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Recent reports note Fla.\u2019s condo market faces rising costs. But an influx of high demand during the pandemic may also be a factor influencing current conditions.<\/span><\/span><\/span><\/p>\n<\/div>\n FORT LAUDERDALE, Fla. \u2013 Sharp increases in what it costs to own a condominium in\u00a0Florida\u00a0are driving down prices that owners can get when they sell their condos in the state, according to a report released Tuesday by national\u00a0real estate\u00a0brokerage Redfin.<\/span><\/span><\/span><\/p>\n The report, written by Redfin data journalist\u00a0Dana Anderson, cited higher costs of insurance and homeowner association fees as reasons that the number of condo listings in\u00a0Florida\u00a0increased by 28.2% in January compared to the previous January, and compared to 11.1% in the nation overall.<\/span><\/span><\/span><\/p>\n \u201cCondos are sitting on the market much longer than they used to, with less interest from buyers,\u201d the report quoted Jacksonville Redfin Premier agent\u00a0Heather Kruayai\u00a0as saying. \u201cSky-high HOA costs are pushing buyers out of their monthly budget.\u201d<\/span><\/span><\/span><\/p>\n Median sales prices, the report said, increased by just 2.4% in\u00a0Florida\u00a0compared to 8.4% nationwide over that time period. Median prices fell 6.5% in\u00a0Jacksonville, by 4.8% in\u00a0Orlando, 2.5% in\u00a0Miami\u00a0and by 1% in\u00a0Tampa.<\/span><\/span><\/span><\/p>\n Increases in median sales prices in\u00a0Cape Coral\u00a0(6.5%) and\u00a0North Port\u00a0(7.1%) occurred largely because they were at a low point a year ago following Hurricane Ian, the report said.<\/span><\/span><\/span><\/p>\n Meanwhile, demand for condos is falling in several metro areas in\u00a0Florida, a data chart accompanying the report showed.<\/span><\/span><\/span><\/p>\n Sales fell by 27.4% in\u00a0Jacksonville, 8.7% in\u00a0Miami\u00a0and 4.1% in\u00a0Tampa, the data chart showed, and rose only in\u00a0Orlando, by 6.6%.<\/span><\/span><\/span><\/p>\n Sales in\u00a0Florida\u00a0fell by 6.8% while remaining flat nationwide, according to the chart.<\/span><\/span><\/span><\/p>\n Redfin says it relies on data from multiple listing services and insights from the brokerage\u2019s\u00a0real estate\u00a0agents across the country.<\/span><\/span><\/span><\/p>\n The report said that\u00a0Florida\u2019s market for single-family\u00a0homes\u00a0is faring better than the condo market. In\u00a0Miami, the median sale price of single-family\u00a0homes\u00a0increased by double digits compared to\u00a0January 2023\u00a0while sales rose 9% and new listings increased by 13%.<\/span><\/span><\/span><\/p>\n Redfin agents say that\u00a0Florida\u2019s condo sales have slowed because purchase prices have increased, while listings have jumped because the costs of owning a condo are up.<\/span><\/span><\/span><\/p>\n The story cited the Insurance Information Institute\u2019s estimate that\u00a0property\u00a0insurance increased by 40% in 2023 \u2013 and cost homeowners three times more than the national average in\u00a0Florida\u00a0\u2013 and mentioned that HOA fees are \u201cmultiplying for many condo buildings.\u201d<\/span><\/span><\/span><\/p>\n \u201cCondos that used to have a\u00a0$400\u00a0monthly maintenance fee may now have a\u00a0$700\u00a0fee,\u201d\u00a0Juan Castro, a Redfin agent in\u00a0Orlando, was quoted as saying. \u201cIt\u2019s causing buyers to rethink their plans.\u201d<\/span><\/span><\/span><\/p>\n HOA fees, the report said, are increasing because a new state law enacted in 2022 requires more frequent safety assessments while eliminating the ability of associations to waive or partially fund required reserves. The law was a response to the Champlain Towers South collapse that killed 98 people a year earlier.