Florida Condo Catastrophe Is In Complete Freefall! Condo Owners Want Out.

The condo market in Florida is in a free fall. Condo crisis is looming. New state laws are pricing some families out of their homes. It is crashing and it's not looking good for 2025. In this video, we're going to review current stats, but more importantly, what is causing the condo market to get into this free fall, how you can navigate the Florida real estate market in general, and how you can be successful if you're looking to move to Florida and purchase a property here in Florida. There's still ways to do it more safely. If you're new to my channel, I'm Katrin Fitzroy. I'm a real estate agent in Sarasota, Florida. I'm going to provide you with boots on the ground information. What is going on in the condo market? The condo market prices are dropping because there's just so many listings that have come up, especially in the beginning of 2024. The median sales price for condos and also includes townhouses in there is $311,000 as of November 2024. And that's a almost minus 6% price decline versus same time last year. We started seeing declines in July of 2024. When we look at months of supply, it's now at over eight months of supply, which is over 50% versus same time last year. There is just a pileup of condos that are hitting the market, and there's a good reason for it. And the reason is there's Surfside built, which was passed in response to a building in Miami and Surfside that collapsed back in 2021 when 98 people died. There's been a lot of investigation in terms of why the building collapsed. Whatever the case may be, I think it's fair enough to say that it is likely this could have been prevented if the building had been better maintained. And so the Surfside bill, which is also known as the Senate Bill 4D, so the SB 4D was passed to ensure that something like this never happens again because condos that are three stories and higher, so this is important, this is three stories and higher, older, reaching the age of 30 years, or if they're three miles from the coast, it would be 25 years of age, they must go through a milestone inspection and a reserve study with the idea of ensuring that if there's repair work that needs to happen to the building, that there's enough money in the reserves to pay for such repair work. In the past, a lot of these associations also listening to condo owners didn't pass assessments like they probably should have or HOA fee increases like they probably should have because, well, guess what happens when you're a condo owner? You're thinking, no, I don't want to have any more of these increases because it's going to take away from other aspects of my life. But it's important to keep a building safe. And so now condos that are three stories and higher of a certain age must make sure that not only the repair work is being done, but that there's funds in place to making sure that this happens. And this is where the real trouble is coming in, especially for condo owners of these types of units that are being affected. This is where we're hearing tragic headlines of how condo owners don't know how to make ends meet anymore because they're now being hit with, say, $50,000 of assessments or $100,000 or even $150,000. I've heard some crazy numbers out there. So if you're somebody that's on a fixed income, not even if you're on a fixed income, if you're just a regular person that perhaps you're still employed, but now you're being hit with $50,000, $100,000, quite honestly, even $20,000 of assessments is high. It's going to take away from other parts of your life. And so a lot of these condo owners are being pushed in a corner because they just don't know how they're going to be able to pay this off. So what they're doing, they're offloading their condo unit and they're selling it at rock bottom prices because quite honestly, you, the buyer, you're starting to see all these headlines. Maybe you don't even want to entertain an older condo unit, three stories or higher, or perhaps you're willing to take a chance at gambling, but you're only doing this at a rock bottom offer price. If you're a condo owner that just doesn't know how to make ends meet, you know, you don't have a choice but to sell. Roughly 1 million units fall under the jurisdiction of the new rules. Some owners are hoping to sell, others are walking away already, and still others are looking to investors to bail them out. Longtime Florida real estate analyst Peter Zalewski calls it the condo cliff. Just a little bit more about the requirements for condo units, and that is the milestone inspection has to be done by a licensed engineer or architect. Now, if during this visual inspection, any deterioration is discovered that requires further investigation, then it's possible that a phase two inspection is going to have to happen, and that's where the inspection itself is going to be much more detailed. If there isn't much that comes out of the phase one inspection, documents have to be created, they're going to have to get passed over to the association, a summary has to be provided to the condo owners. Now, the reserve study is essentially a long-term planning tool for the association to help them understand how much has to be in the reserve to ensure that structural components of a condo building are going to be updated, they have enough money to update it when it reaches the remaining useful life components, such as the roof, the pools, landscaping, any structural components, maybe the elevator, the windows. It'll look to see when these updates or repair works have to happen and how much needs to be collected in the reserves to ensure that once the repair work has to happen, that the funds are in the reserves. Following the initial Surfside Bill, a second bill called the SB154 was passed. It tweaked when condo buildings have to go through this inspection and so, essentially, if a building has reached the age of 