02 Ene Florida condominium real estate market. January 2025.
I am frequently asked by my investors about my opinion of how the real estate market in Florida is performing and how I believe it will perform in the coming months and years.
I firmly believe that one cannot know with certainty how the real estate market will evolve in the medium to long term, and I also believe that anyone who claims they do know is, to put it mildly, grossly overestimating their predictive abilities. On the other hand, it is possible to make an accurate assessment of the present moment if one has the necessary knowledge and information.
For the reader who is short on time and prefers to go straight to the conclusion, in the last paragraph I give my recommendations on how to act at the present time if you are considering investing in an condominium in Florida. The following is my rationale for that last paragraph.
The real estate market tends to be very heterogeneous. The price in one area may very well be rising while in another nearby area it may be stabilized or even falling. Many factors are involved, both macroeconomic (interest rates, inflation…) and others that may have a more local character (job creation in a certain area, proximity to tourist, commercial or work centers…). The factors that can have an influence are innumerable.
The evolution of the Florida condominium market in recent years is worthy of specific study. In 2021, an unexpected event occurred: the collapse of an condominium building in Surfside, just north of Miami Beach, which claimed the lives of 98 people. This event had enormous repercussions and called into question whether numerous Home Owner Associations (HOAs) were complying with the regulations that they must periodically face and that are perfectly described in the regulations of the state of Florida. Following the collapse, the governor of the state placed special emphasis on strict compliance with these regulations.
All these circumstances have had two clear and direct effects:
1. Rise in the price of building insurance premiums as a consequence of the collapse of the building in Surfside.
2. Increase in the price of maintenance work. Many buildings have had to urgently address maintenance work that was long overdue. As a result, maintenance companies have received a significant increase in demand for their services, with a consequent increase in prices.
3. Requirement for neighborhood associations to have reserves to cover expenses.
All of this has resulted in a considerable increase in HOA dues for homeowners, many of whom are finding it increasingly difficult to pay.
Those HOAs that did not have sufficient reserves have had to meet the expenses by creating special assessments, further increasing the outlays faced by homeowners.
Generally, rental prices are holding steady and investors are not being able to pass on to their tenants the amount of the assessments, the increase in insurance rates and the increase in HOA dues.
Faced with this situation, a growing number of homeowners are putting their condominiums up for sale. The inventory of this type of homes for sale in Florida has been rising for months. At the moment the selling prices of condominiums have not dropped significantly but I am beginning to see closings at prices significantly below the sellers’ asking prices.
My recommendation for those considering investing in an condominium in Florida is that your realtor:
1. looks for homes that fit your investment profile,
2. checks the amount of HOA dues and if there is any spillover,
3. analyzes the sales transactions that have taken place in the last few years,
4. studies the yield potential of each home,
5. makes a downward offer on the seller’s asking price on the selected home. It is possible that the seller is in a hurry to sell and will accept a significantly lower offer.
Roberto Sanz / Director of Convey Investments.