Florida condo owners are rushing to sell their condos, resulting in listings skyrocketing in only a few weeks, as experts warn that the Sunshine State’s condo market is turning “catastrophic.”
Many Florida homeowners are seeking to sell their condos as homeowners association (HOA) expenses have risen greatly in price thanks to a new law.
A New Florida Regulation
SB 4-D Bill is officially going into effect, as a new deadline for condo associations is December 31, 2024.
This regulation was first introduced in 2022 after the Champlain Tower South in Surfside collapsed, resulting in the deaths of 98 people.
Inaccurate Condo Assessments
Following investigations into this tragedy, officials learned that the building’s condo association refused to accurately conduct major structural repairs.
This was all done in an attempt to avoid special assessments. As a result, the condo ended up collapsing and killing many. Florida’s newest regulation is attempting to keep this from ever happening again.
Condos Are Under New Regulations
Now, thanks to this new legislation, condo associations must prove that they have enough funds to complete any required maintenance that needs to be done on condo buildings.
These associations also must run proper inspections in a timely manner, especially as they need to be aware of any repairs that need to be done.
Associations Have a Year to Complete Repairs
When an HOA receives a report, they are given a year to complete any required repairs. If this doesn’t happen, it could have catastrophic consequences for the HOA and the people living inside the building.
Enforcement officials could deem the building unsafe for human occupancy, which would lead to condo association directors receiving a civil lawsuit.
Old Condo Buildings in Florida
These new regulations have also required that condo buildings 30 years or older must have all inspections done before the end of 2024.
This deadline has caused many condo associations and condo owners to panic.
Condo Expenses Skyrocket
Now that these new regulations will soon be in place, many condo associations are in a rush to ensure they have the necessary funds to complete these assessments and potential repairs.
Much of these expenses are, in turn, being put on condo owners. As a result, many Floridians who own condos have seen their condo expenses skyrocket out of control. Many cannot pay what condo associations are asking for.
‘Condo Costs Are Shocking’
Juan Castro, a Redfin Premier agent based in Orlando, has said that “condo costs are shocking.” Even if you just look at the maintenance fees of these buildings, they have completely skyrocketed.
For example, condos that used to have a monthly maintenance fee of $400 now cost $700. This has led sellers to rethink where they live and is deterring buyers from purchasing the property.
What Condo Owners Have to Pay
Condos tend to have different maintenance payments, and some people already paying over this are now expected to pay even more.
For example, some people pay $340 for a special monthly assessment and $890 in monthly condo HOA fees. They are now expected to pay an extra $730 toward HOA reserves, equating to $1,960 a month on HOA fees alone.
Condo Listings Rise
Therefore, it should be no surprise to learn that condo listings have risen incredibly in only a few short weeks in Florida.
Experts have stated that the number of condos up for sale will likely continue to greatly rise in the near future. In certain areas of Florida, such as South Florida, the condo market will see listings skyrocket.
Condos Go Up for Sale
According to ISG World, there are currently about 20,293 condos up for sale in Miami-Dade, Palm Beach and Broward counties in 2024’s second quarter. About 90% of all of these units are in condo buildings more than 30 years old.
This is up from 2023’s 8,353 condos for sale.
Condos Are Selling for Much Less
The situation in Florida has become so bad that condo owners are being forced to sell their homes for much less than what they bought them for.
Ivan Rodriguez bought his condo for $190,000 in 2019 and initially listed it for $350,000. As he had no takers, he kept reducing the price until it was eventually sold for $110,000, which is 42% less than what he paid for it.
Buyers Refusing to Look at Condos
The situation has become so bad that potential buyers in the Sunshine State are refusing to look at condos, telling brokers not to show them anything that might require special assessments.
Anyone interested in buying a condo wants a unit 10 years old or younger, as these aren’t affected by the new law. However, not many of these are on the market, and any that do come up are snapped up pretty quickly.
Red Flags When Buying Condos
Anyone considering buying a condo recently has been hit with red flags that immediately put them off.
One couple was refused a mortgage by the bank unless they were willing to put a 25% down payment on the condo they were considering buying due to the building having no reserves. This immediately put them off, so they decided to look elsewhere.
A Concerning Situation
Many real estate analysts have claimed that they are incredibly worried about the condo market in Florida, particularly in South Florida.
Craig Studnicky, the CEO of ISG World, stated that he’s “very concerned” about South Florida’s condo market, especially as it could soon become worse.
Condos Could Become Abandoned
One thing that worries analysts is condos starting to become abandoned due to the high costs associated with them, as owners are struggling to pay these fees.
This is all down to there being more supply than demand. If people can’t get rid of their condo by selling it, they would prefer to abandon it in the hope of avoiding the high costs.
The Consequences of Thousands of Condo Listings
The issue of thousands of people deciding to sell their condos at the same time doesn’t just mean a rise in supply with limited demand, as other issues are also at play.
This includes uncertainties around the condos and banks refusing to lend to various communities based on the reports, which isn’t helped by those who could address the reports being underfunded. This all results in various consequences.
Retirees Are Struggling
This panic has greatly affected many retirees who own condos in Florida who cannot afford the special assessments that their condo associations are asking for.
Studnicky explained, “A lot of these folks that live in these buildings are older, most are retired. They’re on fixed income. They do not want to write those checks for special assessments. They’re hoping that somebody’s going to come in and buy them, but there’s nobody out there that wants to take that risk right now.”
Retirees Forced to Return to Work
For retired Florida condo owners, their financial situation has become so bad that they feel forced to return to work so that they can afford to live in the home they worked hard to get.
Many retired condo owners feel that if they do this, they will be forced to sell their homes. This is the last thing they want to do, but they might have no other choice.
Many Are Driven by Fear
This chaotic situation has caused many retirees and condo owners to try to quickly sell their condos, as they are being driven by fear.
Studnicky explained that this surge in condos up for sale in Florida is “a mass exodus driven by fear, with retirees caught in the crossfire.”
How These Changes Affect Other States
There is some belief that the new condo regulation laws in Florida could eventually affect other states across the U.S., meaning that they could also be experiencing the same high costs as Florida residents.
It is believed that should this happen, it will primarily affect coastal condos in various states. This has already led to calls for other state governments to address these issues before it’s too late.
People Shouldn’t Have to Consider HOA Fees
Maya Vander, a Miami realtor, has said that it’s a sad situation where people are having to consider HOA fees before they can even think about purchasing a property.
However, not much else can be done unless local government officials decide to intervene and resolve the situation.
Calls for Ron DeSantis to Help Out
The situation with Florida condos has become so bad that there are now calls for Governor Ron DeSantis to hold a special session in the hope this can sort out the situation.
The issue is that DeSantis is the only person who can call a special session, so critics are waiting with bated breath in the hope that this does happen.
Politicians Sound Alarm
Florida politicians have also sounded the alarm over this growing issue. Former Republican State Senator Jeff Brandes, who is also the president of the Florida Policy Project, has said this “catastrophic situation” requires Governor Ron DeSantis’ help.
Brandes said, “Lawmakers need to take immediate action to alleviate this crushing financial burden that will bankrupt Floridians, especially our seniors, to protect condo owners from this state sanctioned/caused disaster.”
