br>
Florida's real estate market is facing a perfect storm due to skyrocketing condo ownership costs driven by massive increases in homeowner association (HOA) fees and new safety regulations. Experts predict a fire sale that could send shockwaves through Florida. Steven Kupchan, a real estate agent with One Sotheby’s International Realty, warns of a "worst-case scenario" where condo associations could go bankrupt due to unsustainable repair and insurance costs, leading to widespread foreclosures, plummeting property values, and a potential market collapse.
The trouble began after the devastating collapse of Champlain Towers South in Surfside in 2021, which killed 98 people. This led lawmakers to introduce new legislation mandating stricter safety checks for condos more than 30 years old. Owners must complete necessary repairs within a year of their inspections or face hefty fines.
Many residents are already reeling from rising costs and are being forced to sell their properties. The crisis follows new laws enacted after the Champlain Tower South collapse, resulting in massive repair costs and a rush to sell properties at reduced prices. Insurance premiums are also hitting astronomical heights, making it difficult for buyers to afford the costs. As a result, condo owners are scrambling to offload properties before the full force of the new laws hits. Some have slashed prices by as much as 40% to avoid enormous repair bills.
With condo owners slashing prices up to 40% and interest shifting to single-family homes, the market faces volatility, increased scrutiny, and potential contraction as insurance companies raise premiums or refuse coverage altogether. Homeowners like Karen Shipman are feeling the pinch. Shipman and her husband bought a second-story condo in Venice, Florida, for their retirement in 2021, but they're now worried about whether they can keep it. The numbers are staggering, with listings for condos in Palm Beach, Broward, and Miami-Dade counties jumping to 20,293 in the second quarter of this year, up from just 8,353 the previous year. Nearly 90% of those units are in buildings that are 30 years old or older — the same ones targeted by the new safety inspections.
As the market braces for a potential downturn, Kupchan predicts "market volatility" will likely affect property values across the board, causing interest to shift away from condos to single-family homes and spurring "increased scrutiny and new regulations" for financial and safety stability in Florida's condo market.
