Experts warn Florida’s condo market could teeter on collapse amid soaring costs and new safety rules
By Mary K. Jacob,
2024-09-03
The Sunshine State’s housing market is caught in a perfect storm that could soon drive condo owners to flee in droves.
Experts are predicting that the skyrocketing costs of condo ownership — driven by massive increases in homeowner association (HOA) fees and a slew of new safety regulations — are poised to spark a fire sale that could send shockwaves through Florida.
Steven Kupchan, a real estate agent with One Sotheby’s International Realty, paints a grim picture.
Real estate expert Steven Kupchan warns of a “worst-case scenario” in which condo associations could go bankrupt due to unsustainable repair and insurance costs, leading to widespread foreclosures, plummeting property values and a potential market collapse. Getty Images
“In the worst-case scenario, a significant number of condo associations could go bankrupt due to the inability to cover the costs of necessary repairs and maintenance,” he told the Daily Mail. “This could lead to widespread foreclosures, plummeting property values and a ripple effect throughout the local real estate market.”
The trouble began after the devastating collapse of the Champlain Towers South in Surfside in 2021, which killed 98 people. The disaster led lawmakers to introduce new legislation that mandates stricter safety checks for condos more than 30 years old. Owners must complete necessary repairs within a year of their inspections, or face hefty fines.
This aerial view shows search and rescue personnel working on site after the partial collapse of the Champlain Towers South in Surfside, north of Miami Beach, on June 24, 2021. AFP via Getty Images
Many residents, already reeling from rising costs, have been forced to sell.
“If the crisis deepens, there could be a mass exodus of residents from affected condo buildings, leading to a glut of unsold properties and further declines in prices,” Kupchan added.
The crisis follows new laws enacted after the 2021 Champlain Tower South collapse, mandating rigorous safety checks for condos over 30 years old, resulting in massive repair costs and a rush to sell properties at reduced prices. Urbanmuralhunter via Flickr
And with insurance premiums hitting astronomical heights, buyers are turning their backs on Florida condos, fearing they won’t be able to afford the costs. “Insurance companies could refuse to cover certain buildings or raise premiums to unsustainable levels, making it difficult for buyers to obtain financing,” he added.
Condo owners are scrambling to offload properties before the full force of the new laws hits. Some have slashed prices by as much as 40% to avoid enormous repair bills.
One three-bedroom unit in Saint Petersburg, originally listed at $1.2 million, has seen its price drop to $715,000 — and it’s still on the market.
“Worst of all: check out the HOA fee. $2,300/month. Ouch,” real estate expert Nick Gerli said on social media.
With condo owners slashing prices up to 40% and interest shifting to single-family homes, the market faces volatility, increased scrutiny and potential contraction as insurance companies raise premiums or refuse coverage altogether. jovannig – stock.adobe.com
Homeowners like Karen Shipman are feeling the pinch. Shipman and her husband bought a second-story condo in Venice, Florida, for their retirement in 2021, but they’re now worried about whether they can keep it. “I feel like it’s paradise lost now,” she told ABC Action News.
The numbers are staggering. Listings for condos in Palm Beach, Broward and Miami-Dade counties jumped to 20,293 in the second quarter of this year, up from just 8,353 the previous year. Nearly 90% of those units are in buildings that are 30 years old or older — the same ones targeted by the new safety inspections.
The crisis has already hit home for many, with some units shedding hundreds of thousands off their asking prices. In Tampa, Orlando, and Fort Lauderdale, HOA fees have surged by over 16% this year alone, far outpacing the average increase in other major metro areas.
The crisis is already evident in areas like Saint Petersburg, Miami and Fort Lauderdale, where prices have been slashed, and many residents are uncertain about their ability to afford their homes. Greg Lovett / USA TODAY NETWORK
As the market braces for a potential downturn, Kupchan predicts “market volatility” will likely affect property values across the board, causing interest to shift away from condos to single-family homes and spurring “increased scrutiny and new regulations” for financial and safety stability in Florida’s condo market.
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Condo market. Whole different animal than Single family residences ( houses). Home are just fine. Don’t let this “ the sky is falling” propaganda scare you!!!! Who in their right mind wants to move TO New York from florida. Haha
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