In January, sales of condos in Florida experienced a significant decline, accompanied by falling prices, according to data from real estate platform Redfin. The surge in listings suggests that owners are eager to sell their properties, but they are encountering challenges due to soaring home insurance costs in the state.
The high insurance expenses are deterring potential buyers from investing in condos in Florida, contributing to the difficulty in selling these properties. Major metropolitan areas such as Jacksonville and Miami have witnessed substantial drops in both median sale prices and the number of sales compared to the previous year.
For instance, Jacksonville saw a 6.5 percent decrease in median sale price and a more than 27 percent decline in the number of sales year-over-year. Similarly, Miami experienced a 2.5 percent drop in median sale price and nearly 9 percent fewer sales in January compared to the previous year. However, certain areas like Cape Coral and North Port are faring relatively well statistically, having started from a lower base following the impact of Hurricane Ian, as highlighted by Redfin.
The Florida condo market’s underperformance stands in contrast to the national market, where condo prices are on the rise, and sales are robust, according to Redfin. A significant contributing factor to Florida’s housing market struggles is the exorbitant costs of home insurance, which have surged over the past year due to increased weather disruptions. Some insurance companies have even chosen to exit the state entirely.
Florida residents now face some of the highest insurance premiums in the country, with a reported 42 percent increase in home insurance costs in 2023 compared to the previous year, as per Newsweek’s findings.
Condo owners in Florida are grappling with steep increases in their monthly maintenance fees, causing concern among prospective buyers and impacting the demand for condominiums. According to real estate agents, the surge in maintenance costs is deterring buyers and prompting them to reconsider their housing plans.
Juan Castro, a Redfin Premier agent based in Orlando, highlighted the significant rise in monthly maintenance fees, with some condos seeing fees double from $400 to $700. This escalation in costs is prompting buyers to reassess their affordability and leading them to explore alternative housing options.
The increase in maintenance fees has become a significant obstacle for prospective condo buyers seeking mortgage financing. Mortgage lenders typically evaluate whether buyers can afford monthly homeowners association (HOA) fees, and the substantial fee hikes have made it more challenging for buyers to qualify for mortgages, thereby dampening demand for condos.
As a result, many buyers are shifting their focus towards single-family homes, which offer more predictable and potentially lower maintenance costs compared to condos. In Miami, for example, single-family home prices have risen, with sales increasing by 9 percent and listings up by 13 percent, as per Redfin data.
Heather Kruayai, a Redfin Premier agent in Jacksonville, emphasized that condos are lingering on the market for longer durations than before, with reduced buyer interest. The soaring HOA costs are cited as a primary reason for buyers exceeding their monthly budget constraints, further diminishing the attractiveness of condos as a housing option.