Redfin Reports Florida’s Condo Prices Are Falling As Cost of Insurance and HOA Fees Skyrocket

Rhea-AI Summary

Florida's condo market is facing challenges with dropping prices and declining sales as home insurance costs rise and HOA fees soar following the 2021 Surfside condo collapse. Redfin's report highlights the contrast between Florida's condo market and the rest of the U.S., where prices are rising, sales are steady, and new listings are growing at a slower pace.

Positive

• Florida's condo prices in major metros are decreasing year over year, with sales also declining.
• New condo listings are increasing as sellers try to sell their properties in the challenging market.
• In Jacksonville, the median condo price dropped by 7%, sales declined by 27%, and new listings increased by 32% year over year.
• Miami experienced a 3% decrease in condo prices, a 9% drop in sales, and a 27% increase in new listings.
• Florida's single-family home market is performing better, with Miami seeing double-digit growth in median sale prices, a 9% increase in sales, and a 13% rise in new listings.
• Redfin agents in Florida attribute slow condo sales to rising costs of ownership, including increasing home insurance and HOA fees.

Negative

• None.

Real Estate Market Analyst

The recent downturn in Florida's condo market, highlighted by declining prices and sales, is a significant trend that warrants attention from stakeholders in the real estate sector. The juxtaposition with the national condo market, where prices are rising, underscores the localized nature of these market shifts. The increased costs of homeownership in Florida, such as insurance and HOA fees, are direct contributors to this trend. The median condo price drop of 7% in Jacksonville and the 27% decline in sales are particularly telling indicators of market sentiment. Furthermore, the 32% increase in new listings suggests a shift towards a buyer's market, which could lead to further price adjustments.

Long-term implications for the real estate market include potential shifts in investment strategies, as investors may seek to diversify their portfolios to mitigate risks associated with climate-related events and insurance costs. Additionally, the disparity between the condo market and the single-family home market, where prices and sales are rising, may indicate a growing preference for the latter, likely influenced by the perceived stability and lower relative costs of single-family home ownership. This trend could have a ripple effect on urban planning and development patterns within the state.

Insurance Industry Analyst

The surge in homeowners insurance costs in Florida is a critical factor impacting the affordability of condos. As natural disasters become more frequent and severe, insurance companies are forced to raise premiums to cover the increased risk. This trend is not exclusive to Florida; however, the state's geographic vulnerability to hurricanes and other natural disasters makes it a focal point for insurance-related challenges in the real estate market. The Surfside condo collapse has further exacerbated these insurance costs, leading to heightened scrutiny and regulations for condominiums, which translates into higher HOA fees to ensure compliance with safety standards.

In the short term, this could lead to a contraction in the condo market as potential buyers are deterred by the high costs of ownership. Over the long term, the insurance industry may need to innovate with new products and strategies to keep homeownership accessible. This could include the development of more sophisticated risk assessment models or the introduction of government-backed insurance programs to stabilize the market.

Economist

The data presented on the Florida condo market serves as an early indicator of economic shifts that could have broader implications. A decline in the real estate market can have a dampening effect on local economies, as it often leads to reduced spending on home-related goods and services. The increase in homeownership costs, particularly in the condo segment, reflects inflationary pressures that can erode consumer purchasing power. This is especially pertinent as condos often serve as more affordable entry points into the housing market for first-time buyers and lower-income households.

Additionally, the discrepancy between the condo and single-family home markets may signal a divergence in consumer preferences, possibly driven by a desire for more space and privacy, which has been a trend since the COVID-19 pandemic. This shift could have long-term consequences for urban density and transportation infrastructure. Policymakers may need to consider interventions to support the housing market, such as subsidies or tax incentives, to prevent a significant slowdown in construction and real estate activity, which is a vital component of economic growth.

Florida’s condo market is faltering as the increasing intensity of natural disasters pushes up home insurance costs, and HOA fees soar in the wake of the 2021 Surfside condo collapse

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Prices of condos in major Florida metros are dropping year over year, and sales are declining, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. New condo listings are soaring as sellers try to offload their properties. That differs from the U.S. as a whole, where condo prices are rising, sales are holding steady and new listings are increasing at a much slower rate.

In the Jacksonville metro, for instance, the median condo price declined roughly 7% year over year in January, sales declined 27%, and new listings increased 32%. The story is similar in Miami, where condo prices fell 3%, sales dropped 9% and new listings rose 27%.

Florida’s market for single-family homes is faring better. Take Miami as an example: The median sale price of single-family homes increased by double digits from a year earlier in January, sales rose 9% and new listings increased 13%.

Florida Redfin agents say climbing costs are making condo ownership unattractive

Redfin agents report that Florida’s condo sales are slow because the cost of buying a condo has shot up, and listings are skyrocketing because the cost of owning a condo has shot up. The average cost of homeowners insurance across Florida increased by about 40% in 2023 alone, according to reports, and homeowners association (HOA) fees are multiplying for many condo buildings. In addition to slowing demand, the rising cost of insurance and fees are pushing prices down.

While condo prices are down from a year ago, they’re still much higher than they were before the pandemic—an affordability challenge that’s being exacerbated by rising insurance and HOA expenses.

“Condo costs are shocking,” said Juan Castro, a Redfin Premier agent in Orlando. “Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It’s causing buyers to rethink their plans.”

Florida’s HOA fees are increasing because there are new condo regulations in place this year in the wake of the 2021 Surfside condo collapse. The regulations require HOAs to regularly assess the safety of condo buildings, and in many cases collect more money for maintenance and repairs. HOA fees typically include a condo owner’s portion of insurance costs for the exterior of a building, while homeowners have a separate policy covering the interior of their condo.

In some situations, it’s also more difficult to attain a condo mortgage than a single-family home mortgage, even though condos are often considered a more affordable option. That’s because lenders require borrowers to have enough money to cover HOA dues, and also take into consideration the financial health of the condo building before writing a loan.

Home insurance costs are skyrocketing in Florida due to the increasing intensity of hurricanes and other natural disasters, with some insurance companies leaving the state altogether. Homeowners’ insurance costs three times more in Florida than the national average, making it the most expensive state in the U.S. to insure a home.

“Condos are sitting on the market much longer than they used to, with less interest from buyers,” said Jacksonville Redfin Premier agent Heather Kruayai. “Sky-high HOA costs are pushing buyers out of their monthly budget.”

To read the full report, complete with a table that includes more data, please visit: https://www.redfin.com/news/florida-condo-prices-dropping/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240226778672/en/

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

Why are condo prices dropping in major Florida metros?

Condo prices in major Florida metros are dropping due to increasing home insurance costs and soaring HOA fees following the 2021 Surfside condo collapse.

How are condo sales affected in Florida according to Redfin's report?

Condo sales in Florida are declining, as highlighted in Redfin's report, due to the rising costs of buying and owning condos.

What is the trend in new condo listings in Florida?

New condo listings in Florida are increasing as sellers try to offload their properties in the challenging market conditions.

What is the difference between Florida's condo market and the rest of the U.S.?

Florida's condo market is facing challenges with dropping prices and declining sales, while the rest of the U.S. is experiencing rising prices, steady sales, and slower growth in new listings.

How is Florida's single-family home market performing compared to the condo market?

Florida's single-family home market is faring better than the condo market, with growth in median sale prices, sales, and new listings.