U.S. red state experiencing a growing real estate crisis
In this DML Report…
A growing real estate crisis in Florida has left condo owners struggling to sell properties as soaring Homeowners’ Association (HOA) fees and rising insurance costs drive buyers away. In southern Florida, particularly in Palm Beach, Broward, and Miami-Dade counties, condo listings surged to 20,293 in Q2 2024, up from 8,353 the previous year. Nearly 90% of these units are in buildings over 30 years old, subject to mandatory inspections under Florida’s SB 4-D Bill, enacted after the 2021 Champlain Tower South collapse that killed 98 people. The law requires condos to fund repairs within a year of inspection, pushing HOA fees to unsustainable levels—some as high as $3,300 monthly in places like Winter Park Woods near Orlando. Sellers are slashing prices by up to 40%, with some units losing nearly $500,000 in value, yet buyers remain scarce due to high costs and financing challenges.
The financial strain is forcing many residents to abandon their homes, risking foreclosure or bankruptcy. In Venice, Florida, retiree Karen Shipman said she may not afford to keep her condo due to escalating fees outpacing her mortgage. Real estate expert Steven Kupchan warned that condo associations could face bankruptcy if they cannot cover repair costs, leading to widespread foreclosures and plummeting property values. Insurance companies are either refusing coverage or hiking premiums to unaffordable levels, further deterring buyers. In Tampa, median HOA fees rose 17.2% year-over-year, while Orlando and Fort Lauderdale saw increases of 16.7% and 16.2%, respectively. The market is shifting heavily in favor of buyers, with Florida’s unsold home inventory hitting a record 172,209 in January 2025, up 23% from the previous year.
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The crisis stems from a combination of regulatory changes and market dynamics. The SB 4-D Bill, designed to prevent another Surfside disaster, has exposed widespread neglect in aging condos, forcing associations to impose hefty fees to fund overdue maintenance. Meanwhile, high interest rates and fears of natural disasters are cooling demand, leaving sellers with few options. In St. Petersburg, a 1975-built condo with a $2,300 monthly HOA fee sold for less than its 2020 purchase price. Experts predict a potential mass exodus from affected buildings, creating a glut of unsold properties and further depressing prices. With distressed sales on the rise, the ripple effects threaten Florida’s broader real estate market, as buyers wait for deeper discounts amid ongoing economic uncertainty.