As of March this year, real estate prices in Florida have continued to slide thanks to a combination of market forces.
One is the homeowner association (HOA) fees, which are becoming unrealistically high and making it quite difficult to sell a house. In the same vein, the worsening insurance crisis is forcing many owners to list their vacant properties.
The Glitters On Florida’s Real Estate Market Can Be Deceiving
Florida properties listed on Zillow are seeing more and more of them reducing their sale price relative to the national average.
The number of such properties keeps increasing as many homeowners are struggling to meet insurance costs. Similarly, many buyers are taking a cue from homeowners who are reluctant to acquire new properties.
Property Listings Reeking of Desperation
In the third week of March, Zillow had some 206,000 properties up for sale in Florida. These properties include vacant lots, condominiums, apartments, and multi- and single-family homes.
The biting effect of the crises in Florida’s real estate market can be seen in the listing trend. It is almost obvious that sellers are desperate to unload their properties.
Homeowners Willing To Sell Their Property Short
For example, on Zillow, some 51,000 properties were listed by agents, while about 1,200 units were listed by the owners.
Deducting that figure from the 206,000 total number of listings, the remaining Florida properties on Zillow had reduced prices. Such trends are only prevalent when sellers are trying to rid themselves of properties by all means.
Florida Real Estate Selling at Low Prices
Real estate analysts observed a similar trend in the first week of March. Of the 202,401 Florida properties listed on Zillow, as of March 4, about 47,300 were listed by agents and had their prices reduced below the apparent value.
Likewise, of the 8,651 properties listed around the same period by property owners or others, 1,165 of them also had their prices reduced.
Condos Are Worse Hit by Sale Stagnation
The ongoing crisis worst hits condominium sellers in Florida. Condos in high-rise buildings like the Majestic Towers in Bal Harbour were previously in high demand. However, the crisis has caused condo sales to plummet across the state.
Condo sales have been exceptionally slow since January, even before the ongoing crisis became unignorable.
Florida Condos Are Redundant on the Market
RedFin reported in February that homebuyers in Florida are reluctant to acquire condos.
While most states in the US saw an 8.4 percent increase in the price of condos in January relative to the previous year, the contrary was true for condos in the cities of Florida. RedFin reported a notable decline in condo prices across major metros of Florida.
Condo Sale Decline Varied Across Florida Metros
For example, in January, Orlando saw a 4.8 percent decline in condo prices, Jacksonville’s dropped by 6.5 percent, and Miami saw a 2.5 percent drop.
Real estate analysts suggest that the current glut in Florida’s condo market is due to the cost implications of owning one. Home insurance premiums and HOA fees for this real estate category are at an all-time high.
Homeowner Association, the Property Safety Watchdog
Florida’s homeowner association acquired a new excuse to hike their fees in 2021. The new fees went into force after the 12-story Champlain Towers South condo building collapsed on June 24 of that same year.
Investigations revealed that the mishap was caused by defects in the building’s pool deck. The incident claimed 98 lives.
A Fee To Forestall Disaster
Since the Champlain Tower incident, the HOA has conducted concurrent safety assessments of condo buildings. Consequently, they require owners to pay maintenance and repair fees oh-so-often to prevent a repeat of the 2021 disaster.
Florida Realty Marketplace’s website estimates Florida HOA fees to range between $100 and $350 per month. However, the charge is dependent on available amenities in the locale and maintenance requirements.
Experts Share Their Take on Florida’s Property Predicament
Lawrence Yun is a chief economist and the senior vice president of the National Association of Realtors. He gave his take on why condo sales are going at a snail’s pace.
According to Yun, the relatively higher fees associated with owning a condo and the insurance crisis plaguing Florida are largely responsible for the low performance of condo-type properties on the market.
Insuring Your Condominium Just Got More Expensive
Yun suggests that the preempting of eventualities may be responsible for the sudden hike in insurance premiums for properties in Florida.
Yun also said that “a second factor could be that many condominiums must have extra funds in reserve for repair and maintenance in the aftermath of the tower collapse a few years ago.”
Why Florida Homebuyers Steer Clear of Condos
It is bad enough that condos cost relatively more than most other types of residential property. Having to pay high HOA fees could be the final straw for most prospective buyers in Florida.
Yun opines that buyers may consider condos in Florida if sale prices fall low enough to compensate for the HOA fees that accumulate over time.
Highest Insurance Premium in the US
Unfortunately, the state of Florida is not getting the hang of the lingering insurance crisis. So far, Florida homeowners hold the record of paying the highest insurance premiums in the US.
The Insurance Information Institute reported that the average premium paid by Florida homeowners is $6,000.
The Florida Legislature Made Some Effort
Widespread rigging of the insurance system through fraud, expensive litigation costs, the impact of climate change, and the bailing of major insurance brokers from Florida have been fingered for the uncontrollable expense of property insurance.
However the Florida Legislature has passed bills to help alleviate the insurance crisis, but the average homeowner has yet to feel its impact.