CRISIS IN FLORIDA’S CONDO MARKETS

By Elias DaSilva | September 6, 2024, 11:57 AM GMT+2

In the aftermath of the Champlain Towers incident in Surfside, Florida, and the devastating impact it had on the United States, the American government has instructed all authorities to conduct detailed inspections of condos and buildings that are over 30 years old. Once the condition of these buildings has been analyzed, repairs and necessary changes must be made as soon as possible to prevent another catastrophe like the one that occurred.

With this new legislation, and due to the speed at which property owners must act to carry out the repairs (as they must be done within one year after being reported by the authorities), and because these new modifications typically come with a very high price tag that the owners were not expecting, or perhaps only expected to do gradually or when they could afford it, they find themselves overwhelmed by circumstances they didn’t anticipate. In an effort to avoid worse consequences or evade some of the fines imposed by this new regulation, many owners are desperately selling their properties for prices they normally wouldn’t. This is one of the main reasons why the condo market in Florida is in crisis.

Additionally, the unexpected, costly, and fast repairs required by law for condos that don’t meet the government’s standards play a significant role in the real estate market crisis. Many of these properties also have mortgages that are being affected by these events, leading many owners to face constant foreclosures.

Would now be a good time to buy these condos, given that their prices have significantly depreciated in the real estate market? One could think so, especially considering that these properties are over 30 years old and that owners are facing major difficulties in making repairs. Out of fear of being hit with sanctions or fines brought by the new state laws, if they don’t comply within the stipulated time, they are selling their homes for very low prices to avoid losing them to foreclosure, which could be even more damaging. Thus, this could be the best time to acquire a home.

However, aside from the abundant foreclosures and the strict current government regulations regarding the condition condos must be in to be habitable, there is another important reason contributing to the condo market crisis in Florida. This issue falls on the insurance companies, which, upon analyzing the new law, have decided to increase their rates for potential buyers. This makes it even more difficult for someone to aspire to obtain a loan.

All these reasons combined lead one to believe that the Florida condo market will face increasing difficulties, both in terms of selling due to the excessive supply of properties and foreclosures, and for future investors who will see investing in the state as unfeasible. It is not an easy task to deal with the new stringent condo legislation, as well as insurance companies that do not make it easy for future owners with their excessive rates.

One could say that this new condo legislation, and everything that comes with it, is what is exclusively affecting Florida’s real estate sector and is creating a dark outlook that is becoming harder to manage. However, it seems that it is becoming a trend across the United States for thousands of owners to sell their properties before they are affected by any mandatory repairs or modifications to their property that the law may require. These repairs could make it difficult for them to meet their mortgage payments, leading to an unwanted foreclosure.

To better understand the problems these new regulations bring and how they are affecting Florida’s economy, it is important to consider the following list of foreclosures that the market currently holds and the counties in the state most affected by this new situation:County: Miami-Dade: 6,721.
County: Broward: 5,498.
County: Palm Beach: 8,074.
Tampa: 2,655.
Orlando: 1,873.
Port – Fort Lauderdale: 1,472.
St. Petersburg: 1,112.