Condo prices in Florida are "collapsing," real estate expert Nick Gerli said, as homeowner association (HOA) fees are surging, driven by skyrocketing home insurance premiums and new safety laws requiring special assessments and swift repairs for aging buildings.
Sharing a Zillow listing for a condo in Saint Petersburg, Florida, Gerli pointed out that the seller had cut their asking price by $472,000, from $1,187,400 in late January to $715,000 on August 10—a 40 percent reduction from the original price.
"Down to a price below what they bought it for in 2020, before the pandemic spike in prices," Gerli wrote on X, sharing a screenshot of the listing. "Worst of all: check out the HOA fee. $2,300/month. Ouch," he added.
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— Nick Gerli (@nickgerli1) August 12, 2024Condo prices in Florida are collapsing.
Seller has cut price $472k on this listing. 40% reduction from original list.
Down to a price below what they bought it for in 2020, before the pandemic spike in prices.
Worst of all: check out the HOA fee.
$2,300/month. Ouch. pic.twitter.com/Qn2fHJblw2
The three-bedroom, two-bathroom condo in Saint Petersburg was built in 1975, which means the building is nearly 50 years old, according to the Zillow listing. Under the SB 4-D Bill, a new regulation passed in May 2022 following the disaster at Champlain Towers in Surfside, all Florida condos aged 30 years and older must undergo an inspection by an architect or engineer by December 31.
Disaster struck with the partial collapse, on June 24, 2021, resulting in 98 deaths. Thirty-five people were rescued from the remaining Champlain Towers section, which was demolished ten days later. Degradation of reinforced concrete due to water penetration and corrosion, land subsidence, insufficient reinforcing steel, and potential corruption during construction, were all believed to be potential contributing factors for investigation by The National Institute of Standards.
Since the new regulation, if any evidence of "substantial structural deterioration" is found in the condo, the building will have to undergo a second, more detailed inspection. If not, another inspection will have to be conducted ten years later, and so on. Condo owners and associations must start repairs and maintenance works flagged in the assessment's report within a year of receiving it.
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Fears of facing costly repairs as a result of the required special assessments have led to a surge in the number of condos listed for sale in Florida, especially in the south of the state.
ISG World recently reported that there were 20,293 condo listings in Palm Beach, Broward and Miami-Dade in the second quarter of the year, up from 8,353 in the same time frame in 2023.
Nearly 90 percent of these units are in buildings aged 30 years and above—suggesting that the new safety laws have something to do with the condo owners' sudden desire to offload their properties.
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As of Tuesday morning, there were a total of 45,890 condos listed for sale on Zillow in Florida. Of these, 9,546 had a price reduction—which means that over 20 percent of sellers have slashed prices in order to attract buyers. Most of the listings with price reductions were focused in Saint Petersburg, Sarasota and Venice on the west coast and Miami, Fort Lauderdale, Boca Raton and West Palm Beach on the south and east coast.
The recent rise in HOA fees is also playing a role in the surge in condo listings across Florida. Fees have shot up nearly 60 percent over the past five years in south Florida, reported The Miami Herald using data provided by Redfin to the local newspaper exclusively.
In Miami-Dade County, HOA fees were $900 between April and June, up more than 59 percent from the same period in 2019. In Broward, the fees climbed by more than 56 percent to $613 this year. Between April and June 2019, the median monthly HOA fee in the county was $392.
Some are warning that the combination of rising HOA fees and the new safety laws could trigger a mass sale of condos in Florida which nobody is going to want to buy.
"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," Jeff Brandes, a former Republican state senator and president of the Florida Policy Project, previously told Newsweek.
"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," he warned. "And a series of cascading consequences."
