The collapse of the Champlain Towers South in Surfside, Florida, in 2021 and the tragedy of ninety-eight lost lives have had seismic repercussions for the state’s condo fees, threatening a wave of homelessness, reports Moneywise.
Following the Surfside tragedy, a new law mandated that associations for buildings of three-story or higher condos must fully fund their maintenance reserves. Previously, they could delay filling the reserves, which left buildings unable to fund maintenance repairs.
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Another requirement was for buildings 30 years old and older to undergo structural assessments, which they must pay, along with the repairs for the issues that arise. Building owners have passed these fees on to their tenants, increasing monthly fees that many cannot afford.
The extra fees issued under Florida law are usually levied in addition to any existing fees, such as taxes, insurance, existing code violations, and repairs, Moneywise reported. Those at the greatest risk are older people on a fixed income who cannot earn more money to afford the increases, which must be paid in conjunction with existing mortgage payments Florida has one of the highest proportions of seniors in the country, with 20.1% of the population over 65, according to World Population Review.
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Some HOA Fees Without Amenities Are Over $1,000/Month
In August, Redfin RDFN found that homeowners association dues had risen more than 15% in the previous year in Tampa, Orlando and Fort Lauderdale, compared to a median gain of 6% across 43 other metros that it analyzed. As a result, condo prices had dropped.
“Many buildings—even those without amenities—now have HOA dues north of $1,000 a month,” Rafael Corrales, a Redfin agent in Miami, said. “And with special assessments getting tacked on, a lot of condo owners who are retired and/or on a fixed income are being forced to sell and relocate because they can’t keep up with the payments.”
A Perfect Storm Of Unaffordability
Condo fees in South Florida have increased as much as 27% between Jan. 31 2024, and the end of this past January, according to the Palm Beach Post, Complicating issues are the currently high mortgage rates, hovering around 7%, making downsizing or refinancing difficult. This, coupled with increasing insurance costs in the wake of extreme weather events, has created the perfect storm of unaffordability for many. High rates have forced people to leave the state and prompted Gov. Ron DeSantis to instigate insurance reforms earlier this year to make Miami-Dade County more affordable.
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Unsellable Inventory
Miramar's WTVJ-TV estimated that overall living expenses had also increased from November 2023 to the same time a year later. Food prices were up 2.4%, and medical care up 3.7%, further exacerbating the cost of living.
“These special assessments… they’re growing $100,000, $200,000. I’ve heard as high as $350,000 per unit to fix the structural imperfections in these older buildings, basically rendering that inventory unsellable at the moment,” broker and CEO of real estate firm ISG World, Craig Studnicky, told WTVJ.
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