The slow-motion crisis could destroy the state’s reputation as a retirement destination with affordable beach living.
As they race to sell their properties and receive only a mediocre response from buyers, owners of the state’s older condominiums are preparing for steep special assessments.
While almost every other segment of the real estate market is still thriving, Florida’s aging condominiums are losing value. Almost 1,400 buildings are currently prohibited from obtaining mortgage financing, which makes selling those apartments even more difficult, as per a report by The NY Post.
Why are Florida’s condo values dropping?
Florida’s aging condo buildings are in dire need of repairs, and state officials are making them evaluate (and pay for) those long-overdue improvements. This is the fundamental truth at the center of all the chaos, as per a report by The NY Post.
A law passed in response to the devastating 2021 collapse of Champlain Towers South in Surfside, which claimed the lives of 98 people, prohibits condo boards from postponing significant structural upgrades for another day or ten years. By the end of 2024, the “Building Safety Act” mandated that all condo buildings in Florida that were 30 years of age or older finish a structural integrity study in order to fully understand what issues needed to be fixed.
How are special assessments affecting owners?
Condo boards are now required to set aside money to address the problems identified in those studies, such as balcony renovations and concrete restoration. The evaluations of specific condo owners appear to be both costly and unsettling.
According to published reports, unit owners at Aventura’s Mediterranean Village, a waterfront condominium complex with a marina in front, were hit with six-figure special assessments last year, some of which were as high as $400,000, as per a report by The NY Post.
According to brokerage Compass, 23 of the 217 condos in Miami’s Cricket Club, a 50-year-old waterfront tower with $134,000 special assessments per condo, are up for sale.
Condos at the Cricket Club are looking for buyers with prices as low as $220,000 for a 1,950-square-foot two-bedroom on the 19th floor, in a Miami market where the median condo price was $445,000 in the fourth quarter of last year.
The owners who are unable to pay these assessments will not be the only ones affected. According to Tomaselli of Strategic Inspections, a building may lose its ability to receive mortgage financing if 15% of its unit owners default.
More than half of condo owners in Florida’s retirement communities are impacted by the law. However, special assessments and the uncertainty surrounding repair costs are making these units difficult to operate.
Potential buyers are frightened by the unknown, according to Craig Studnicky, CEO of ISG World. With only 39% of buildings in Southeast Florida submitting structural integrity studies, the scope of special assessments is still unknown for many properties.
FAQs
Why are Florida condominiums losing value?
A new law requires older condominium buildings to undergo expensive structural repairs, resulting in massive special assessments for owners. This has made it more difficult to sell condominiums, resulting in lower prices.
Can anything be done to help the market?
Lawmakers may look into financing options, but there are no plans to delay or cancel necessary repairs. Improved building conditions could eventually restore market confidence.
Disclaimer Statement: This content is authored by a 3rd party. The views expressed here are that of the respective authors/ entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated, and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein.
