In Florida, condo owners are drastically reducing their property prices, some by as much as 40%, in response to impending massive repair costs.
This trend marks the severest real estate downturn the state has faced in decades, putting significant financial pressure on property owners.
Saint Petersburg’s Price Plunge
In Saint Petersburg, a condo initially listed at $1.2 million now struggles to find a buyer, even after slashing its price to $715,000.
This steep drop is part of a wider crisis of plummeting values as condo owners are forced to sell in far from ideal conditions.
New Laws, New Challenges
Following the tragic Champlain Towers collapse, Florida passed stringent laws requiring costly repairs that had been long deferred.
These new requirements come in the wake of a disaster that claimed 98 lives and revealed widespread neglect across the state’s condominiums.
Retirees Feel the Pinch
Karen Shipman, now retired in Venice, Florida, shared her woes with ABC Action News: “I feel like it’s paradise lost now.”
Her financial distress reflects a growing trend among retirees who find the rising costs of condo upkeep unmanageable.
Retirees Are Going back to Work
Janet Stone had spent over five decades as a teacher and school administrator, so when she was finally able to retire, she jumped at the chance of being able to buy a condo in Florida in the hope of relaxing in her golden years.
However, the reality couldn’t be further than the expectation. Stone has had to go back to working with preschoolers with disabilities and has had to move in with her son in Las Vegas, forcing her to lose her dream condo. This comes after she was given a $100,000 bill from the condo association — a price she couldn’t afford.
Money Being Spent on Restorations
Despite leaving the building, Stone still has to pay off the $100,000 bill. Every cent she makes is going toward that, and she doesn’t even have any money left for groceries.
It goes to show the shocking state of affairs in Florida’s condo market and the crippling situation that many are finding themselves in.
A 60% Rise in Fees
HOA fees in South Florida have risen by at least 60% over the last five years. In one case, they are expected to rise to $2,300 a month, on top of insurance and mortgage fees.
Many condo owners are retirees, and they cannot afford this amount, especially as they never considered having to pay this much for HOA fees alone.
Condo Market Floods
ISG World reports a massive jump in condo listings — over 20,000 in just three counties, up from 8,353 last year.
This surge has led to a sharp decline in prices as the market struggles to absorb the influx of properties.
Compliance Costs Mount
According to the Daily Mail, around 360,000 South Floridian property owners could be crippled by the costs to meet new safety standards.
The financial implications are severe, igniting fears of a looming crisis among homeowners.
A Cost of $60,000 per Household
One HOA has sent a letter to residents of a community in Feather Sound, Pinellas County. The letter states that residents need to pay the HOA $60,000 by October.
This money is to pay for a special assessment required by DeSantis’ new law. Although the law doesn’t take effect until the end of the year, homeowners are already feeling its effects.
Payments Higher Than Their Mortgage
In some cases, condo owners’ HOA fees are higher than their mortgage payments. For this reason, many are struggling to cope with the rising costs and worry they are at risk of homelessness.
Karen Shipman and her husband, who bought a condo in Venice, Florida, in 2021, can no longer afford to keep the home they worked so hard to afford and worry about what this will mean for them going forward.
Selling at a Loss
“Many [owners] are already looking to sell their units at a loss before they are hit with huge repair bills,” property lawyer Joseph Hernandez said.
His observations highlight a desperate bid by many to escape mounting financial pressures.
Selling for $500,000 Less
In some cases, the situation has become so bad that owners have to sell their condos for $500,000 less than the asking price in a desperate attempt to get rid of it.
Even with this sharp price decrease, there aren’t enough buyers willing to risk buying these condos, leaving sellers in a slump over what to do.
The Housing Market Remains Unaffordable
Despite selling at a loss, the housing market in Florida and the rest of the U.S. is widely unaffordable. This is due to high mortgage rates and insurance premiums. In Florida’s case, it is also due to the HOA fees.
Bill McBride, who predicted the 2008 housing crash two years before it happened, has predicted that a crash as bad as that one will be avoided. However, it is still set to be a tough environment for buyers.
The Florida Housing Market
In May, the number of homes for sale in Florida increased by 40.1% year-on-year. In comparison, the number of newly listed homes increased by 12.5%.
The average house price is $420,100, which has increased by 3.1% in 2024 compared to 2023 prices. Even though the average house prices have risen, condo owners keep lowering theirs in the hope of getting a sale.
The Most U.S. Property Listings
Of all current U.S. property listings, 1 in 5 are for a property in Florida. Despite having the most properties for sale, the Sunshine State has the least uptake.
Insurance rates are another issue. Home insurance prices in Florida are rising, which is keeping many people from buying a property because they’re unsure they can keep up with the costs.
The Price of Neglect
The Champlain Towers catastrophe has cast a spotlight on neglected condo maintenance.
Now, with new laws in place, all condos over 30 years old must be inspected by the year’s end, prompting a rush of compliance efforts across Florida.
90% of Condo Sales Over 30 Years Old
Of the thousands of condos currently up for sale in Florida, around 90% are for buildings older than 30 years old, due to homeowners not wanting to pay the HOA fees.
In many cases, it’s not just owners not wanting to pay the fees, but it is a case of being unable to afford them and wanting to get out while they still can.
Inland Houses vs. Costal Properties
In the Sunshine State, there is a vast difference between inland properties and condos along the coast.
The prices of the inland properties are holding relatively steady, and there doesn’t seem to be much of an issue there. The main issue is with the condo properties along the coast, as they are dropping in value and proving difficult to sell.
Inspection Deadline Spurs Sales
The mandate for inspections of aging condos has resulted in a spike in listings, as owners rush to offload properties before costly repairs can begin.
This requirement aims to ensure better maintenance but has stirred uncertainty in the real estate market.
Kathleen Passidomo’s Refusal to Act
Due to the severity of the issues, many have called for Florida Senate President Kathleen Passidomo to call a special session in the hope of resolving some of them.
However, as the crisis continues and the deadline looms, Passidomo refuses to call a special session. This has left many Floridians worried about what this will mean for them and whether the crisis will ever be solved.
Widespread Price Cuts
From the beaches of Saint Petersburg to the bustling streets of Boca Raton, condo sellers are dropping prices to entice buyers.
As reported by Newsweek, thousands of properties across Florida are now listed below their previous values, reflecting a market in transition.
A Market Riddled With Risk
The condo market’s complexity increases as potential buyers weigh the risks of significant upcoming repair costs.
Hernandez notes that while individual buyers are wary, developers eyeing valuable land might provide a lifeline to distressed sellers.
A Crucial Year for Florida Condos
As Florida edges closer to the inspection deadline, the real estate market teeters on the brink of significant change.
The effects of these new regulations will shape the future of the condo market, potentially altering property values and community stability for years to come.
