Want more housing market stories from Lance Lambert’s ResiClub in your inbox? Subscribe to the ResiClub newsletter.
Back in May, residents of Regency Gardens Condominiums in Orlando were notified that their monthly HOA fees would nearly triple. Plus, to cover a shortage of required HOA reserve funds, they were required to pay up to $22,000 in the form of a one-time special assessment—effectively forcing some of the residents to sell.
Regency Gardens Condominiums isn’t alone.
Following the tragic Surfside condo collapse in June 2021, which killed 98 people, Florida passed new structural safety rules, requiring milestone inspections and additional funds for repairs to be set aside by the end of 2024. That bill has led to Florida HOAs issuing sky-high special assessments and monthly fee increases to cover these costs.
According to a recent report from Redfin, monthly HOA fees—which cover the maintenance and operation costs of shared housing developments—are up 5.7% year-over-year on an aggregate basis across the 43 largest housing markets tracked by Redfin. But the biggest year-over-year HOA increases are in Florida, including Tampa (17.2%), Orlando (16.7%), and Fort Lauderdale (16.2%).
“Condo associations [in Florida] are dealing with new laws with a targeted compliance date by the end of 2024,” Jerry Kopensky, a real estate agent based in Coral Springs, Florida, tells ResiClub. “The [new inspections] apply to many older projects based upon the age of and number of floors in the buildings and their proximity to the coast. For associations that have not completed these inspections the risk of additional special assessments to bring the buildings into compliance is very problematic to many potential buyers.”
Kopensky adds that: “Looking at just those issues, it’s easy to see why the abated condo sales and weakening pricing [in Florida] are occurring.”
Big picture: While priced-out homebuyers have borne the brunt of the pandemic housing boom’s run-up in home prices and the subsequent mortgage rate shock, most homeowners have not—with many benefiting from increased equity and the opportunity to refinance at ultralow rates during the pandemic. However, recent regional spikes in home insurance, property taxes, and HOA fees are beginning to create affordability challenges for homeowners in some pockets of the country.