Florida’s Condo Correction
Bottom Line: Many have predicted a correction, or a sustained decline in Florida’s housing market, due to rapidly rising prices for several years. Those predications have all been wrong. Florida’s housing market has appreciated annually for each of the past 12 years. Not since 2011, at the tail end of the impact of the Great Recession, has Florida experienced a net decline in property prices. That included the average property appreciating by another 4.5% over the past year most recently despite high prices and the highest mortgage rates in over twenty years. But that doesn’t tell the entire story. It’s been, and increasingly is, a tale of two housing markets. A market of single-family homes and a tale of condos and townhomes (though mostly condos between the two).
While real-estate has appreciated over the past year it hasn’t happened everywhere with every property type. Single family homes did see appreciation statewide. Condos did not. In fact, of Florida’s six major metros, half have seen condo prices decline over the past year including the Miami-Fort Lauderdale-West Palm Beach metro – where the average condo value is 2.5% less today than a year ago. The biggest culprit isn’t demand but rather cost. While the price of the average condo in South Florida is lower today than a year ago – the average total cost of buying one is higher. Rapidly rising HOA dues, due to Florida’s property insurance crisis and increased regulations following 2021’s Surfside collapse of Champlain Tower’s South, have led to HOA dues that have commonly risen by 40%-100% depending upon the building, the amenities and the HOA’s priorities.
It’s finally reached the point where the increase in dues has led to a decline in prices. Will this be a sustained correction in Florida’s condo market or a short-lived blip on the way to higher prices? That remains to be seen. But with dues still rising within many associations it appears unlikely that prices will rise alongside them as well. Until there’s sustained sustainability in HOA dues, we’re unlikely to see a recovery in condo prices.