Challenges with HOA's when buying/selling. The Seattle Condo Market Update, November 2025

Welcome to the latest and greatest edition of the Seattle Condo Market Update. As always, to jump straight into the stats, you can do so by clicking here. For those looking for more (and better) info, continue below!

As I've mentioned in previous reports, I struggle to find material for this report each month as the condo market has been so bland all year long. In this report, I thought I'd mix it up a little bit and discuss a variety of topics crucial to selling a condo in today's market. Bear with me.

Financial strength of HOA: Especially in markets like we're in right now, the financial health of an HOA is crucial in determining the marketability of a unit. What we're seeing right now is that there are lots of associations playing "catch up" because their dues have either been too low for too long, and/or for too long they've kicked capital improvement plans down the line. And while the rise in insurance premiums and taxes has caught every association off guard, those associations playing catch up have been disproportionately impacted. A great individual unit might warrant sufficient buyer interest, but that interest can completely evaporate if the association's financial health is poor.

Rules and Regs: Additionally, associations can deter buyers for reasons outside of their financial weakness. I'm referring to restrictive rules and regulations, specifically those that are restrictive in their pet and rental policy. 

Seattleites love their dogs. Associations that don't allow dogs, expect a more difficult time in selling that unit and more time on the market. Associations that have weight policies on pets (25lbs and less) can also make it difficult, but at least offer something for dog owners. Cats seem to be acceptable everywhere. Pretty unanimously, most projects will have a 2 pet maximum. There's lots of variety when it comes to pets, just remember being excessively restrictive on dogs is not helpful in selling quickly. 

Restrictive rental policies can also deter buyers. Generally homeowners like the flexibility of having the option to rent out their home if they move out, but aren't wanting to sell. Except, if the building has a restrictive rental cap policy in place, this can leave a homeowner in a real pickle. To be fair, I'm not aware or any condo building that doesn't have a rental cap policy in place so they're all restrictive to some degree. Most associations have a 25%-50% cap meaning no more than 25% or 50% of total units can be rented at one time. Some of the more challenging associations will have caps at 10% and it's not uncommon to hear of wait lists where there are homeowners waiting to rent out their unit when an opening becomes available. Imagine buying a unit in a low rental cap association and you get an unexpected job change. You can sell, but the market is really unfavorable, but you also can't rent the unit because there's a waiting list. What do you do? This is a real situation for many homeowners, unfortunately. 

Non-warrantable: This is the term used to describe a condo association ineligible for conventional financing. In other words, Fannie Mae and Freddie Mac won't back any mortgages for these associations (of course, that means neither will the VA or FHA). Associations become non-warrantable for a variety of reasons. It could be financial (low reserves, special assessments in place or on the way) or something else like more than 50% of the units being rented, a single person owning more than 10% of the total units, the association being involved in litigation, etc. 

The only options for owners selling a unit in non-warrantable buildings are either selling to a cash buyer or a buyer financing via a portfolio lender (a lender who doesn't sell to Fannie/Freddie). Washington Federal (WaFed) used to be the go to non-warrantable lender, but they exited mortgage lending in recent years. While there is a lender, somewhere, who can finance a non-warrantable condo, that stigma and limitations alone are likely to scare off a vast majority of buyers before they make it inside the unit.

Amenities: I'm not talking about a fancy gym, rooftop deck, pool, etc. I'm referring to basic amenities like in-unit washer/dryer and parking. Units not offering one, or both of these luxuries, are a much harder sell taking up more time on the market.

Given the above, I hope I've illustrated all the variables that come into focus when prepping a condo owner on the challenges they might face when preparing to list their unit for sale. The unfortunate part is that so much of this is outside the control of the homeowner. It's not as if we can just change a restrictive pet/rental policy, properly fund the associations reserve balance, or create parking where it previously never existed. Don't get me wrong, there's a buyer for any property at a certain price. The more challenges in place, the more the price needs to make up for those deficiencies. 

Onto the stats: The median sale price for a Seattle condo for the month of October 2025 was $577,562. That is down .42% from last year and up MoM from $523,687. Inventory is up 12.9% YoY and the months of inventory dropped to 5.21 months from 5.45 in September. Absorption still remains at historically putrid levels though it was at the highest level since July. 

Have an amazing Thanksgiving. Onward!