It seems to be the perfect storm for the South Florida high-rise market right now.
Condo sales in Miami-Dade and Broward counties fell by double digits in June, according to the latest real estate report — at a time when condo owners are increasingly hard hit by rising homeowners association fees aimed at complying with new regulatory requirements and building up larger reserves for maintenance after the collapse of the Surfside condo market.
According to the latest breakdown of newly signed contracts in Florida compiled by the Elliman Report, the number of annual condo sales in June 2024 in Miami-Dade fell 26.8% to 865 deals from 1,181 deals in June 2023.
Things are also getting tougher for buyers as interest rates have remained stable despite expectations that they would fall earlier this year and insurance costs have skyrocketed, according to real estate experts.
TELL US: Homeowners association fees keep rising. How are South Florida condo owners coping?
The picture was no better in Broward, where 412 sales were recorded, a 31.7 percent decrease from the 603 sales in June 2023.
“The main reason was that in January, February and March there was an expectation that the Fed would cut rates, maybe three times or more,” said Jonathan Miller, president and CEO of real estate consulting firm Miller Samuel and author of the Elliman report. “The promise of lower rates was not kept. That made some people hesitant.”
In Miami-Dade, sales declined each year in all price ranges, including those under $200,000 and those over $5 million. The same decline was seen in Broward, except for condos priced over $3 million.
Rising costs for homeowners associations and insurance are keeping many buyers from purchasing a home, says Ilene McMenamin, a real estate agent with Oakland Park-based real estate brokerage and property management firm McElliot Properties.
“People are afraid to buy a condo,” McMenamin said. “What’s the benefit? There’s no equity. The maintenance costs are high.”
Homeowners association (HOA) fees have skyrocketed since the collapse of Champlain Towers South in Surfside in 2021. The collapse of the 12-story beachfront condominium killed 98 people.
After becoming aware of the policy that allowed homeowners associations to forego reserves and delay repairs, Florida lawmakers have banned homeowners associations from foregoing financial reserves. Homeowners associations must also conduct “structural integrity reserve studies” by January 2025 to determine how much money is needed for structural repairs.
If the annual decline in condo sales continues, prices will likely soon fall as inventory levels rise and the costs associated with owning a condo rise, said Mike Pappas, CEO and president of the Keyes Company.
According to the Miami Association of Realtors’ latest monthly real estate sales report, there are currently 8.6 months of inventory in Miami-Dade and 7.6 months in Broward.
A balanced market consists of six to nine months of inventory, with anything below that going to sellers and anything above that going to buyers.
For sellers, conditions for condominiums are likely to worsen rather than improve, with a recovery expected in one to two years, Pappas said.
“There are two condo markets. There’s the luxury beachfront, Brickell, Miami Beach, Aventura – all coastal sales are still driven by South Americans and (buyers from) the Northeast. There are also some affluent locals,” he said.
“If you go west, you have a more suburban market, Kendall with low-rise buildings and those are the Miami-Dade County residents – the first stop for first-time buyers. Once you have the financing and the reserves and do the financing tour, you may be able to do more sales.”
