Florida Condo Market Faces Challenges Amid Surge in Listings
The Florida condo market is experiencing a surge in listings, but experts warn of potential catastrophic outcomes. As changes requiring regular checks on older properties come into force and homeowners association (HOA) expenses continue to rise, condo owners are rushing to sell their homes.
The Numbers
According to a recent report by ISG World, there were 20,293 condo listings in the Palm Beach, Broward, and Miami-Dade counties during the second quarter of 2024. This represents a significant increase from the 8,353 listings in the same period last year. Notably, nearly 90 percent of these units are in buildings over 30 years old.
Looming Deadlines
The surge in listings is driven by a new regulation that requires buildings already 30 years or older to undergo inspections before the end of the year. For many condo owners, this deadline is approaching rapidly. However, the situation is complicated by the fact that a significant portion of these owners are retirees on fixed incomes. They are reluctant to write checks for special assessments and hope that buyers will step in, but the market remains cautious.
Structural Defects and Uncertainty
Condo owners in aging buildings are racing to sell before physical examinations reveal potential structural defects. Unfortunately, they may already be late to the party. Buyers are wary of purchasing units in older buildings, leading to a flood of 30-plus-year-old condos on the market.
SB 4-D Bill and Lessons from Tragedy
The new regulation, known as the SB 4-D Bill, was introduced in May 2022 following the tragic collapse of the Champlain Tower South in Surfside, which claimed 98 lives. Investigations revealed that the condo association had postponed major structural repairs to avoid assessment increases. Now, the SB 4-D Bill aims to prevent similar incidents by ensuring timely inspections.
Cascading Consequences
However, the unintended consequences could be severe. If condo owners cannot raise funds to meet state-mandated reserves, they may be forced to sell or face liens on their properties. This situation could result in thousands of condo listings with few buyers, uncertainty in the market, and banks hesitating to lend to certain communities.
The Exodus
As Floridians grapple with these challenges, some are selling their homes and leaving the state altogether. Meanwhile, potential newcomers are exploring other housing markets.
Th Florida condo market faces a critical juncture. While listings surge, the impact of the SB 4-D Bill remains uncertain. Condo owners, buyers, and lenders must navigate these complexities to ensure a stable and sustainable housing market.
