New Florida regulations have caused condo listings for sale to skyrocket, forcing many analysts to worry that a “catastrophic” condo market in the Sunshine State could become a reality in the near future.
Analysts have also warned that condo owners may soon begin to abandon their condos at an alarming rate because of these new high costs and fees — all from new regulations within the state.
Buying a Condo Is a Rite of Passage
Buying a condo is a rite of passage for those in Florida, particularly retirees. Known as the Sunshine State, it has excellent weather and great beaches and was once considered a great place to live out the rest of your days.
Sadly, this might no longer be the case. With new regulations set to hit condo owners by the end of the year, many are being forced out of the homes they have worked so hard to afford. This is all because they cannot afford the new fees associated with these regulations.
New Florida Condo Regulations
On December 31, Florida condos that are 30 years or older must complete their first round of inspections, thanks to a new regulation passed back in 2022.
This regulation was passed in the wake of the Surfside condo collapse in 2021, which tragically killed 98 people.
Laws Because of Surfside
Once investigations were completed on the Surfside tragedy, officials learned that this condo collapsed because necessary repairs and assessments were not made.
Certain features and designs also didn’t meet building codes, which may have escalated the collapse and subsequent tragedy.
Keeping Further Tragedies From Happening
Now, Florida has passed these regulations to ensure another terrible tragedy like Surfside never happens in the Sunshine State ever again.
As a result, these new regulations state that many Florida condos — such as those 30 years or older, or those that are more than three stories tall — must undergo essential inspections by the end of 2024.
How the Inspections Will Work
How the inspections will work is that condo buildings over 30 years old and at least 3 stories tall will have their first inspection by an architect or engineer by the end of the year.
If there is any evidence of structural deterioration during this inspection, a second, more in-depth inspection will be conducted. If there is no sign of deterioration, the next inspection will be conducted after ten years. However, if deterioration is found, the necessary repairs must be done within a year of receiving the report.
Condos Issue Assessments
As many condo associations and buildings are not necessarily prepared to meet this upcoming deadline, much chaos has occurred in Florida.
Many condo associations have also issued assessments for these inspections, telling various condo owners that they may have to cough up hundreds — if not thousands — of dollars in the next few months.
Florida Condo Owners Are Hit Hard
This has caused many Florida condo owners to find themselves in a difficult situation, as many cannot easily afford to pay these astronomical amounts for these assessments.
Furthermore, many condo owners in Florida are senior citizens and retirees on a fixed income. There’s no way they can afford these higher payments or fees.
A Potentially Catastrophic Situation
As a result of all of this, many analysts have claimed that the Florida condo market is nearing a “catastrophic” situation.
Thousands of condos in Florida are now listed for sale — and experts say this number will likely rise as more owners list their condos. Though many are trying to sell their condos to get out of this situation, nobody seems to be buying.
20,000 Condos for Sale
With the new regulations set to come into force and not enough people able to afford these costs, around 20,293 condos have been listed for sale in the Palm Beach, Broward and Miami-Dade Counties.
These were listed in the second quarter of 2024. In comparison, just 8353 condos were listed in the second quarter of 2023. 90% of all these listings are buildings over 30 years old, as those are the ones most affected by the new legislation.
Condo Prices Are Down
As there is more supply than demand, real estate agents and sellers have to examine current condo prices and consider how they can be made more attractive to potential buyers.
The only solution is to lower the costs. In June 2024, a condo would typically cost $316,700, which is 1.5% lower than what it cost in June 2023. Most condos lower their prices by at least 15%, but some are going much lower.
Some Are Losing Half of Their Money
In some cases, people are losing so much money from selling their condos because they want to do anything they can to avoid paying the new fees.
One condo owner bought their condo for $190,000. When it came to selling it, it was put on the market for $350,000. After getting no interest, they had to keep reducing the cost until they could sell it for $110,000, 42% less than what they bought it for.
What’s Putting Condo Buyers Off?
As condos remain on the market for much longer than normal, it is important to examine what is putting buyers off. Along with the rising HOA fees, buyers aren’t happy with other aspects of owning a condo.
