Foreclosure Listings Rise in Florida Condo Market as Safety Costs and Price Drops Cause Alarm

By Elias DaSilva | September 11, 2024.

The Florida condo market is going through a tough time, with foreclosure listings expected to rise. Due to new safety laws and increased costs, many condo owners are feeling pressure. Rising HOA fees, high insurance premiums, and costly safety renovations are making it difficult for owners to keep their properties. After the tragic collapse of Champlain Towers in Surfside, FL, which led to 98 deaths, laws now require all condos over 30 years to be inspected and repaired within a year. This has put additional stress on elderly owners in older condos who are unable to meet the high costs.

Steven Kupchan, a real estate expert with One Sotheby’s International Realty, paints a gloomy picture for Florida condos. He warns that if associations cannot cover the cost of required maintenance, many could face insolvency, forcing them to dissolve. This would lead to more properties being taken over by lenders, with values falling, creating a ripple effect across the city’s housing market. Kupchan also mentions that more foreclosures could happen as insurance rates rise, making loans hard to get for potential buyers.

Condo owners all over Florida are rushing to sell, worried about the new regulations. Some properties are being sold for 40% less to avoid the steep repair costs. For example, a three-bedroom condo in Saint Petersburg was initially priced at $1.2 million but is now listed for $715,000. High HOA fees are also a problem, with some costing $2,300 monthly, adding more financial burden on the owners.

The ISG World report shows a significant increase in foreclosure listings in South Florida. In the previous year’s second quarter, there were 8,353 condo listings in the three key South Florida counties, but this number has nearly doubled to 20,293 this year. Most of these units—about 90%—are in buildings over 30 years old that are most affected by the new safety requirements. Tampa, Orlando, and Fort Lauderdale have also seen HOA fees go up by more than 16%, which is putting more pressure on condo owners.

Experts say that as more condo owners are unable to meet these new safety rules, foreclosure listings will continue to rise. This could shift buyer interest away from condos and toward single-family homes, which are seen as more secure investments. Kupchan also expects to see “more regulations and tighter scrutiny” on condo markets in Florida to maintain stability and prevent a market collapse.

Foreclosure Listings by City:

Saint Petersburg, Florida: 1,502 foreclosures
Tampa, Florida: 2,078 foreclosures
Orlando, Florida: 1,645 foreclosures
Fort Lauderdale, Florida: 1,213 foreclosures

The condo market in Florida is facing significant challenges, and the increase in foreclosure listings shows that the situation is becoming more complicated and uncertain.