<\/span><\/span><\/span><\/p>\n Roy Lemus, a loan officer and\u00a0real estate\u00a0broker at\u00a0Sterling One\u00a0Realty\u00a0in\u00a0Miami, said on Tuesday that increases in costs of commercial insurance policies that associations must buy to cover roofs, buildings, and other common areas, have also pushed HOA fees higher.<\/span><\/span><\/span><\/p>\n Despite the lower prices of many condos, bank financing can be more difficult to obtain for condos than single-family\u00a0homes, the report said, because lenders require borrowers to have enough money to cover HOA dues. Lenders, adhering to requirements of federal loan guarantors\u00a0Fannie Mae\u00a0and\u00a0Freddie Mac, must also verify whether condo associations have sufficient reserves before approving mortgages, it added.<\/span><\/span><\/span><\/p>\n Fannie Mae\u00a0maintains a blacklist of condo\u00a0properties\u00a0it will not back, forcing buyers to find alternative financing, the\u00a0South\u00a0Florida\u00a0Sun Sentinel\u00a0reported in November.<\/span><\/span><\/span><\/p>\n Lemus said that tougher lending rules \u201cin my opinion is the biggest obstacle\u201d and the leading cause of why more condos are languishing on the market in\u00a0Florida.<\/span><\/span><\/span><\/p>\n Lenders require a 25% down payment to buy a condo if the association doesn\u2019t maintain a proper reserve or carry recommended amounts of \u201cmaster\u201d insurance, Lemus said. Most condos in\u00a0South\u00a0Florida\u00a0fall into this category, he said. Finding one that can be purchased with 10% down \u201cis like finding a needle in a haystack,\u201d he said.<\/span><\/span><\/span><\/p>\n \u201cIf a unit is priced at\u00a0$350,000, you will need close to\u00a0$100,000\u00a0to close the deal with closing costs,\u201d Lemus said. \u201cI really feel that if we create better loan programs with low down payments, that would overcome the cost of higher HOA fees.\u201d<\/span><\/span><\/span><\/p>\n Ryan Paton, a\u00a0Coconut Creek-based mortgage broker who specializes in condos, pushed back against the report\u2019s assertions.<\/span><\/span><\/span><\/p>\n High insurance costs and HOA fees \u201care definitely an issue for some condos in\u00a0Florida,\u201d Paton said on Tuesday, \u201cSome of them are in big trouble.\u201d<\/span><\/span><\/span><\/p>\n But he added, \u201cIt needs to be said that the condos that chose to be run properly, before the insurance crisis, are in a much better position and are doing fine through the insurance crisis in\u00a0South\u00a0Florida\u00a0and (their owners) are not in panic mode or seeing values drop and inventory increase.\u201d<\/span><\/span><\/span><\/p>\n South\u00a0Florida\u00a0condo prices, he said, increased more than in most markets during the pandemic \u201cbecause so many people wanted to live here.\u201d<\/span><\/span><\/span><\/p>\n The price increases achieved during the pandemic couldn\u2019t be maintained, he said. \u201cI just think we were so far ahead of the curve, and now we are taking a breather. (They\u2019re) not declining because people can\u2019t or won\u2019t want to pay the HOA or high insurance costs in\u00a0Florida.\u201d<\/span><\/span><\/span><\/p>\n Interest rates, he added, have fallen \u201csubstantially\u201d since Christmas. Purchase applications picked up over 75% compared to the previous month.<\/span><\/span><\/span><\/p>\n \u201cSo as rates keep improving, more people are getting back into the game and our numbers will continue to improve in South\u00a0Florida,\u201d Paton said.<\/span><\/span><\/span><\/p>\n \u00a9 2024 South\u00a0Florida\u00a0Sun-Sentinel. Distributed by Tribune Content Agency, LLC.<\/span><\/span><\/span><\/p>\n<\/div><\/div>\n <\/p>\n <\/p>\n\n