It has been rare to see management fees significantly exceed the local average while observing Baltimore real estate for decades. The average management fee for Baltimore condos is $886 per month based on 39 surveys, which is more than six times higher than the state median of $130 per month in Maryland. This gap is often the most surprising point for investors seeking advice.

The median price for Baltimore condos is around $241,950, with some areas in the Southeast reaching up to $650,000, indicating significant variation by location. However, recent trends show that while single-family home prices have risen by 6.3%, condo prices have turned downward for the first time since June 2020. This indicates that the condo market is under different pressures than the single-family home market, with much of that pressure stemming from management fees and insurance costs. From my long-term observation of this market, the trend of condo prices adjusting before single-family homes signals that the burden of management fees directly impacts buyer sentiment.

While the rise in insurance premiums is a nationwide trend, cities like Baltimore, which have many older buildings, feel the impact more acutely. In recent years, rising reinsurance costs and litigation risks have led to increases in master insurance premiums for management associations, with that burden often passed on as higher management fees or special assessments. Especially after the Surfside condo collapse, insurance companies have been more stringent in requiring structural safety documentation, leading to cases where condos with incomplete paperwork are charged higher premiums. In response to this trend, Maryland has mandated that condo associations conduct a professional reserve study at least once every five years, requiring detailed specifications for elements such as structure, mechanical, electrical, and plumbing systems. Associations that fail to comply can face fines of up to $10,000 from the Maryland Attorney General's Consumer Protection Division.

The implications of this regulation for buyers are clear. Requesting the results of recent reserve studies allows buyers to check the condition of structural, mechanical, electrical, and plumbing systems and to see if significant expenditures are planned in the coming years. If an association has an outdated or nonexistent reserve study, it should be viewed as a warning sign.

Loan conditions should also be considered. If the percentage of delinquent units exceeds 15% or if the reserve fund is less than 10% of the budget, the condo may be classified as non-warrantable, making conventional loans difficult. Starting in 2026, PennyMac has strengthened its reserve fund requirement to 15% of the budget, so choosing a condo with a healthy reserve fund may be advantageous for future resale. From my decades of observation, there have been repeated cases where buyers chose properties solely based on low management fees, only to face significant special assessments a few years later. Low management fees at the time of purchase often only defer future expenses.

• Check if a reserve study has been conducted in the last five years and review the results
• Review the history of insurance renewals and trends in management fee increases
• Check the percentage of delinquent units and the reserve fund accumulation rate
• Consider regional price variations and building age, especially in the Southeast

Recent trends indicate that the gap between well-prepared properties and those that are not is widening. Properties with well-organized documentation tend to receive consistent buyer inquiries, even if priced slightly higher, while properties with poor documentation often struggle to attract buyers, even at reduced prices.

If the purpose is rental, it is also important to note that it is often difficult to fully pass on increases in management fees and insurance premiums to rental prices. When the rate of increase in management fees outpaces that of rental prices, net yields can continue to decline, so it is advisable to check the trends in management fee increases over the past three years before purchasing.

Families relocating to Baltimore from other states should also consider that Maryland's property tax and insurance conditions may differ from their previous residence. If school districts are a consideration, it is advisable to verify the assigned school directly at the address before purchasing. This article is not investment or legal advice, and it is recommended to consult with professionals before finalizing any contracts.