The crisis emerged in the wake of the Surfside condo catastrophe in 2021, a collapse that saw 98 people lose their lives and led to mandates for structural inspections and reserve funds to cover potential repairs.
Buyer confidence has plummeted – and less than a quarter of condo associations throughout the state are currently meeting those new standards, the Department of Business and Professional Regulation says.
The new regulatory oversight has had a big impact on lending in Florida, realtor Alexei Morgado told Mortgage Professional America. “The condo market is in the midst of a perfect storm,” he said. “The combined effect of these new laws made over 1,400 condos in Florida ineligible for the standard loan. Buyers now rely on non-QM loans to buy condos in Florida, and the rates and terms are worse.”
Insurance, HOA fees continue to surge
Meanwhile, insurance premiums are on the up due to climate risks and those structural concerns, and Morgado said HOA [homeowner association] fees and special assessments have “skyrocketed”.
“It’s not unheard of for monthly HOA dues to exceed $3,000,” he said. “Insurance costs in the Florida condo market have climbed due to increased climate risk, which has led some insurance companies to withdraw from the condo insurance market completely. The insurance is another hurdle because buildings without full coverage cannot qualify for a Fannie Mae-backed loan.”
