Some Miami Area Condo Prices Under Pressure a Year After Surfside Building Collapse

In Miami Beach, where prices have been falling since February, the average sales price was $1 million in April and May, which was 22% lower than the year-earlier period, the report said.

The markedly lower sale prices reflect safety concerns and the prospect of new assessments, which can run to hundreds of thousands of dollars, to bring aging buildings up to code, real-estate agents say. Those issues have become more prominent following the partial collapse of the Champlain Towers South building on June 24, 2021.

Surfside and Miami Beach condo-price declines stand in contrast to the rest of the country, where home sales prices continue to chug higher despite rising mortgage rates.

They also are an anomaly in Miami-Dade County, where condo prices have been soaring as more people move to South Florida for its warm weather and lack of state tax. The rest of Miami-Dade County’s average sales prices jumped 32% during the two months compared with last year, according to ONE Sotheby’s.

“There’s a great divide that’s occurring,” said

Peter Zalewski,

principal at Condo Vultures, a condo consulting firm based in Miami. “While newer luxury buildings are seeing price increases, Surfside showed the risk associated with old buildings especially near the ocean.”

Prices for single-family homes in the same Surfside and Miami Beach neighborhoods, which are free from these new assessments, are also soaring.

Teams of federal investigators continue to dig through the clues of the Champlain Towers collapse. They have yet to rule out any scenarios on what exactly caused the tragedy, and many believe there were several contributing factors. Family members of those who perished have reached an almost $1 billion settlement.

Ida Schwartz, a Realtor at Compass who specializes in the Miami Beach area, said she hasn’t sold a single condo unit this year in buildings built before the year 2000. One buyer from Chicago was looking for something in the $800,000 range, she said, but gave up on buying an older oceanfront condo unit after he realized the condo board could require a special assessment to upgrade the property.

“A lot of people are scared to go into a building that’s older,” Ms. Schwartz said.

A statewide law passed in May requires condos near the ocean to conduct inspections at 25 years, and those more than 3 miles away from the coast are required to do so at 30 years. While there were no previous statewide inspection requirements to ascertain structural integrity over time, Miami-Dade previously required them at 40 years.

The new law could have a widespread impact on the area’s condo market. More than two-thirds of Miami’s condo stock is already 30 years or older, meaning that the majority of buildings in the area are now preparing for this more stringent inspection.

The law will also require condo boards to hold money in reserve to pay for structural repairs. Previously, many condo boards were known to waive reserves year after year, finding themselves hamstrung when repair bills came due.

Condo boards at some buildings that opened less than 25 years ago are already planning ahead. At Murano at Portofino, a Miami Beach luxury bayside building built in 2001, residents are expecting to pay around $300,000 in special assessments to fix a leak in their pool deck and to make various repairs and improvements.

The board has approved $30 million to make initial repairs, and it is expected to call for another $15 million, according to residents who say they have started by writing a $50,000 check on average per unit. Residents fear that the assessment total will rise because of inflationary pressures and the likelihood that inspectors will find more to fix once renovations begin.

“Am I happy about writing that very large check that could be $300,000 when we’re done? Absolutely not,” said Diana Shoolman, a resident in the building. “But we don’t have any alternative other than selling and having it be someone else’s problem.”

Those who can’t afford to write a six-figure check may have to sell. Even some owners who have the money but are part-time residents balk at spending it on a home they use a few months of the year.

Developers are seizing on the situation, offering to buy all the units in some older buildings with plans to demolish them and build new luxury towers in their place. Some buildings require as little as 75% of its residents to vote in favor of the process, known as condo termination.

“I think some unit owners have become far more receptive,” said Camilo Miguel, a developer with Mast Capital who said he is working on four different condo terminations in Florida. “They understand the possible consequences of what can happen in an older structure that’s not well-maintained.”

Write to Deborah Acosta at [email protected]