor condo purchases fell 30% in Q4 compared to 2023. Tampa and Miami also saw sharp declines, with investors buying 26.1% and 22.9% fewer units.
The slowdown in Florida’s condo market has been partly attributed to a state law passed in 2022 that mandates structural integrity studies for condo buildings over 30 years old. This law requires owners to fund maintenance reserves by the end of 2025, which could result in special assessments as high as $175K per unit.
This financial burden led many condo owners to flood the market with listings, pushing prices down by 21% in 2024. Projections suggest further declines of up to 38% in coming years.
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Small Multifamily Goes Big
While the condo market has struggled, demand for small multifamily properties has increased. Purchases of 2–4-unit properties grew by nearly 3% in Q4, the highest share of investor activity in this segment since 2019.
Notably, the stability of the smaller multifamily segment contrasts with that of the cooling condo sector, as investors are seeking opportunities in smaller properties perceived to offer better returns and less risk.
National Investor Trends
Nationally, investor purchases of all types of residential properties fell 4% in Q4, totaling 47K units, the lowest level since 2016.
Investors are pulling back due to high mortgage rates, rising inventory, and falling rents, which dampened home-flipping profits. Economic uncertainty and concerns about the potential for negative returns are also causing many to reconsider their investments.
Looking Ahead
Despite the national slowdown, some regions are seeing stronger investor interest. Notably, the West Coast has attracted more attention, with investors purchasing 33.8% more homes in Seattle in Q4 2024 than the previous year.
Other cities in California, including San Jose, Oakland, and San Francisco, also posted significant increases in investor activity.
However, the overall trend is a more cautious investment landscape, especially in the condo market. In Florida, the oversupply of condos combined with new legislative requirements could result in a prolonged period of low demand, worsening the market’s challenges.