One of these is the high insurance fees everyone living in Florida must pay. This is due to the Sunshine State being at risk of yearly hurricanes that cause a lot of damage to properties, and buyers simply don’t want to deal with all of these added costs.
Buyers Only Want Younger Condos
The issue sellers of condos over 30 years old are having is that buyers don’t want older buildings. They are only interested in those younger than 30.
This is because they know that if they buy a younger building, they won’t be hit with the extra fees. However, the issue for them is that the few younger condos on sale get snapped up pretty quickly, meaning they either have to wait to get a younger condo, give in and buy an older condo or buy an entirely different type of property.
Retirees Are Forced Back to Work
The situation in Florida has become so bad that retirees living in condos who can’t afford the new fees are being forced back to work so that they can pay them off.
This is after they have tried to sell them but without much luck. It is predicted that the fees could cost $100,000 per owner, which normal working people, let alone retirees, struggle to afford.
People Could Go Bankrupt
The worry is that those staying in the condos could go bankrupt due to the high costs expected to come with these inspections and new regulations.
With the end of the year approaching, people are becoming increasingly concerned about how they will afford these new costs in addition to everything else.
How Costs Are Expected to Increase
With the maintenance fees already high, these are set to increase due to the new bill. Some condos have a $400 monthly maintenance fee, which is expected to rise to $700 a month.
Another issue is HOA fees. For example, Arkadiy Kats pays $340 a month for special assessments and $897 in monthly condo HOA fees. However, from 2025 onwards, he is expected to pay an extra $731 toward condo reserves.
HOA’s Are Charging for Repairs
HOAs are able to charge fees for the repairs. The Cricket Club condo board has proposed needing $30 million from condo owners for repairs. This money is required for roof and waterproofing repairs, which cost $134,000 per unit owner.
On top of the cost of owning the condo, insurance and other costs, this six-figure sum is getting too much for some people. After seeing these costs, many see it as no surprise that condo owners want to sell up.
Sudden Deadlines
Former Republican state senator Jeff Brandes, who is also the current president of the Florida Policy Project, recently warned that these upcoming deadlines could force people into undesirable situations.
“It could end up leading to some pretty catastrophic outcomes where people are unable to raise the money to fund their required reserves by state law,” he explained.
Liens Placed Against Condos
While many people are currently trying to sell their condos, most haven’t had luck. They could eventually have liens placed against their condos.
Brandes added, “They are then forced to try to sell their condo or have a lien placed against their condo. And when this happens at scale, you could have potentially thousands of listings of condos, no buyers or very few buyers, uncertainty around the condos, banks refusing to lend to certain communities because of the reports and the underfunding to address those reports. And a series of cascading consequences.”
Regulations Are Needed
While Brandes has warned about how many Floridians may face a difficult near future, he’s also claimed that these regulations are needed.
After all, nobody wants another tragedy to occur. However, Brandes has said that the timeline and deadline should be changed to help people.
The Legislature Could Help
Brandes has further warned that many condos could be abandoned if this situation isn’t soon taken care of.
He called on the legislature to enter into a special session, as they could change the deadline before the end of this year, which would help a lot of Floridians.
House Bill 1021
While all of this has been going on, Florida Governor Ron DeSantis has quietly signed a new bill into law. While many might have hoped this would benefit condo owners, they will be disappointed to know that it doesn’t.
Instead of benefitting condo owners, it benefits condo associations and managers. One example is the Miami Beach hotel and spa Carillon, which can now get away with not paying a $16.3 million fee to the condo association. The new bill means the previous ruling no longer stands, with many questioning if there’s any point in this new bill at all.
Creating a Reasonable Timeframe
Brandes stated that a reasonable timeframe must be found for Florida condo owners.
He said, “The question is, what is a rational and reasonable timeframe for the inspections to be completed? How do we provide some grace if they’re not able to be completed in that time for whatever reason? How do we address this issue of immediately requiring capital to be infused? What is a rational time frame by which we have to put the capital in? Is it two years? I mean, could you come up with $100,000 for your apartment, for your condo in six months?”
