Article Courtesy of Florida Politics

By Janelle Irwin Taylor

Published  January 25, 2025

We are looking at a combination of deferred maintenance, skyrocketing repair costs, and regulatory hurdles that could push many condo owners toward financial ruin.'

A new study finds more trouble among Florida’s robust condominium sector, with owners facing crippling financial demands and trying to offload their condos in a shaky market.

The Florida Policy Project, a nonpartisan research-focused organization launched by former Sen. Jeff Brandes, has found through its latest research project and analysis that condo listings among properties 30 years old or older are surging. The buyer market is also weak, as individuals face challenges in financing purchases on units that don’t meet current codes.

At issue are new requirements passed by the Legislature in 2022 after the tragic Surfside condo collapse, including heightened assessment demands and increased reserve funding. While the law was meant to ensure safety, the new rules created new problems.

The new law requires condo associations to set aside more money for condo maintenance and repairs, which has caused owners to face steep, often unsustainable assessments on their properties. A Redfin analysis of the cost increases for homeowners found a 15% jump from 2023 to 2024 in homeowners association fees in Tampa and Fort Lauderdale.

Some condo owners have been hit with six-figure assessments, including a 79-year-old owner who faced a $224,000 special assessment, on top of monthly maintenance fees that had already doubled from $1,500 to $3,000 per month, according to Local 10.

Compounding the issue, the Florida Policy Project report, prepared by John Burns Research & Consulting, found that investors who could help alleviate the problem are hitting the pause button on scooping up aging condo buildings to redevelop amid legal concerns.

Two Roads Development acquired all but eight of the 192 units at Biscayne 21, a 13-story residential condo tower in Miami. Because the aging building, built in 1964, needed massive repairs to bring it to code, tearing it down made the most fiscal sense. But the owners who refused to sell sued the developer. Two Roads initially won the suit, but it’s under appeal, leaving other large developers watching from the sidelines before taking any risks.

Overall, the report found that listings for condos built more than 30 years ago have surged 56% year-over-year. Florida is home to about 1.1 million condo units, with 58% of them located in just eight counties: Broward, Miami-Dade, Palm Beach, Pinellas, Collier, Sarasota, Hillsborough and Manatee counties. In Miami-Dade specifically, nearly 65% of the condos are in the older category, and most of those are located along the waterfront.

With assessments mounting and many owners unable to foot the hefty bill, the market is being flooded with units for sale. While the report found a surge in listings that correlates to uncertainty in the condo market, it also notes that the correlation is not necessarily an indication of distress, because the broader housing market has also experienced volatility.

Prior to the 2022 legislation, condos were considered, in some cases, a viable affordable housing option.

“In fact, older condo units fill a distinct affordable niche in many Florida markets — in Miami-Dade, half of all condo units sold in 2024 were priced below $300,000, highlighting one of the few options for buyers in this price segment,” the report notes.

But since the new law, and the hefty assessments that often come with it, “the existing older condominiums, especially those that need massive repairs and remediation,” no longer “present a viable solution for affordable housing.”

The report’s release is timely. It came out just days before Gov. Ron DeSantis announced that he would call a Special Session to address post-Surfside condo safety costs.

“We’re now seeing some problems that I think were unintended that have popped up, and we have a responsibility to act to make sure that people can stay in their condo units. The Legislature should not be doing anything that’s going to cause someone to have to flee because of an artificial mandate,” DeSantis said.

The Special Session will convene on Jan. 27 to address, in part, condo cost issues. The report could offer some insight into the problem, beyond just impacts to owners. The affordable housing issue, for example, could be a topic worth considering, especially as Florida continues to face an affordability crisis.

“We are looking at a combination of deferred maintenance, skyrocketing repair costs, and regulatory hurdles that could push many condo owners toward financial ruin,” Brandes wrote of the report. “If we don’t take action now, we risk destabilizing entire communities.”

The report doesn’t offer any specific fixes, and Brandes notes that “the solution isn’t simple.”

But he writes that “we must prioritize solutions that will ensure safety without sacrificing the ability of residents to remain in their homes.”

A second part to the report is due out next month, and it will offer actionable solutions. Brandes teased those solutions.

“From expanding the pool of qualified inspectors to rethinking repair funding and insurance mechanisms, we are committed to finding practical solutions that will protect condo owners and residents,” he wrote, noting also that “we need the state’s leaders to act with urgency.”