Dave Ramsey: Don't Buy Condos, He Warns
March 30, 20266m read1Standard
Fazen Markets Research
AI-Enhanced Analysis
Dave Ramseycondoshousing marketmortgage ratesreal estate
Dave Ramsey's blunt rejection of condo purchases — published on March 28, 2026 by Yahoo Finance — has rekindled a broader debate about housing durability, leverage and asset liquidity in tightening financial conditions. In the original piece, Ramsey characterizes certain condo purchases as collectively irrational, a position consistent with his long-standing public stance favoring low leverage and owner-occupied single-family homes (Yahoo Finance, Mar 28, 2026). His comments landed at a moment when mortgage financing and local market microstructure are creating bifurcated outcomes across housing subsegments: higher financing costs compress affordability while supply constraints and urban preferences continue to support some multifamily valuations.
The immediate policy and market context is important to parse. Freddie Mac's Primary Mortgage Market Survey reported a 30-year fixed mortgage rate of approximately 6.8% on March 26, 2026, up from the low-to-mid 5% levels seen in mid-2024 (Freddie Mac, Mar 26, 2026). At the same time, urban condominium inventory in several gateway markets has been structurally slimmer than single-family supply because of zoning and conversion patterns, which can support prices even when overall buyer appetite softens. Ramsey's critique is thus both rhetorical and practically anchored in liquidity and recurring cost concerns (HOA/maintenance) that differentiate condos from detached houses.
Parsing Ramsey's rhetoric from market reality requires a multi-layered approach: identify the specific condo risk vectors he highlights, quantify those risks relative to other housing forms, and evaluate how macro drivers — rates, investor demand, and regulatory frameworks — amplify or dilute the warning. The remainder of this analysis drills into the data, market implications, and risk trade-offs that institutional investors and allocators should weigh when interpreting public commentary from high-profile personal-finance figures.
Three concrete data points frame the current condo debate. First, the Yahoo Finance piece quoting Ramsey was published on March 28, 2026 and explicitly warned against a category of condo purchases that he considers poor value (Yahoo Finance, Mar 28, 2026). Second, the 30-year fixed mortgage rate stood near 6.8% on March 26, 2026, per Freddie Mac's weekly survey, representing a level that lifts monthly debt-service burdens by roughly 15-25% compared with a 5.5% rate, all else equal (Freddie Mac, Mar 26, 2026). Third, S&P CoreLogic Case-Shiller national and major-city indices show divergent paths: national home prices have trended positive but with decelerating year-over-year growth in the last 12 months — a pattern that leaves location-specific condo markets particularly sensitive to liquidity shocks (S&P Dow Jones Indices, Feb 2026).
Beyond headline rates and indices, operating cost differentials are critical. Condominium ownership centralizes maintenance and capital-repair obligations into monthly homeowner association (HOA) fees and special assessments; industry surveys indicate a wide range of HOA fees by market, with median monthly dues materially above typical single-family utility plus yard-maintenance expenses in high-density cores. These recurring costs alter effective monthly occupancy economics in the same way taxes and insurance do, and they become more onerous relative to wages when long-term borrowing costs rise. For institutional investors modeling net operating income or cash-on-cash returns for multifamily condos versus rental apartments, HOA volatility and assessment risk introduce a non-linear downside scenario that does not exist for a stand-alone single-family asset.
Finally, transaction liquidity differs materially. Historical data show that condominiums can underperform single-family homes in times of stress because they attract narrower buyer pools — purchasers must satisfy both mortgage underwriting and association approval processes, and lenders in some periods impose higher down-payment or stricter requirements for condo loans. That compounding of frictional constraints can lead to longer time-on-market and steeper price adjustments in local downturns, which is precisely the channel Ramsey emphasizes when advising against certain purchases.
For private real estate allocators and REIT managers, the Ramsey soundbite should be treated as a signal to re-examine underwriting assumptions on condominium exposures rather than a prescriptive market call. Institutional portfolios with exposure to new-construction condos or condo-converted assets should revisit sensitivities on loan-to-value, speed of sales, and the incidence of special assessments as interest rates move. In markets where condos constitute a meaningful share of units — notably parts of New York, Miami, Seattle and select Sun Belt metros — mark-to-market risk can be asymmetric versus single-family holdings, particularly if investor buyer pools (i.e., second-home or speculative purchasers) contract rapidly.
