Florida’s Condominium Market Is Becoming A Disaster Zone

On Mar 28, 2024

[ad_1]

Over the last several decades, retiring and buying 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 fees and high interest rates is scaring off buyers and turning Florida’s once highly vaunted condominium market into a disaster zone. This has left condo owners facing a perfect storm that was unimaginable as recently as 10 years ago.

A Market In Freefall

According to a recent Redfin report, Florida’s condominium market is in a state of freefall. Every indicator shows evidence of a market struggling to come to terms with a new reality. First, condo listings have increased by 30% in comparison to the same period one year ago. Another shocking aspect of the report is the extent to which prices in some of Florida’s largest markets are retreating in comparison to condominiums nationwide.

Tampa condominiums are selling for an average of 1% less ($235,000).

Miami condominiums are selling for an average of 2.5% less ($385,000).

Orlando condominiums are selling for an average of 4.8% less ($200,000).

Jacksonville condominiums are selling for an average of 6.5% less ($254,000).

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

Don’t Miss:

Story continues

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

Prospective Buyers Are Spooked

The culprit for this rapid cooling of the Florida condominium market is a squeeze play that savvy buyers are choosing to steer clear of. First, Florida has the highest homeowner insurance premiums in the country, with the average Floridian paying an estimated three times more than the nationwide average. Second, the only expense rising faster than the insurance premiums are homeowners association (HOA) fees on many Florida condominiums.

Since the collapse of the Surfside Towers in 2021, many Florida condominium communities have been dramatically raising HOA fees to cover both the cost of rising group premiums and assessments for needed maintenance. That’s assuming HOAs can find an insurer willing to write a policy for the community. In many cases, insurers will only cover communities after they make numerous (and costly) repairs or upgrades to existing facilities.

Orlando-based Redfin agent Juan Castro summed up the problem, saying, “Condo costs are shocking. Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It’s causing buyers to rethink their plans.” Failure to pay HOA fees can lead to foreclosure, which is why buyers are taking a hard look at the numbers and offering less for Florida condominiums. Many are avoiding the Florida condo market entirely.

A Bitter Irony

The most brutal irony of all is that despite Florida condominium prices being down compared to a year ago, they are still higher than they were during the pandemic. Add that to spiraling HOA fees, insurance premiums and interest rates, and you end up with a perfect recipe for buyers collectively hitting the pause button on Florida condominiums. Unfortunately for sellers, the new reality is hitting them in the pocketbook.