30, again, three stories or higher, before July 1st, 2022, it must perform the inspections by December 31st, 2024. But if the building reaches 30 years between July 1st, 2022 and before December 31st, 2024, the inspection deadline is actually extended to December 31st, 2025. But because most condo buildings, especially those that are closer to the coast, are going to be older than 30 years, I would say, conceptually, in your own mind, just anticipate that if you're interested in one of these condo units that falls within the Surfside Bill, that you will have all necessary information in terms of the inspection report, the reserve study, fairly soon. And that's why I think it's important to wait a few months here. I think the condo market is going to be much more telling next year when we're able to look at more stats, which are going to help us understand how buyers are reacting to this, how sellers are reacting to this. But also, we should get more information from Florida lawmakers that are discussing, or hopefully discussing right now, how they can be assisting homeowners with this issue of not knowing where to come up with the money to pay the assessments and HOA fee increases. Going back to September, Governor Ron DeSantis had a roundtable discussion with lawmakers to speak about the Surfside issue and the challenges, especially post, on homeowners. And he actually floated the idea of providing 0% interest on loans for those homeowners in order to be able to cover any expenses necessary post from the Surfside Bill. And so I think there's more to come, and hopefully there's going to be some concrete assistance being provided. That'll shape out the condo market even more, but I think it's fair enough to say that we've probably not seen the bottom yet. I think it's going to take some time to have this kind of play out. It's likely that, you know, prices continue to crash in the next year. But once it levels out, when we look at the year-over-year change, it will be much less drastic. So right now, it's there. It's declining. It'll probably continue to decline, so be careful. Because a lot of these older buildings are going to be in prime locations in Miami, in Sarasota, right by the shore. Investors are very eagle-eyed, and they're looking for opportunity to buy out condo owners in order to demolish older buildings and build luxury buildings. For you coming in from outside of Florida, or even if you live in Florida and you've always kind of romanticized about living close to the beach or on the beach, there might be opportunities, but I think you have to be very careful. A lot of these inspection reports and reserve studies are going to be at hand quite soon. If they're not already, you should wait for a particular building. If you're interested in purchasing in, say, Building X, make sure you have that information. And I think in this case, because it's such a unique real estate market, it might actually make sense not only to work with a buyer's agent, I think that is a must, but also consult a real estate attorney that is very well aware of the Surfside Bill and the mandates being posted on these condos. Perhaps this is an opportunity for you to look at condos that don't fall within the Surfside Bill. You might start with an older condo unit. Maybe it's just one story, perhaps it's two stories, and you're going to want to make sure it's a well-maintained older condo. It shows a strong track record of having been well-maintained and well-managed. You're still going to want to look at the budget and the financials, but it's perhaps a better option for you. Or maybe look at a completely new condo. Or perhaps it's an opportunity for you to look into the single family home category here in Florida. And I actually think that the single family home category is going to do fine moving into 2025 because a lot of you buyers who may have been initially interested in purchasing a condo, you may become much more keen on purchasing a single family home even though it may be further removed from the shore, which now all of a sudden, given the fact that we've had two hurricanes and tropical storm Debbie that came through, all of a sudden living really close to the shore may not be as alluring to you anymore. We look at the median price for single family homes. November, 2024 was down by minus 0.6%. Prior to that in October, it was actually up by 1.2%. Now I don't have a crystal ball. It's likely that prices are going to hold in the single family home category in Florida, or perhaps a slight decline versus the same time last year, even though there is the homeowner's insurance crisis. But there are going to be ways of you keeping the homeowner's insurance costs down. For one, buying further away from the coast. If you buy a new construction home, you will be surprised how affordable the homeowner's insurance costs can be. I know because I work with a lot of buyers who are purchasing new construction homes. And I'm in an older home from 1991, completely updated but closer to the coast. And my homeowner's insurance costs are probably four times as high than many of those buyers who are going into new construction. So just be aware of that. And I know I got into a little bit of a tangent here. But there's opportunities for you to navigate the Florida market while taking out a lot of the risk. And that's really the point here of this video is to ensure that you understand what the major pain points are right now. And that is absolutely the condo market. That is crashing, no doubt about it. But Florida is going to be alluring for a lot of you still, whether it's for tax reasons or the climate or being relatively close to beautiful beaches, people are still going to want to come. They're just going to get much better, smarter at purchasing their next home. Thank you so much for tuning in today, watching this video. I truly always appreciate when you guys do that. Happy 2025. I wish you the best. Take care.