In a concerning trend for the Florida real estate market, condo inventory is skyrocketing while sales are plummeting. According to real estate expert Jared Jones, the surge in unsold condo inventory is reaching historic levels, with implications that could spell trouble for the state’s housing market.
Rising Assessments and HOA Fees
Jared Jones reports that some South Florida condo owners are being hit with six-figure assessments, causing a mass exodus from homeowners’ associations (HOAs). In extreme cases, owners are facing over $2,000 a month in HOA fees. “Eventually, they might lose their condo,” Jones notes, highlighting the severe financial strain these assessments are causing.
Legislative Changes Exacerbating the Problem
Two major legislative changes – Senate Bill 4D and House Bill 7069 – are set to intensify the financial burdens on condo owners. SB 4D mandates regular inspections for buildings over three stories, while HB 7069 requires condo associations to maintain substantial reserves for structural repairs. These regulations, aimed at preventing tragedies like the 2021 Sunrise Tower collapse, add significant costs to condo ownership.
Inventory Surge Outpaces Single-Family Homes
While headlines have focused on the overall increase in Florida’s housing inventory, Jones points out that the spike in condo and townhome listings is far more dramatic. “Single-family homes are up 60% year-over-year, but condo inventory has surged over 90%,” he explains. In some areas like Naples, condo inventory has increased by more than 240%.
Historical Lows in Condo Sales
Perhaps the most alarming statistic is the record low number of condo sales. “In 2023, Florida sold fewer condos than at any point in the history of the Florida Association of Realtors’ data,” says Jones. Despite an increase in available units, the market is struggling to attract buyers, further exacerbating the glut of unsold properties.
Regional Variations Highlight the Crisis
Different regions in Florida are experiencing varying degrees of this crisis. In Miami, it would take eight months to sell off the current inventory at the current sales pace, a significant increase from just four months in June of the previous year. Daytona Beach faces an even starker reality, with nearly a year’s worth of inventory on the market. In Naples, condo inventory has reached a 13-year high, surging over 230%.
The Impact of Regulatory Compliance
The new legislative requirements are placing additional financial burdens on condo owners. Inspections and reserve funds mandated by the new laws are leading to special assessments that can range from tens of thousands to over $100,000 per unit. “These are expensive projects, and many associations are already struggling to cover regular maintenance costs,” Jones explains.
Forced Sales and Depressed Prices
The combination of rising costs and regulatory pressures is forcing many condo owners to sell their properties. Unfortunately, this influx of listings is driving prices down. Jones warns that sellers might have to give up all the equity gained during the recent housing boom. “Prices could roll back to 2019 or even 2018 levels,” he predicts.
Newer Properties Aren’t Spared
The crisis is not confined to older buildings. Jones suggests that even newer properties will feel the impact as buyers opt for more affordable, albeit older, options. “The nicer buildings are going to feel the effects of those other properties selling at much lower prices,” he notes.
“Something is Seriously Wrong”
People in the comments shared their thoughts: “When you own your own home and still can’t afford it, something is seriously wrong.”
Another commenter said: “HOH fees, property taxes, insurance are making it very hard for seniors in Florida.”
One person added: “Here’s an idea – Florida thought it was a good idea to incentivize businesses to relocate there by offering them decades worth of tax exemptions. Even though they can definitely afford to pay. But YOU & I have to pay every year. That’s the bigger issue.”
A Perfect Storm
Florida’s condo market is facing a perfect storm of rising costs, increasing inventory, and plummeting sales. The new legislative requirements, while necessary for safety, are adding significant financial burdens on condo owners, pushing many to sell. As inventory continues to surge and sales decline, the market is likely to see substantial price corrections. Prospective buyers and current owners should brace for a challenging period ahead.
Market Dynamics
What are your thoughts? How will the increased inventory and decreased sales affect long-term property values in Florida’s condo market? Are the new legislative measures sufficient to prevent future tragedies, or do they impose excessive financial burdens on condo owners? How can real estate investors navigate this volatile market, and what strategies might help mitigate risks?
Explore the full insights by viewing the video on Jared Jones’ YouTube channel here.
