It seems like the perfect storm right now for South Florida’s high-rise market.
Condo deals in Miami-Dade and Broward counties fell double digits in June, according to the latest real estate report — just as condo owners become increasingly strapped by rising homeowners association fees aimed at meeting new legal requirements to maintain larger maintenance reserves after the Surfside condo collapse.
The number of annual condo sales fell by 26.8% in June 2024 in Miami-Dade, to 865 deals from 1,181 deals in June 2023, according to the latest breakdown of Florida new signed contracts compiled by the Elliman Report .
Buyers also are facing a more challenging landscape, as interest rates have held steady — despite expectations that they would fall early this year — and insurance costs have skyrocketed , according to real estate experts.
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The picture was no better in Broward, which saw 412 sales, down 31.7 percent from 603 sales in June 2023.
“The big reason was in January, February, March there was expectation that the Fed was going to cut rates and maybe cut them three times or more,” said Jonathan Miller, president and CEO of the Miller Samuel real estate consultancy firm and author of the Elliman Report. “The promise of lower rates didn’t happen. That caused some people to pause.”
Sales fell annually across all price points in Miami-Dade, including those priced below $200,000 and those priced over $5 million. The same downfall happened in Broward, except for condos priced over $3 million.
Rising HOA and insurance costs have many buyers on the sidelines, said Ilene McMenamin, a real estate agent with the Oakland Park-based real estate brokerage and property management firm McElliot Properties.
“People are afraid to buy a condo,” McMenamin said. “What’s the advantage of it? The equity isn’t there. The maintenance fees are high.”
Homeowners association fees, or HOA fees, have skyrocketed since the collapse of Champlain Towers South in Surfside in 2021. The collapse of the 12-story beachfront condominium killed 98 people.
After facing scrutiny for policies allowing condo associations to forgo reserves and delay repairs, Florida lawmakers banned condo associations from waiving financial reserves. Condominiums also are required to conduct “structural integrity reserve studies” by January 2025 to understand how much funding is needed for structural repairs.
If the annual decline in condo sales continues, prices are soon expected to follow given climbing inventory and rising costs that come with owning a condo, said Mike Pappas, CEO and president of The Keyes Company.
At the moment, Miami-Dade has 8.6 months of inventory and Broward has 7.6 months of inventory, according to the latest Miami Association of Realtors monthly home sales report.
A balanced market consists of six to nine months of inventory with anything under benefiting sellers and anything over benefiting buyers.
Condo conditions are expected to sour not brighten for sellers with a rebound happening in one to two years, Pappas said.
“You have a tale of two condominium markets. You have the luxury beachfront, Brickell, Miami Beach, Aventura — all of the coastline sales those are still fueled by South Americans and (buyers from) the Northeast. You also have some wealthy locals,” he said.
“As you go west, you have a more suburban market, low rise Kendall and those are Miami-Dade County residents — the first entry for first-time buyers. Once you get that financing and reserves put into place and get the financing tour, that may open up more sales. “
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