How Florida condo guidelines could affect the market
Some uncertainty among potential condominium buyers is brewing as they wait to see how the latest state guidelines on condo safety play out.
Florida lawmakers approved a revised version in early May of last year’s guidelines on ensuring safety in condo buildings in an effort to smooth out the process, though experts say that some buyers are choosing to wait to see what happens with assessments before taking a leap.
“It’s more chaotic right now because the studies aren’t done yet, and there is uncertainty because of that,” said Jeff Lichtenstein, founder Echo Fine Properties in Palm Beach Gardens. “There is a big unknown.”
Under the revised version of the rules, buildings that are three stories or taller can now undergo a “milestone inspection” after being occupied for 30 years, unless local officials deem that there are “local circumstances, including environmental conditions such as proximity to salt water,” that would require a milestone inspection every 25 years if they were within three miles of the coastline.
The revised bill also allows local officials to offer buildings additional time past the deadline if they have a contract with an architect or engineer.
The law was passed after the deadly Surfside collapse in June of 2021 raised concerns across Florida about the structural integrity and safety of older buildings. Champlain Towers South, built in 1981, collapsed right as its 40-year recertification was due; ninety-eight people lost their lives.
“In the long-term, these safety inspection requirements are a good thing. It’s going to add a considerable layer of expenses that probably should have happened years ago,” said Elliot Koolik, founding partner with the Koolik Group with Compass in Boca Raton.
A key part of the law entitles buyers of certain buildings to a copy of the milestone inspection of the building when they enter into a contract, as well as a structural-integrity-reserve study, which notes the amount of funds needed to be reserved for future major repairs and replacement of the condominium property, with certain exceptions granted.
“In the older buildings, there are more buyers reserving their decisions to see how this will play out. There are people that are hesitating because they don’t want a big expense without knowing it,” Koolik said.
Closed sales for condos have decreased overall when compared to last year. In Palm Beach County, closed sales for condos decreased about 21.4%, according to the Miami Realtors Association.
Broward County’s condo sales decreased 28.7% year over year. In Miami-Dade County, closed sales for condos decreased 43.8% year over year.
This uncertainty doesn’t mean the condo market is failing; rather, the fall in sales can be attributed to a few factors. There is the rise in mortgage rates, the slowdown that has also affected the rest of the market, and potentially a small part being hesitation from prospective buyers, real estate agents said.
“In older buildings there might be some price depression, and more people selling, but overall the market has been pretty strong,” Koolik said. “In general, newer construction is doing well depending on the price point you are looking at.”
In light of the uncertainty in some areas or buildings, there are things buyers and sellers can do to prepare and work around it, Lichtenstein noted. It’s especially important for a seller to know as much about the building’s financials as possible and to disclose that information upfront to the buyer.
Overall, there are still options for buyers looking to get into a condo.
“Just because a building is older, it doesn’t mean that it needs a lot of updates. Many condo associations have been diligent and they have stayed on top of this.” Koolik added.
