Fears the condo crisis will spread beyond Florida as another Southern state is hit by plummeting sales and panicked owners dump their properties

Condominium sales are down in major Texas cities, raising concerns the state will follow Florida’s lead.

Unsold homes are piling up in Fort Worth and Dallas as high insurance costs and destructive natural disasters make condos difficult to sell, according to new data from Redfin.

The move comes as Florida faces a catastrophic housing crisis, which has seen condo listings skyrocket as desperate homeowners try to flee.

Along with high insurance costs and higher homeowners association (HOA) fees, homeowners are trying to dodge a costly new law requiring additional safety checks.

According to Redfin, the number of condos for sale in Florida increased 53% in the year through July. But Texas is quickly catching up, with a 42% increase over the same period.

In the United States, the number of condos for sale is also increasing and pending sales are decreasing – but not as much as in Florida and Texas.

In Houston, for example, condo inventory increased 35.9%, sales decreased 35.3% and prices fell 6.5%.

In Fort Worth, listings increased 65.4% and sales fell 33.3%.

Meanwhile, in Dallas, the number of condos for sale increased by 61.7%. In San Antonio, it increased by 58.3% and in Austin, it increased by 28.6%.

There are several reasons why demand for condos is declining in the Lone Star State.

Frequent and intense natural disasters in Texas, as in Florida, are a major factor in rising homeowners insurance costs. This in turn contributes to rising condo fees in condominiums as maintenance costs are passed on to the condo owners.

Those rising costs, along with the danger of being caught in a natural disaster, are scaring off condo buyers and motivating owners to sell, Redfin said.

Texas has been hit by extreme weather this year, including the largest wildfire in state history, flooding, tropical storms and the deadly Hurricane Beryl.

Real estate investors have also backed away from buying condos. Those who bought these properties to rent out a few years ago are now trying to get rid of them.

Texas and Florida are also building more new homes than anywhere else in the country, contributing to the accumulation of unwanted condominiums as buyers move away.

Texas has seen a construction boom, but inventory is not being met by strong demand due to high interest rates, Daryl Fairweather, chief economist at Redfin, told DailyMail.com.

“There was a bit of a disconnect between what the builders were expecting and the actual demand,” she said.

Condo fees are certainly an issue in Houston, she added, and prices are a bit lower in the city than in other Texas metropolises.

“It could be related to insurance, but also to the environmental challenges that Houston has faced,” Fairweather added.

“Last year, Houston experienced particularly severe storms, heat waves and power outages, all at the same time. It makes living in Houston much less attractive from a quality of life perspective.”

It comes as real estate agent Steven Kupchan revealed what he believes is the “worst-case scenario” for Florida’s condo crisis.

Kupchan, an agent with One Sotheby’s International Realty, told DailyMail.com he believes there could be a strong domino effect.

“In the worst case scenario, a significant number of condo associations could go bankrupt due to their inability to cover the costs of necessary repairs and maintenance,” Kupchan said.

“This could lead to widespread foreclosures, falling property values ​​and a ripple effect throughout the local real estate market.”

Recently, a new law was introduced that requires increased security checks on condos in Florida.

The legislation was passed following the collapse of the Champlain Tower South in Surfside in 2021, which killed 98 people.

It later emerged that the condo association had postponed crucial repairs to avoid rising costs, prompting lawmakers to introduce new regulations that are expected to take effect at the end of the year.

Because of this, many residents have had to leave their apartments and look for somewhere else to live – many of them fleeing to Georgia, Texas, the Carolinas and even leaving the country for Mexico or Central America.

“If the crisis worsens, there could be a mass exodus of residents from affected condominiums, leading to a glut of unsold properties and further price declines,” he said.

Will the same thing happen in Texas?

Fairweather doesn’t think so, but she does expect the market to continue to slow.

People might increasingly come to the conclusion that they would get better value or better opportunities elsewhere, she said.

“A lot of people move to Texas to take advantage of the tax breaks. So if they start to feel like the value proposition of affordability is not there anymore, with higher property taxes and higher insurance costs, or a lower quality of life or whatever, then I think that’s going to slow down the potential of Texas,” she told DailyMail.com.

Texas, more than Florida, could take all the extra tax revenue it gets from people moving in and reinvest it in better infrastructure, Fairweather said.

“In Florida, I think the challenges are deeper. My hunch is that the increase in condo fees is not a one-time change and that these types of costs in Florida are going to continue to increase steadily going forward.

“That’s largely because the challenges of climate change are much more difficult to address in Florida than they are in Texas. I think Texas as a whole is in a much better position than Florida as a whole.”