Miami Homeowners Race to Sell Condos Before 2025

Miami’s housing market is flooded with aging condos which owners are desperate to sell before strict new regulations come into force later this year, according to a recent report from ISG World.

Talking about an “impending crisis,” the report found that older condos dominate the market: nearly 90 percent of active listings in the southeast Florida city are condos that are more than 30 years old, while only 3 percent are less than a decade old.

As of the second quarter of the year, there were a total of 20,293 active listings in the Miami-Dade, Broward & Palm Beach Counties, according to ISG World. Of these, 17,796 were condos built at least 30 years ago. In Miami-Dade County alone, 7,961 active listings were more than three decades old; 1,088 were for condos aged between 10 and 30 years; and 588 condos less than 10 years old.

More From Newsweek Vault: How to Calculate How Much House You Can Afford

The numbers suggest that a significant number of condo owners in Miami are trying to sell their aging property before the new regulations introduced by the SB 4-D Bill, Building Safety, come into place in 2025.

“It’s a mass exodus driven by fear, with retirees caught in the crossfire,” ISG World CEO Craig Studnicky told Newsweek. “Condo owners in aging buildings are rushing to sell before the physical examinations start that could reveal structural defects, but they’re already late to the party,” he continued.

“We’re seeing a flood of 30-plus-year-old units on the market, and buyers are steering clear. For retirees on fixed incomes, it’s a financial nightmare—suddenly, their affordable slice of paradise is becoming an expensive liability they can’t afford to keep or easily sell.”

“To make matters worse, our brokers are being told point-blank by most buyers: ‘Don’t even show us anything with potential special assessments.’ Everyone’s clamoring for newer units, but those are in short supply,” Studnicky added. “This isn’t just a trend, it’s a seismic shift in our market that’s caught most condo owners off guard, threatening retirement dreams and creating a massive inventory imbalance.”

Under the SB 4-D Bill, Florida condos over three stories tall and over 30 years old must undergo a first inspection by an architect or engineer that, should evidence of “substantial structural deterioration” be found, will be followed by a second, deeper inspection. If no sign of deterioration is found, a new inspection will be done after 10 years, and so on.

More From Newsweek Vault: Find the Lowest Rates From Top Mortgage Lenders

According to a June 2023 amendment, local jurisdictions can set the inspection requirements to 25 years instead of 30.

The inspection reports will be made available to owners, tenants and prospective buyers online. The bill also requires condo associations to begin repairs within a year of receiving a report calling for work to be done. If they do not do so, enforcement might intervene and determine the building isn’t safe for human occupancy; condo association directors might also be liable to civil lawsuits.

The bill was passed by the Florida legislature in May 2022 after the Surfside tragedy of June 24, 2021, when a large part of the 12-story Champlain Towers South condo in the town collapsed in the middle of the night, killing 98 people. Investigators found that the building had been in dire need of structural repairs.

The South Florida market is full of aging condos. While many may be structurally sound, all are likely to face an increase in condo association fees. After the deadline of December 31, by which the first round of inspections must be completed, condo associations will have to prove they have the funds necessary for maintenance, inspections, and potential repairs. The bill for potential repairs and maintenance works might be in the millions.

There is also another reason why so many owners of older condos are trying to get rid of them: 30-year-old condos and older have depreciated 19 percent since 2023.

In 2024, the average sales price of a condo in the three counties analyzed by ISG World was $225,000, down from $277,000 last year. The biggest price drop was reported between 2022 and 2023, when 30-year-old and older condos went from selling for an average $325,000 to $277,000.

During the same time frame, condos under 10 years old appreciated by 9 percent. The average sales price of a condo that is 10 years old or less is $1,943,000 this year, according to ISG World estimates; last year, it was $1,840,000.

“We’re facing a condo crisis that will reshape Florida’s real estate market and potentially other parts of the country,” Studnicky said. “As structural issues in aging buildings surface, we could see a ripple effect through coastal markets nationwide. Older condo values may plummet, renovation costs will skyrocket and buyers will redefine ‘safe’ investments.”

“Florida isn’t unique—it’s just the first to confront this issue head-on, and other states could soon follow suit,” he added.

Are you the owner of an aging condo in Miami-Dade? How are you preparing for the new regulations? Are you trying to sell your property? Contact [email protected] to tell us about your experience.

Correction 07/18/24, 6:43 a.m. ET: This article was updated to state that inspections are required for buildings that are 30 years old, not three.

Update 07/19/24 6:55 a.m. ET: This article was updated with comment from ISG World CEO Craig Studnicky.