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Real Estate
11 August 2024

Florida Condo Owners Face Exorbitant Repair Costs

New inspections and repairs prompted by past tragedies put financial pressure on residents throughout the state

Florida's real estate market is undergoing some significant challenges, particularly when it concerns aging condominium buildings. These properties, once the haven for many retirees and first-time buyers, are now grappling with the rising costs tied to new regulatory requirements targeting structural safety.

The alarm bells first rang with the tragic collapse of the Champlain Towers South condo building back in 2021, which took the lives of 98 people. This disaster prompted the Florida legislature to put forth new rules stipulating stricter inspections and necessary repairs for condo buildings older than 30 years. This means there’s quite a bit of anxiety among condo owners as they face hefty bills to bring their properties up to code. For many, like Janet Stone, who had envisioned her retirement relaxing by the beach, the reality is far from the dream.

Janet, who had worked for years as a teacher, is now back at work managing preschool classes. The reason? A staggering $100,000 special assessment her condo association has slapped her with to cover the costs associated with concrete restoration and other repairs necessary to keep their building safe. "I shouldn’t say it, but it really sucks to work every day and not have a cent and wonder, ‘Can I afford groceries this week?’" she shared, reflecting the financial strain many face.

This economic pressure is felt not just individually but on a broader scale, jeopardizing one of the few remaining affordable housing options along Florida’s coastline. Representative Vicki Lopez, who played a role in drafting the new legislation, expressed her concern about how the situation can push those on fixed incomes out of their homes and contribute to the state's existing affordable housing crisis. "We already have an affordable housing crisis in Florida, so this perfect storm has arrived at a very difficult time," she noted.

The home price surge across the state has not helped either. Since 2020, the costs of homes have skyrocketed by nearly 67%. With homeowners’ insurance also seeing a stark increase of 42% just last year, many households are now unable to afford the median-priced homes. For many, these older condos were seen as viable alternatives for those unable to secure single-family homes, but now they are rapidly becoming just as burdensome.

With approximately 900,000 condo units across Florida affected by the new regulations, condo associations are requiring members to contribute more to funds meant for these necessary repairs. For example, residents at Palm Bay Yacht Club have been handed bills totaling up to $140,000 each for structural improvements. Similar stories play out across the state, from Daytona Beach to Orlando, leaving condo owners scrambling to figure out how to make these payments.

Many owners are turning to loans or even returning to work, like retired health care administrator Cristian Murray, who bought his condo hoping to enjoy his retirement, only to face new expenses he wasn’t prepared for. "Pardon my language, but we’re screwed," he lamented, as he juggles his mortgage payments with the new assessment costs.

The increased financial burden is causing a surge in units on the market as owners try to sell before they incur additional costs. Data has shown the number of condos available has risen by 23% statewide over the past six months. Despite this, prices are beginning to dip, down about 4.5% on average, indicating potential buyers are hesitant. Krista Goodrich, a realtor operating around Daytona Beach, remarked, "All the realtors are talking about how long their listings have been sitting... Condos are being hit the worst." Buyers are fearful of the looming costs associated with repairs and the stories emerging about the poor condition of some older buildings.

Florida's environment poses additional challenges, particularly its saltwater, which rapidly deteriorates concrete and rebar structures. Many veterans of the state’s real estate scene understand the delicate balance between maintaining properties and cutting corners, noting how some owners prioritized cosmetic upgrades over the fundamental upkeep required for structural integrity.
"When you put the maintenance on second tier and you don’t do simple but very important things...you jeopardize your building’s longevity," explained Greg Batista, an experienced engineer. His insights reflect the broader realities many condo owners are facing, illustrated through stories of properties sliding toward disrepair.

On the developer's side, this chaotic environment has supplied opportunities amid the distress, especially with many older properties sitting on prime oceanfront real estate. The value of the land could well exceed the allegiance owners have to the aging buildings. Developer Edgardo Defortuna has been eyeing some of these properties, seeing excellent potential for luxury high-rise builds. "If you build new luxury condos on them, it could fetch $3,000 to $5,000 per square foot," Defortuna stated, hinting at the stark reality facing many longtime owners who may be forced to surrender their homes to the highest bidder.

It’s evident the rising costs and legislative mandates are putting many condo owners on shaky ground as they navigate financial strain, potential foreclosure, and the stressful possibility of losing their homes. After decades of settling for manageable costs and lower maintenance responsibilities, the result feels like being thrust back to the unpredictability of the broader housing market, something they believed they had escaped. Many, like Janet Stone, now see their retirement dreams slipping through their fingers. "This was supposed to be the time when I was really going to retire and be close to my family and enjoy life," she said. Instead, her path now involves strenuous work just to stay afloat, showcasing the difficult paradox of Florida’s housing situation and the uncertainty clouding the condo market.

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