If you own a condo in Phoenix or are thinking about buying one, you’re probably seeing longer days on market and frustrated buyers who can’t secure financing. In late 2026 the market for Phoenix condos looks different than the single-family market: prices have softened in many buildings, homeowner associations are increasing assessments, and underwriters are applying stricter requirements. Below I break down the causes, the red flags lenders look for, options sellers can use when buyers fall through, and a realistic near-term outlook.

Phoenix Condo Market Crisis

Condo sales in Phoenix are slowing for several reasons that overlap: falling condo prices in many complexes, rising HOA fees to cover shortfalls, and tougher mortgage financing standards. The combined effect is fewer qualified buyers and more listings sitting on the market.

This isn’t a single problem with one fix. It’s a mix of building-level finances, loan guidelines from the big secondary market players, and buyer perception. Understanding each piece helps owners decide whether to hold, sell, or take alternate routes to liquidity.

Falling Condo Prices

Many Phoenix condos that saw big gains earlier in the decade are now experiencing value compression. When buyers can’t get loans or lenders impose higher down-payment requirements, demand drops and sellers must adjust pricing to attract cash buyers or buyers with stronger financing.

If your unit has been on the market for an extended period, price is the first thing to review. Market comps for the same building or association are more relevant than citywide condo averages because buyers pay close attention to the HOA’s finances and the condition of the common areas.

Rising HOA Fees

A major factor pushing buyers away is rising HOA dues. Associations increase assessments when reserves fall short, major systems need repair, or insurance costs spike. Higher monthly fees reduce affordability for buyers and can make financing harder if underwriters view the HOA as a risk.

Sellers should understand and disclose the HOA’s budget, reserve levels, recent special assessments, and any planned increases. Buyers and their lenders will ask for this information early in the process.

New Fannie Mae and Freddie Mac Rules (Impacting 2027)

Fannie Mae and Freddie Mac announced new condominium underwriting requirements that are expected to affect condo approvals starting in 2027. Lenders selling loans into the secondary market will need to comply with these rules, which generally mean stricter scrutiny of HOA finances and building eligibility.

The practical effect: some condo projects that were previously easy to finance could see fewer lenders willing to underwrite loans, pushing buyers toward higher down payments, stricter debt-to-income thresholds, or out-of-pocket solutions.

VA Loan Challenges for Condos

VA buyers bring important demand to the Phoenix condo market, but VA loans have their own eligibility and condo-approval rules. In some cases VA guidelines or the association’s status can limit VA financing for a given project, reducing the pool of buyers for those units.

Sellers should confirm whether their association is VA-approved and, if not, be prepared for a smaller set of qualified buyers or to negotiate with cash or conventional-financed buyers instead.

Condo Financing Red Flags Lenders Watch

Lenders and underwriters look closely at HOA health. Common red flags that can derail financing include low reserve balances, frequent special assessments, ongoing litigation involving the association, large percentages of rentals, and inadequate insurance coverage.

Getting the association’s financials and meeting minutes ready before listing reduces surprises. If a buyer’s lender sees red flags late in escrow, deals can collapse despite an otherwise strong offer.

Options for Condo Sellers When Buyers Can’t Secure Financing

If prospective buyers are struggling to get a mortgage, sellers have several practical options to keep momentum and close a sale:

- Price competitively for your building and be prepared to negotiate credits or rate buydowns rather than relying on inflated list prices. - Work with a lender experienced in condos to pre-clear buyers or to identify lenders who will consider your project under the new guidance. - Target cash buyers or investors who don’t need condo-specific approvals. - Offer a lease-to-own or extended closing to give buyers more time to secure financing, but use clear agreements and professional guidance. - Consider short-term rental or hold strategies while the association stabilizes finances, if you can afford to wait.

Every option has trade-offs—speed versus price versus certainty—so weigh them against your timeline and financial needs.

Frequently asked questions

Why are Phoenix condo values falling when single-family home prices are more stable?

Condo values are more sensitive to financing availability and HOA health. When lenders tighten condo underwriting and associations face higher expenses or low reserves, demand for those units drops more quickly than for single-family homes, which aren’t tied to HOA finances.

How will the new Fannie Mae and Freddie Mac rules affect condo sales?

The rules introduce stricter eligibility and documentation standards for condominium projects, which means some buildings may find it harder to get buyers who qualify for conforming loans. That will likely push some buyers toward higher down payments, alternative financing, or out of the market entirely.

What HOA problems make a condo hard to finance?

Key problems include low reserve funds, frequent special assessments, active litigation involving the HOA, inadequate insurance coverage, and a high percentage of units rented out. Lenders see these as increased risk and may decline loans or require stronger borrower qualifications.

Can veterans still use VA loans to buy condos in Phoenix?

VA loans are still available, but condo projects must meet VA criteria. If an association is not VA-approved or has issues flagged by the VA, that can reduce the pool of VA-qualified buyers for units in that building.

What should I do if my condo isn’t selling because buyers can’t get financing?

First, make sure your pricing reflects current demand for your building. Gather and disclose complete HOA documents early, work with lenders who understand condo underwriting, consider targeting cash buyers or investors, and weigh temporary hold strategies if you can. If you want help evaluating options, work with a real estate agent and lender who specialize in condos.

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