The cost of owning a condominium in Florida has shot up significantly in recent months, prompting a wave of homeowners to offload their properties.
The cost of homeowners insurance has surged in Florida as insurance companies have grappled with significant losses due to an increase in natural disasters. The average cost of a policy increased 40% in 2023 alone, according to a report by Redfin. And homeowners insurance costs are three times higher in Florida than the national average.
Meanwhile, homeowners association (HOA) fees multiplied for many condo buildings in the aftermath of the 2021 Surfside condo collapse. In May 2022, the Florida Legislature introduced a new condominium safety law, which mandates more rigorous inspections and stronger financial reserves for HOAs. Before the new law was enforced, manycondo associations were investing their reserves in government-insured instruments, sacrificing their liquidity to generate a return.
As a result, new condo listings are flooding the market in Florida as sellers try to unload their properties at a discount. On the demand side, buyers are wary of purchasing a condo since it has become less affordable. While condo prices are down from a year ago, the prices remain much higher than they were before the COVID-19 pandemic.
In Jacksonville, the median condo price declined roughly 7% year over year in January, sales declined 27% and new listings increased 32%. A similar phenomenon occurred in Miami where condo prices fell 3%, sales dropped 9% and new listings rose 27%.
“Condo costs are shocking,” Juan Castro, a Redfin Premier agent in Orlando, said in the report. “Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It’s causing buyers to rethink their plans.”
In some states, HOAs are opting to sell and vacate the building, according to Robert Diamond, senior counsel at Reed Smith, who has a focus on community association law. The HOA either sells the building to a developer who will renovate it or, in most cases, to a redeveloper who will tear it down and replace it with another economically viable project.
