After a fatal collapse of a 12-story apartment tower in the Surfside suburb of Miami, Florida, in 2021, the state Legislature introduced new requirements for older apartment buildings. Buildings more than 30 years old, like the collapsed Tower of Champlain, must undergo special inspections, be repaired and raise funds for future maintenance. The deadline is the end of this month.
An inspection is currently underway and the bill is due soon. For some organizations, the costs run into the millions of dollars, leaving apartment owners, many of them retirees on fixed incomes, in a bind.
Approximately 1 million homes will be subject to the new capital-intensive rules. Some owners prefer to sell their units rather than comply, others are pulling out, and some are even seeking bailout from investors.
Peter Zalewski, founder and longtime analyst at Miami-based real estate consultancy Condo Vultures, calls it the condo cliff.
“Compared to what we saw during the Great Recession, it’s essentially a zombie-like building. In these units, you’re basically carrying a small number of people carrying a cross, or other people who can’t afford to pay.” We have to pay everyone’s share. They can’t pay or they’re choosing not to pay,” Zalewski said.
In South Florida, which includes Miami-Dade, Broward and Palm Beach counties, three-quarters of all condominiums for sale are older than 30 years and are subject to the new rules, according to Zalewski’s tally. are. Sales during the typically busy summer season were down 21.5% year-on-year, and average prices were down 2.4%. In the third quarter of this year, the number of active listings increased 60% year over year.
Search and rescue teams search for potential survivors at the partially destroyed 12-story Champlain Towers South Condominiums in Surfside, Florida, on June 29, 2021.
Chandan Khanna | AFP | Getty Images
According to a recent report in the Palm Beach Post, the special assessment levied to make repairs could reach $200,000 per condominium owner, and the cost of repairs could be as much as $15 million.
“What’s happening now is these reports are coming in and maintenance budgets are being put together, but a lot of boards don’t want to admit how much it’s going to be. It will be sent out and people will receive a little booklet that tells them how much they have to pay each month and they will receive it in January, so it’s like the calm before the storm. ,” Zalewski said.
In September, Florida Governor Ron DeSantis called for a special legislative session to address the condominium association’s financial cliff. However, the Palm Beach Post reported that legislative leaders decided to wait until the regular legislative session begins in early 2025 to consider changing the law, citing a need to better understand the financial situation involved.
Stefania Ancona, a real estate agent in Miami, said the buyer pool is now so limited that sellers must first pay the new appraisal or lower the price. But there is another outlet: investors.
One such building, Bay Garden Manor, a condominium on Miami’s West Avenue, has been sold to a large investor and will be demolished to make way for luxury waterfront real estate, Ancona said. It is said that
“I think it’s fair to say there could be foreclosures and short sales. We don’t know yet. We haven’t seen much yet because, again, investors are in a desirable location. Because we’re buying up buildings that feel,” she said.
Condo prices fell about 2% over the summer, but Zalewski said that was just the beginning.
“It wasn’t until September that information about pitfalls started pouring into the area,” Zalewski said. “Uninformed buyers saw lower prices [in the summer] And we thought we might as well buy it now so we could own a piece of South Florida. Many buyers now have regrets. ”