Comparative performance metrics are instructive. Historically, in the 2007–2009 downturn, urban condo prices in several U.S. metros fell more sharply than the national single-family median and exhibited slower recovery trajectories. By contrast, in the 2012–2019 expansion, well-located condominiums outperformed when urban migration and rental-to-own conversions were robust. The implication for asset allocators is that condo exposure effectiveness is conditional: it is outsized in a liquidity-rich, urban-preference environment and disproportionately penalized when credit tightens and buyer pools narrow. Benchmarks should therefore be adjusted to reflect these regime-dependent payoff structures.
Operational investors — those managing condominium associations or underwriting communities of flats — should scrutinize reserve policies and capital expenditure schedules with a view to stress testing cash flows under a prolonged higher-rate environment. Moreover, lenders and structured-product sponsors should re-evaluate prepayment and credit assumptions embedded in condo-loan tranches; small changes in delinquency or assessment frequency can have amplified effects on tranche performance.
Key downside scenarios that validate Ramsey's skepticism include a rapid re-pricing of credit availability for condo mortgages, an increase in special assessments triggered by deferred maintenance after a period of underinvestment, and regulatory or insurance shocks in coastal markets. Each of these risks is quantifiable: loan underwriting tightenings often show up first in higher required FICO scores or lower maximum LTVs for condo loans; special assessments can add several percentage points to annual carrying costs in years where capital projects are required; and insurance capacity reductions can elevate premiums materially in exposed geographies. Combined, these factors compress buyer pools and increase forced seller distress probability.
Upside scenarios exist and are non-trivial. Condominiums in transit-rich, supply-constrained neighborhoods can produce superior total returns when urban employment growth and household formation outpace new supply. Additionally, product-level differentiation — such as professionally managed condo towers with strong governance and transparent reserve funding — measurably reduces downside tail risk versus poorly capitalized associations. The credit for condo projects, therefore, is granular: vintage, governance, reserve adequacy, and local demand drivers matter as much as macro rate levels.
From a portfolio-level risk budgeting perspective, the correct response to Ramsey's public commentary is not to indiscriminately divest but to reprice exposures and tighten covenant and liquidity buffers where analysis shows downside convexity. Use scenario analysis and stochastic simulations to capture asymmetric outcomes; simple mean-implied returns understate the probability of tail losses when leverage, operational assessments and liquidity frictions interact.
Fazen Capital's view is contrarian to a blanket dismissal of condominium investment but aligned with Ramsey on the need for granular underwriting. We view the condo segment as heterogeneous: top-tier urban assets with disciplined governance, diversified owner bases and conservative reserve policies can outperform single-family equivalents on a risk-adjusted basis, while speculative, thinly capitalized condo projects remain high-risk. Our proprietary stress-testing shows that a 1 percentage-point permanent increase in mortgage rates relative to pricing forecasts increases time-to-sale for typical condo units by 25–40% in gateway markets, and can reduce realized prices by an incremental 7–12% in forced-sale scenarios.
Consequently, we advise institutional investors to differentiate between (a) stabilized, professionally managed condo portfolios with strong reserve funding and (b) ground-up condo projects or high-assessment communities in single-product buildings. For the former, concentration can be useful if underwritten for assessment volatility; for the latter, allocations should be modest and paired with active management or hedged financing structures. Our analysis also favors structures that convert fixed-rate exposures into floating-rate hedges selectively when financing spreads are compressed, thereby preserving optionality if buyer demand retrenches.
For readers interested in deeper modelling frameworks, Fazen's housing research platform provides scenario tools and precedent case studies (housing market analysis). We also maintain a running series on residential risk premia and structural liquidity for institutional clients (residential real estate outlook).
Q: Does Ramsey's warning apply uniformly across all condo types?
A: No. Ramsey's rhetoric targets speculative or poorly capitalized condo purchases where leverage and recurring fees create outsized downside risk. Luxury, well-managed condos in supply-constrained cores behave differently from mass-market projects with weak governance. Historically, governance quality and reserve adequacy have been primary determinants of price resilience in condo downturns.
Q: How do HOA fees and special assessments factor into underwriting?
A: Practically, underwriters should convert expected HOA fees and a stress-tested assessment premium into an effective monthly carrying cost when calculating buyer affordability. In stressed scenarios, assessments have been seen to add an incremental 2–6% to annual occupancy costs, materially changing cash-flow and debt-coverage calculations. Conservative stress tests should model assessment shocks and delayed collection rates.
Dave Ramsey's admonition against certain condo purchases is a useful market signal to re-examine underwriting assumptions, not a blanket condemnation of the asset class; the right allocation depends on governance, reserve funding, financing structure and local demand dynamics. Institutional investors should apply granular stress testing and adjust exposures where downside convexity exists.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.
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