The Florida Condo Crisis Just Got Worse: What You’re Not Hearing!

Hi there, I'm Katrin Pfitzenreiter and today we're going to talk about the condo crisis here in Florida. It's been unraveling over the last few years and prices just continue to drop. Sellers are frantic, buyers aren't buying, and quite honestly, some units are really hard to sell off even at a massive discount. So whether you're someone that's looking to purchase right now or perhaps you're someone that owns a condo unit, this constitutes the latest update pertaining to the condo market here in Florida. We're going to go behind the scenes. We're going to look at what condos are most at risk. We're also going to review some major stats. I've compiled the information from articles and recent bills that have been passed. A lot of research went into it, but disclaimer, I'm not a lawyer and so this does not constitute legal advice. Let's get into it. Let's start off with the bigger picture. Florida condo market is under serious, serious stress. The median price for condos and townhomes, so townhomes are lumped together in this analysis, but condos are going to take the biggest share, so it's still very telling for the condo market. The median price right now, and this is as of May 2025, was $310,000, which is down by approximately 6% from a year prior. So certainly not a crash, but what we have to understand when it comes to the condo market is that there are certain regions, certain cities in Florida where the condo market is absolutely, absolutely crashing, especially on the Gulf Coast and some central Florida locations. In some cities like Deltona, condo prices have dropped by more than 30%. I mean, to me, that is a crash in that city. And this isn't just kind of an isolated occurrence. There are plenty of different pockets across Florida where the condo market is in serious crisis mode. So it's becoming more widespread. Let's talk about inventory, because it's all about demand and supply. Inventory, well, that's through the roof. As of May 2025, there were nearly 80,000 condos and townhomes on the market statewide. And just to give you a point of comparison, that is up by almost 30% from a year earlier. So massive pileup of condos on the market, and that's partially because sellers are rushing to offload them, perhaps because they just can't afford to keep up with the costs of condo ownership. So what's causing all of this? Well, it can be traced back to the tragic Surfside collapse in 2021, when the Champlain Towers South partially crumbled, unfortunately killing 98 people. And so in response, Florida lawmakers passed sweeping reforms, especially for condo and co-op buildings that are three stories and higher and also older, so 30 years or 25 years or older, if they're closer to the coast. And so the Surfside bill, which is known as the SB4D, and then the updated SB154 bill essentially requires that milestone inspections are done by these buildings. So it has to be done by a licensed engineer or an architect, and there's going to be a phase one inspection, which is more of a visual inspection. But if there's any structural concerns that comes out of it, then a phase two inspection has to be done. And then the second part is that the law mandates fully funded reserves for critical structural items, such as the roof or load-bearing walls or foundation, in some cases the windows, and of course other similar components. And so associations are no longer allowed to waive or reduce reserve contributions. Instead, the funds must be available to cover necessary repair work when it needs to happen. And important to notice that these inspections and reserve studies don't just happen once and then be done with it. It has to be done at least every 10 years, and full reports have to be supplied to the owner. So the association is going to have to be very transparent about it. And here's where it gets financially brutal. First of all, the Florida's insurance crisis is crushing condo budgets. For say mid-sized buildings, mass insurance policies could have easily cost $40,000 and now are $100,000 or maybe even over that $200,000. Of course, it depends on the size of the building and the building's condition, age, and location. But guess who has to pay for these premium spikes? That brings me to my next issue. And this is a really big issue and what you're probably hearing about quite often in the news. And that is it's those condos, kind of associations that have not done a really good job with the reserves. They're the ones that are going to have to increase condo fees and perhaps even more brutally, passing massive assessments to condo owners. In some cases, it could be $20,000, $40,000, $60,000. I've even heard over $100,000. Now, it's not all condo buildings. Those are the ones that have been really badly managed. The ones that were well-managed, kudos to the condo association for doing a great job. Let's talk about those types of condos that are more likely to lose value in the near future. And the first one is somewhat obvious. And that is the older condo or co-op building that is three stories and higher. Well, if these buildings have not done the inspection or reserve study, just based on the previous example I gave you, it's really likely that a lot of buyers are going to bypass that building and they'll instead purchase a condo unit where they've already gone through that whole process. It's not something that's often talked about, is those units that are on the Fannie Mae blacklist. So there's a blacklist, a growing list of condo buildings in Florida that are essentially quietly being flagged as too risky for conventional financing. And so here we're talking about hundreds of buildings. A lot of them are going to be in Miami-Dade, Breaux Ward and Palm Beach, but really kind of sprinkled across Florida as well. And if your building ends up being on this list, buyers can't get a normal mortgage. And so what that means is fewer buyers, lower property values, and in some cases owners who need to refinance or sell simply can't. Here's the kicker. Most owners are actually unaware that this list exists. Lenders can see it, but a lot of owners don't know about it. So if you're in a condo and things seem a little bit too quiet, don't assume that you're in the clear. Where do you go to check to see if the condo is on the list? Well you can ask your association, they should really know. But you can also check on condoblacklist.com. So go there. The non-compliant building, the ones that don't have the inspections, they don't have the reserve studies, well they may now be ineligible