Condo Market 2027: Why Reserve Rules May Be Housing's Next Problem

The question: are condos housing's next weak spot?

Steven Thomas, chief economist at Reports On Housing, says the next big problem in US housing is not the whole market. It is condominiums. In a video published October 10, 2026, he argues that a mix of higher HOA dues, costlier insurance, litigation, special assessments and tighter lending rules is squeezing the buyer pool for attached homes. He expects that to put more pressure on condo prices in 2027.

The short answer for readers: the flat condo prices he describes are real in the data he cites, and the rule changes he highlights are worth taking seriously. But the video offers a forecast, not a certainty. It does not present inventory or delinquency figures, and several details should be confirmed with lenders and your own HOA before you act.

Why condos lost their "starter home" role

For years, condos were a common first step onto the property ladder. They usually cost less than detached houses. Buyers could build equity, then trade up. Thomas says that path was disrupted after the 2021 collapse of a condominium complex in Surfside, Florida.

In his telling, the fallout has come in several waves:

• Higher HOA fees, as associations try to catch up on maintenance.
• Rising insurance costs for condo complexes, on top of broader insurance increases.
• Litigation inside some complexes.
• Costly special assessments, which owners pay when reserves fall short.

Each of those raises the monthly or one-time cost of owning a unit. A lender counts HOA dues in a buyer's debt-to-income calculation, along with principal, interest, taxes and insurance. Higher dues mean a smaller loan a buyer can qualify for, which narrows the pool of people able to pay a given price. That is the mechanism behind the creator's price warning.

Readers in coastal and Sun Belt markets have heard versions of this story before. Our piece on Fannie Mae condo rules and HOA defaults covers the lending side in more detail.

What the numbers in the video show

Thomas relies on the Zillow Home Value Index (ZHVI). Zillow's index tracks typical home values and is published as national and local series. The figures he cites are below.

Note: the auto-generated transcript is garbled on a few of these figures. The attached-home and Clark County numbers are our best reading of what the speaker said.

Two points stand out. First, nationally, attached homes have been essentially flat for four years, while all homes combined crept up. Thomas calls the overall market a plateau rather than a surge. Second, Las Vegas is an example of a market where condos have fallen, not just stalled. He says the monthly trend turned negative around 2025 and that it points lower.

He also stresses that housing is local. He says he regularly hears from viewers in Florida and Texas who see something different where they live. That is a fair caution: a national average blends strong markets, weak ones and many in between.

For context on other soft spots, see our look at which Texas metros are weakest.

The lending changes he says are coming

The most distinctive part of the video concerns Fannie Mae and Freddie Mac. These government-sponsored enterprises buy or guarantee most conventional mortgages. Thomas notes that a loan generally needs to meet their standards to be sold on that market. Exceptions include very large jumbo loans and non-qualified mortgages (non-QM).

For condos, the building matters as well as the borrower. The complex itself has to meet agency requirements. Thomas describes three developments:

1. A growing "blacklist." He points to a Realtor.com-style article, as he describes it, about the number of complexes Fannie Mae will not back. He says Georgia has seen the biggest increase, with Hawaii at 6.2 times and California at 4.2 times, and that Illinois and New York appear too. He says nearly 700 California complexes are on the list. Agencies dispute that a "blacklist" exists in that form, and Thomas acknowledges this, but he argues the effect is the same.
2. The end of a streamlined review on August 3. He says lenders previously could package condo loans quickly with limited due diligence on the association. That fast track ended on the first Monday of August, so condo loans now involve more work.
3. A higher reserve floor on January 4, 2027. He says the minimum HOA reserve allocation is moving from 10% to 15%. Reserves are the money an association sets aside for future repairs.

If a building does not have enough in reserve, Thomas says, it has two options: raise dues or levy special assessments. Either can reduce the number of qualified buyers. If it does neither, it may fail review and lose access to conventional financing.

He adds that more than a million condos nationwide already do not qualify for Fannie Mae or Freddie Mac financing, and he expects that to grow after January 4.

Why non-QM is not an easy substitute

When a complex cannot get conventional financing, buyers can turn to non-QM loans. Thomas says those typically carry higher interest rates and larger down payments, with different qualification standards. That further shrinks the group of people who can buy.

It also affects sellers who already own in that building. If a unit is hard to finance, buyers who can pay cash or accept a pricier loan hold more leverage. Cash buyers are a smaller slice of the market, so values can come under pressure.

The creator pairs this with his view on interest rates. His base case for 2027 is that rates stay between 7% and 7.75%. He says that would push condo values lower. That is his forecast, not an official one. Check the current weekly average in Freddie Mac's Primary Mortgage Market Survey rather than relying on any single projection.

Limits and counterpoints

A fair reading should include the following caveats.

• Rule details need confirmation. The 10% to 15% reserve change and the August 3 streamlining change come from the video. We could not verify them against Fannie Mae's published Selling Guide in preparing this article, so confirm effective dates and specifics with a lender or the Fannie Mae Selling Guide.
• The effect depends on each building. Many associations already hold healthy reserves. A higher floor matters most for older, underfunded or litigated complexes, not for well-run ones.
• Some of this is policy aimed at safety. Thomas says the agencies want better insurance outcomes and lower dues. He is skeptical of the approach, but stronger reserves can protect owners from surprise bills and structural neglect. The trade-off is a short-term squeeze.
• National averages hide variation. Zillow's attached-home index is flat nationally, but individual metros can be rising or falling much faster.
• The video lacks supply and distress data. It does not show condo inventory, days on market or mortgage delinquency rates. A fuller picture would add those. You can check them at Realtor.com Research, Redfin and FRED.
• Commercial interest. The channel sells paid reports and tools, which is worth keeping in mind when weighing its outlook. It also argues that a 2008-style collapse is "absolutely not going to happen."

What this means for you

This is general information, not personalised financial advice.

If you are buying a condo

• Ask the lender early whether the specific complex is eligible for conventional financing, and whether that could change before closing.
• Request the HOA budget, reserve study, special-assessment history, insurance details and any litigation disclosures.
• Compute your qualifying payment with dues included, and ask how a dues increase would affect it.
• Treat seller concessions as a negotiating tool. Our guide to how buyers can negotiate seller concessions explains the options.

If you are selling a condo

• Find out now whether your association is meeting reserve targets. A building that qualifies is a stronger selling point.
• If you plan to list, consider doing so with current eligibility documented, since changes after January 4 could affect buyers' financing.
• Price realistically against recent closed sales in your building, not against detached-home trends.

If you own and plan to stay

• Attend HOA meetings and ask the board how it plans to meet any higher reserve requirement.
• Keep a cash cushion for possible assessments.
• Remember that unrealised price moves matter less if you are not selling soon, but rising dues affect you immediately.

What to watch next

• January 4, 2027: how lenders and agencies apply the reserve standard in practice.
• Rates: the weekly Freddie Mac average and whether it stays near the range Thomas expects.
• Local condo indexes: Zillow's attached-home series for your metro, especially in places like Las Vegas where he sees a downtrend.
• Association actions: announcements of dues increases or special assessments in your building.

For readers weighing ownership versus renting amid rising carrying costs, our rent vs buy 2026 analysis offers a framework.