Bottom line: Los Angeles condo buyers may have more choice, more time, and more negotiating leverage. The strongest opportunity may be finding a financially sound smaller project with a clearer path to conventional financing.
For years, Los Angeles homebuyers have dealt with limited inventory, intense competition, and prices that make purchasing a single-family home difficult.
The condominium market is beginning to tell a different story.
From April through June 2026, the median Los Angeles condo sale price moved from $699,000 to $685,000. During that same period, active condo listings increased from 5,950 to 6,305, and median days on market increased from 26 to 29.
Single-family homes remained comparatively resilient, with the median sale price moving from approximately $1.04 million to $1.06 million during that period.
This does not mean the condo market is collapsing.
It means buyers may have more inventory to choose from, more time to evaluate properties, and more leverage when negotiating with sellers.
But the strongest opportunity may not simply be finding a condo at a lower price.
It may be finding a condo with a clearer financing path.
A Condo Purchase Has Two Approvals
When purchasing a single-family home, the lender primarily evaluates three things:
- The borrower
- The property
- The transaction
A condominium adds another layer.
The lender may also need to evaluate the condominium project and homeowners association.
That project-level review is separate from evaluating the buyer’s credit, income, assets, and ability to repay the loan. Depending on the required review, the lender may examine the HOA’s financial stability, insurance coverage, property condition, litigation, governing documents, reserve funding, special assessments, and other project-level risks.
This is why a buyer can be fully pre-approved and still encounter financing problems after selecting a condo.
The problem may have nothing to do with the buyer or the interior of the unit.
It could be an issue involving:
- The HOA’s master insurance policy
- Inadequate financial reserves
- Pending litigation
- Delinquent HOA dues
- An unresolved special assessment
- Deferred maintenance
- A recent engineering or inspection report
- The legal structure of the development
For larger condo projects, gathering and reviewing that information can add time, uncertainty, and additional conditions to the loan approval.
For qualifying smaller projects, the path may now be different.
The Overlooked Advantage of Projects With 10 Units or Fewer
A significant 2026 guideline update expanded the opportunity for certain smaller condo projects to receive a Waiver of Project Review.
Under Fannie Mae’s current guidelines:
- Units in new or established two- to four-unit condo projects may qualify for a Waiver of Project Review.
- Units in new or established five- to ten-unit condo projects may also qualify when the project is not part of a larger development or master association.
- Attached units in a five- to ten-unit project that is part of a larger development or master association generally require a Full Review.
Freddie Mac has a similar Exempt From Review pathway for eligible two- to four-unit projects and five- to ten-unit projects that are not part of a master association.
In plain English, qualifying condo projects with 10 or fewer units may not require the same extensive project-level review that is commonly required for larger condominium communities.
That can create a clearer path to conventional financing.
It may reduce the number of project-level questions that must be answered, simplify the approval process, and eliminate some of the uncertainty that buyers experience in larger condo communities.
That does not mean every small condo project automatically qualifies.
The legal structure matters.
The Legal Project Size Matters More Than the Building Size
A buyer should not determine project size simply by standing outside and counting the number of units in the building.
Consider two examples.
The first property is an eight-unit condominium building with its own HOA, governing documents, insurance, and financial accounts. It is not connected to any other development.
That property may qualify for the smaller-project review waiver.
The second property also appears to have eight units. However, it is legally part of a 60-unit development with multiple buildings and a master association.
That property may require a Full Review because the legal condominium project is larger than the individual building.
This distinction is critical.
Before making an offer, buyers should confirm:
- The total number of units in the legally established project
- Whether the project is part of a larger development
- Whether there is a master association
- Whether there are multiple layers of HOA dues or insurance
- Whether the individual building and master association are financially connected
A small building does not necessarily mean a small condominium project.
What a Waiver of Project Review Actually Means
The phrase “Waiver of Project Review” can sound as though the lender ignores the HOA entirely.
That is not the case.
The waiver means Fannie Mae does not require the same thorough project review that would otherwise apply. The loan must still satisfy applicable requirements involving the borrower, transaction, individual property, appraisal, insurance, and project status.
Among other requirements, the project cannot have an “Unavailable” status in Fannie Mae’s Condo Project Manager, and the property must satisfy applicable eligibility and insurance standards. Certain project types, such as condo hotels, timeshares, and projects involved in insolvency proceedings, remain ineligible.
The lender may still request information or documentation based on the property, appraisal, insurance policy, or circumstances of the transaction.
More importantly, a financing waiver should not replace the buyer’s own due diligence.
Something can be eligible for financing and still be a poor financial decision.
Buyers should still investigate the HOA’s reserves, maintenance obligations, insurance, assessments, and future expenses before purchasing.
Why the 10-Unit Rule Matters More Now
The financing advantage for smaller projects is especially relevant because conventional condominium reviews are changing.
For loan applications dated on or after August 3, 2026, Fannie Mae retired its Limited Review process. Established condo projects that previously qualified for Limited Review must now generally be evaluated through a Full Review or, when applicable, a Waiver of Project Review.
Freddie Mac also restricted the use of its Streamlined Review process to applications received before August 3, 2026.