for citizens insurance, which is actually Florida's government-established insurer of last resort, which means that the only other option if they can even get insurance is through a private carrier. And if that's the case, if that's who they're getting the master policy from, then the insurance costs are going to become much more expensive, likely. And that again will be passed through to the condo owner in the form of either higher condo fees or perhaps special assessments. Unfortunately a lot of condo owners are being stretched really thin here, not knowing how to pay off their debt. And so one of the questions you may have is, you know, is there any relief coming? And yes, it's called House Bill 913. It's a new legislation which essentially went into effect July 1st of 2025. And while it doesn't magically fix everything for condo owners, what it does do is buy the association some much-needed time to catch up. For example, the buildings now have until the end of 2025, not the end of 2024, which was original, to complete the milestone inspection and the structure reserve study. So that extension is giving them some breathing room. Here's where it gets even more flexible. So associations can pause the reserve contributions for up to two years after the inspection was complete. And once the search is done, assuming that the association isn't putting things on hold, they have to fund the reserves in the next budget cycle. And they have to do it using a straight line method. So an example is, let's just assume that the windows need to be upgraded in 10 years from now for $300,000. That means that over the next 10 years, every year, they need to start collecting $30,000 to put into the reserves. This rule applies to anything in the SERS report that has 25 years or less of useful life left, or anything that needs repairs right now, if it's aging or showing where the money has to start being collected. One more important change is that associations can now take out loans or a line of credit to meet funding requirements. And yes, the majority approval needs to be had by homeowners. But you know, this wasn't allowed before. And it's actually kind of a big deal, especially when looking at smaller buildings or communities that have a lot of senior citizens that are on fixed income. It provides them with much more flexibility to spread out the cost, instead of hitting these owners with a massive assessment right away. So is this a free pass? Absolutely not. But I do believe that this bill does provide a lifeline for struggling associations. Absolutely. So what do we think is going to happen towards the end of 2025 and 2026? Well, nobody has a crystal ball. But we can make educated predictions here that may or may not hold true. It really depends on what else happens in the macro environment. But I think it's fair enough to say that towards the end of 2025, the condo market is still going to see price pressure. So I think that we're probably still going to see declining condo prices, especially in those units that have not been well maintained. They have not gotten their inspections done. They don't have their reserve studies done. Chances are when it comes to maybe the latter half of 2026, we're going to see a stabilization here. I'm not saying that prices are going to rebound. But by 2026, chances are that we're going to see the bottoming out, especially once more and more buildings become compliant. And also maybe some of the younger buildings are starting to plan ahead and they're starting to collect more now to have reserves well funded when it need be. Older, non-compliant buildings are probably more likely to see price drops. It just makes sense, right? Because buyers are taking much more of a risk. And so they're going to want to get a much better price for it if they even go for some of these units. The well-managed, fully funded condo units, they're going to see their value hold. In some cases, they may actually even see prices increase because now they're getting way more buyers interested in their units because the non-compliant buildings are just much less attractive for them. Buyers are going to continue to be cautious. And many of them may actually even sit on the sideline up until 2026 to see how the market evolves. Perhaps they're hoping for even better prices in 2026. And when it comes to supply, that's going to continue to build. So when we look at months of supply, I do believe that's going to continue to increase. And if that happens and with more buyers on the fence, then yes, absolutely prices will go down, especially in the short term. Up until maybe 2026, that may be a turnaround period. Here's my recommendation for you, the buyer. I think the condo market is a great opportunity right now because you're going to get a much better price than you would have two or three years ago if you're really careful about how you go about purchasing a condo unit right now. So you're going to want to definitely do your homework. If you're interested in a condo unit, get the condo docs, get board meetings just to kind of understand what the chatter is for that condo unit. Look for any red flags like lawsuits or special assessments that may be coming down the pipeline. Of course, you're going to want to check compliance. Has the building done its milestone inspection? Do they have a valid SERS study? If the answer is no, you're going to have to then weigh the risk of wanting to purchase that home. This market right now, it's not one that's DIY. You need guidance to connect with an agent that knows the condo market really well. And then I also think it pays off to get maybe an hour's time with a lawyer that can give you even more information. You want to make sure you don't make any mistakes because if you do in this market, it could very well become a costly mistake. You guys can do me a quick favor. If you enjoyed this video, like this video, subscribe to this channel for more videos like this one. If you're somebody that was in the market to sell or purchase a condo, tell your story, leave a comment in the comment section of this video. Really appreciate it. And I wanted to draw your attention to a new venture of mine, which is actually on Substack. I'm going to be writing a lot of free articles about the housing market. So if you own Substack, please find me there. I'm going to link to the in the description section of this video. If you're not on Substack yet, please go on Substack. It is such an informative social media platform. Thank you so much for tuning in today for watching me today. I wish you guys a great day. Take care.