There was a time when South Florida’s condo market was red hot. However, changes in regulations and increases in ownership costs have pushed many condo owners in the area to sell. However, the problem is that they’re now all selling at once.
Michael Leccese’s one-bedroom, two-bathroom unit at the Sian on South Ocean Drive in Hollywood, Florida, has been on the market for more than a year, and he’s dropped the price four times since listing it.
“It’s gonna take a while,” he told CBS News, in reference to finding a buyer.
A big reason Leccese is looking to sell his condo is that the overall cost of homeownership has risen. “I’m definitely taking a hit economically to support these types of expenses,” Leccese said.
When Leccese first listed his condo just over a year ago, he priced it at $435,000. Most recently, he lowered it to $414,000 in the hopes of finding a buyer. He’s banking on finding one eventually.
“There’s a lot of condos on the market right now, so for a buyer it’s a great opportunity,” Leccese said. “But you have to be an educated buyer.”
Leccese isn’t the only South Florida condo owner to see his costs go up.
“A lot of people have seen their maintenance double. They’ve seen some of the assessments become extremely unaffordable. It’s definitely impacted many residents here in Florida,” said Phil Gutman, President of Gutman Development Marketing President, in a Fox News interview.
Any time there’s more supply of a given commodity than there is demand, prices tend to fall. That’s what’s happening in South Florida right now.
Many condo owners are buckling under the weight of increased costs and are looking to unload their units. That’s created an abundance of inventory on the market.
Peter Zalewski, who tracks the condo market on his site Condo Vultures, said South Florida condo owners are selling in short order because they can’t keep up with higher maintenance fees and special assessments.
In January of this year, there were 25,000 South Florida condo units on the market. That number increased to 28,000 in April. In addition, Zalewski is predicting that 40,000 units will hit the market before the end of the year.
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Making matters worse, more condos are being built today because they went under contract three years ago, when the market was different. That’s only going to introduce more competition for condo owners who are desperate to sell.
A big reason condo owners in South Florida are being hit with higher costs is that new laws that were enacted following the tragic 2021 Surfside Champlain Towers collapse now require buildings to have extra cash reserves on hand to cover maintenance costs.
In Naples, Florida, condo fees were up 9.6% on an annual basis in January, reports Redfin. In Cape Coral, they rose 10.2%.
Adding to the problem is that almost 22% of Florida’s population is 65 and over. Retirees on fixed incomes can’t afford to keep up with the rapidly rising cost of condo maintenance.
But while it may be a bad time to sell a condo in South Florida, it could be a good time to buy or rent one. Buyers can benefit from lower prices and more inventory to choose from. Renters may even have more negotiating power given the number of condo owners who are trying to bide their time until they can sell.
However, it’s important to be cautious about buying a South Florida condo given the potential for not only hidden damage, but increasing costs.
Real estate broker Julia Ray of Raydiant Realty advises buyers to look beyond the listing price when buying a condo in South Florida. “Be very careful when you choose the building. Look at the history,” she says.
It’s also important to get a structural reserve study on a condo building before making an offer on a unit. This ensures that there are adequate funds for long-term maintenance.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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