This creates a clearer dividing line.
Many larger attached condo projects now face a more comprehensive review.
At the same time, qualifying projects with 10 or fewer units may have access to a waiver or exempt pathway.
That does not mean a small project is automatically better than a larger one. A well-managed 100-unit community can be financially stronger than a poorly managed six-unit building.
But from a financing perspective, a qualifying smaller project may face fewer project-level hurdles.
That can matter when buyers are competing for properties, negotiating closing timelines, or trying to avoid discovering an HOA problem halfway through escrow.
SB 326 Is About What the Inspection Reveals
Another source of buyer uncertainty is California’s exterior elevated element inspection requirement, commonly associated with SB 326.
For covered condominium buildings, California Civil Code Section 5551 requires associations to arrange periodic inspections of certain association-maintained balconies, decks, stairways, walkways, and related load-bearing components. The first inspection deadline was January 1, 2025, with subsequent inspections generally required every nine years.
The existence of an SB 326 inspection is not automatically a financing problem.
The real question is what the report found.
A report may show that the inspected components are in generally safe condition. It may identify routine maintenance that the HOA has already budgeted and scheduled.
It may also uncover significant deterioration, structural concerns, or repairs that the association has not funded.
Those are very different situations.
Fannie Mae identifies projects needing critical repairs, including projects with material deficiencies or significant deferred maintenance, as potentially ineligible. Freddie Mac similarly states that failed mandatory inspections or unresolved critical repairs can prevent a project from qualifying until the required work and documentation have been completed.
The inspection is not necessarily the problem.
The condition of the building and the HOA’s ability to respond are what matter.
The Best Opportunity May Be a Healthy Project in a Nervous Market
The strongest condo opportunity is not necessarily the property with the largest price reduction.
A heavily discounted condo may have expensive problems hiding behind the lower price.
The better opportunity may be a property that has been affected by broader buyer uncertainty even though the individual project is financially and structurally sound.
That could be:
- A six-unit standalone project that qualifies for a review waiver
- A building that has completed its required inspections
- An HOA with adequate reserves and transparent financial records
- A community that has already funded or completed necessary repairs
- A project with acceptable insurance and no significant litigation
- A seller who is motivated because the property has been on the market longer
In that situation, the buyer may receive the benefit of softer condo market conditions without taking on the risks associated with a poorly managed HOA.
The opportunity comes from understanding what other buyers may be overlooking.
A Lower Purchase Price Is Only Part of the Equation
A condo should not be evaluated based solely on its list price or mortgage payment.
The buyer’s actual cost of ownership may include:
- Principal and interest
- Property taxes
- HOA dues
- Homeowners insurance
- Current special assessments
- Future HOA increases
- Potential future repairs or assessments
- Alternative financing costs if conventional financing is unavailable
A $650,000 condo with inadequate reserves and a likely $40,000 assessment may be more expensive than a $675,000 condo in a financially responsible association.
The lowest price is not always the best deal.
The goal is to find the right combination of purchase price, financing, monthly payment, HOA health, property condition, and long-term ownership risk.
Five Questions to Ask Before Writing an Offer
Before making an offer on a Los Angeles condo, buyers should answer five questions.
1. How many units are in the legal condominium project?
Do not rely only on the number of units in the building. Confirm the legal project size.
2. Is the property part of a master association or larger development?
This may determine whether a five- to ten-unit project qualifies for a project review waiver.
3. What financing review will be required?
Ask the mortgage advisor to screen the address and determine whether the likely path is a Waiver of Project Review, Exempt From Review, Full Review, agency approval, or an alternative loan program.
4. What do the HOA documents reveal?
Review the budget, financial statements, reserve study, insurance, meeting minutes, inspection reports, special assessments, litigation disclosures, and maintenance plans.
5. What is the complete cost of ownership?
Include HOA dues, assessments, expected increases, insurance, and potential future expenses. Do not focus only on the mortgage payment.
These questions should be asked before the buyer becomes emotionally committed to the property.
The Bottom Line
Los Angeles condos may currently offer buyers something that has been difficult to find for several years:
Choice, time, negotiating leverage, and a more attainable entry point into homeownership.
The financing environment remains more complicated than it was in the past, but that complexity is not the same for every property.
Qualifying condominium projects with 10 units or fewer may now have a clearer path to conventional financing, particularly when they are not part of a larger development or master association.
Larger projects can still be excellent opportunities, especially when the HOA is financially strong, properly insured, and proactive about maintenance.
The key is to stop treating every condo as though it carries the same financing risk.
The opportunity is not simply buying because prices have softened.
The opportunity is identifying a sound property, understanding its financing path before writing the offer, and negotiating while many other buyers remain uncertain.
This article was inspired by a recent piece from my friend Geoff Taylor examining the opportunity developing in the Los Angeles condominium market.
This material is for educational purposes only and is not legal, tax, financial, or investment advice. Loan eligibility depends on the borrower, property, condominium project, insurance coverage, investor requirements, and lender guidelines. Guidelines and lender overlays are subject to change. Information is current as of August 2026.
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