Big Jump in Insurance Costs Strikes Condos
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Insurance costs are exploding for condo associations across the U.S., raising the cost of homeownership and making it harder for some owners to sell their units. Major losses from years of expensive natural disasters and higher rebuilding costs have pushed up property insurance prices for residential and commercial buildings in the U.S. At the same time, many condos are aging and have deferred maintenance, making insurers wary of the potential for water-pipe leaks and other damage, insurance brokers say.
The increase in insurance premiums is a major factor behind rising condo association fees. Condo dues rose 20% between 2022 and 2024, according to an analysis of 1,800 associations in 44 states by real-estate tech company Rexera. The rise in these costs is squeezing homeowners when home-buying affordability already hovers around its lowest level since the 1980s. Property taxes and home-maintenance costs are also climbing in much of the country.
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Condos and townhomes are often a starting point for homeownership. They are typically cheaper than single-family homes, which also appeals to retirees on fixed incomes. But higher monthly fees, alongside home prices that have climbed almost 50% since the end of 2019 and mortgage rates around 7%, are making these units less affordable for home buyers. Many of the hardest-hit communities are in California and in Florida, where a new state law requiring older buildings to meet structural safety standards is also pushing up condo owners’ expenses. But condo and townhome communities around the country are facing big jumps in their insurance premiums.
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Communities’ insurance deductibles are also rising, which transfers more financial risk from insurance companies to homeowners. In some cases, those high deductibles put the community out of compliance with conventional lending rules, meaning that home buyers wouldn’t be able to get mortgages backed by Fannie Mae or Freddie Mac. That can make it more difficult to sell a unit to a buyer who needs a mortgage. A seller would need to find a cash buyer or one who could get a nonconventional loan, said Dawn Bauman, chief strategy officer at the Community Associations Institute, an industry group.
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