Florida’s Condominium Market Faces Growing Challenges

Florida’s Condominium Market Faces Growing Challenges

Over the past several decades, retiring and purchasing a condominium in Florida has been a rite of passage for millions of Americans entering their golden years. Unfortunately, a combination of high insurance rates, high homeowners association dues and high interest rates are scaring off buyers and turning Florida’s once-vaunted condo market into a disaster zone. This has left condo owners facing a perfect storm that was unimaginable just 10 years ago.

A market in free fall

According to a recent red fin report, the Florida condo market is in free fall. Each indicator shows a market that is struggling to adapt to a new reality. First, condo listings are up 30% compared to the same period a year ago. Another shocking aspect of the report is the extent to which prices in some of Florida’s largest markets are falling compared to condos nationwide.

  • Tampa condos sell for an average of 1% less ($235,000).

  • Miami condos sell for an average of 2.5% less ($385,000).

  • Orlando condos sell for an average of 4.8% less ($200,000).

  • Jacksonville condos sell for an average of 6.5% less ($254,000).

More alarming is the fact that pending condo sales in four of Florda’s largest markets are down significantly, or at best flat, compared to a year ago. This means that Florida condos are losing their luster in the eyes of many potential buyers.

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“Condos are staying on the market much longer than before, with less interest from buyers,” Jacksonville agent Heather Kruayai said in the Redfin report.

Potential buyers are scared

The cause of this rapid cooling of Florida’s condo market is a squeeze play that savvy buyers are choosing to avoid. First, Florida has the highest home insurance premiums in the country, with the average Floridian paying about three times more than the national average. Second, the only expense that increases faster than insurance premiums is homeowners’ association (HOA) fees on many Florida condominiums.

Since the collapse of the Surfside Towers in 2021, many Florida condo communities have significantly increased HOA fees to cover both the cost of increased group premiums and assessments for required maintenance. This assumes that HOAs can find an insurer willing to write a policy for the community. In many cases, insurers only cover communities after they have made numerous (and expensive) repairs or improvements to existing facilities.

Orlando-based Redfin agent Juan Castro summed up the problem by saying, “Condominium costs are shocking. Condominiums that previously had a monthly maintenance fee of $400 may now have a fee of $700. This causes buyers to rethink their plans. Failure to pay HOA fees can lead to foreclosure, which is why buyers are looking closely at the numbers and offering less for Florida condos. Many avoid the Florida condo market altogether.

A bitter irony

The starkest irony of all is that while Florida condo prices are down from a year ago, they are still higher than they were during the pandemic. Add to that the spiraling HOA fees, insurance premiums, and interest rates, and you have a perfect recipe for buyers collectively hitting the pause button on Florida condos. Unfortunately for sellers, the new reality is hitting them hard.

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