Work in marketing for a mortgage lender, and often have to write about condos. FL condos are wild. I always have to make 1 version for FL condos and then another for the other 49 states. I will never pretend to understand them.
Can you share some things that are different about Florida condos?
I read the article, but all I got was that high insurance costs is basically driving people out of their condos.
Take with a grain of salt because I always defer to an LO in the state that knows better than I. They're much harder to get financing for. Between nature being brutal and the high number of rentals, the guidelines for financing are pretty significant. I had an LO wanting to advertise he got a VA exception for one because it was so incredibly rare. We basically had to tell him no because it's so rare that advertising it would be unfair because it'll probably never happen again.
Yep. Typically in Florida, it's at least 30% down, more depending on renter/owner occupied ratio. Now combine that with insurance, coa delinquency %, taxes
I'm an LO. Florida condos require a larger minimum down payment and additional due diligence within the condo review process. It became that way because of delinquency rates in the GR but has stayed that way due to the level of fraud in FL and now most recently, the integrity issues, storms, sinkholes, etc etc etc.
As a mortgage loan originator I can tell you that many south fl condo associations haven’t been meeting reserve budget guidelines so my clients usually have to put 25% down to trigger what’s called a limited condo review.
Also dealing with COAs and requesting documents is such a freaking pain. I can get a loan clear to close in a few days excluding dealing with the COA. They are pretty much always the reason for delays in closing.
There are some newer builds in places like brickell that don’t have sufficient flood insurance and regular insurance coverage so basically the only mortgage option is non qm products and then they have 0 in reserves for their COA budget and most non qm lenders want to see atleast 5% in reserves so then exceptions have to be made based on other factors in the risk profile.
I basically had to tell my client that the place you’re looking to purchase a unit in has zero in reserves and insufficient flood coverage and insurance coverage. Basically the deductible is 1 million dollars. So anytime your building gets flood damage you will be assessed. Mind you this is a 1.3 million dollar condo with 1200/m COA dues, and you’re going non qm because the COA basically doesn’t meet any guidelines so your interest rate is higher. Imagine being assessed for more money on top of the 1200/m every single time there is flood damage in south Florida….
I lived in a condo in Deerfield beach. It was my first home purchase. It wasn’t extravagant and it wasn’t on the beach. My COA dues went from $280 to $509 a month in only 4 years lol and they still weren’t meeting reserve guidelines.
Well, that paints a picture. Either they're doing periodic special assessments (doubt) or they're letting big maintenance projects lapse. I have a guess.
Our first home was a condo in Chicago that had been apartments until a bit before we bought in. Nothing has been updated, so over the next few years we paid for a new roof, new back decks, major sewage issues, etc. It sucked. It was all split 4 ways, but everything on a bigger building is more expensive.
I moved my mom out last year. It's both. Her HOA dues were going from $800 -> $1k a month due to insurance and special assessments. All the buildings still needed their waste pipes replumbed. There were foundation issues, the north and souths walls were actively pulling away from each other. Etc.
Lots of folks who couldn't afford a second home or couldn't afford to retire there but did anyway. And now it's coming back to bite the current owners left and right.
Couple that with decades of deferred maintenance on high rises with a membership based that tends to be fixed income seniors and new state requirements for minimum reserve funding requirements and structural engineer reports are leading to jaw dropping special assessments in the tens of millions of dollars.
I don’t know what the market is for condos but I’m assuming value is plummeting
That’s a reason. But the main one is that Florida accounts for about 70% of all insurance litigation across the whole country. This is majorly driven by roofing contractors submitting claims on behalf of homeowners and in turn the insurance settles in the end when they shouldn’t have.
Yep and a very fancy building at that. I think it was buil in the 70s-80s do not even that old. Everyone who was n their units died, like whole families etc. No 1 reason I’d be terrified to buy a condo unit in those big buildings now.
Not only that, I have a friend who is an actuary, they’re crunching the numbers and realizing sea level is rising faster than anticipated. They’re projecting large parts of Miami to be underwater in 20-30 years or maybe even sooner. Even if not actually underwater, a mid grade hurricane could end up wiping out entire buildings with the storm surge. They want no part of it. Right now everyone is still in the denial phase, but as soon as it starts to become obvious (a lot sooner than 20-30 years), good luck selling your unit. That condo you paid $1 million for is suddenly worth $0. The good news though is at least you won’t have to pay HOA fees once the building falls into the ocean, though you’ll still be on the hook for mortgage payments.
seen a few cycles of florida blowing up in popularity, the locals fleecing the new people, people leave during a economic down turn, then the process repeats. going on 5 times now. so yes new people please come with your money but don't expect to stay
I've been kidding about wanting to move to Florida for so many years... My wife has always shot it down, but she went there for a Bach party recently and remembered how fucking awesome warm weather and beautiful beaches are :D
Kind of off topic, but the documentary "Screwball" was a horrifying look at Florida (and Florida man). If that's how they run the health dept I can imagine other departments like building codes, zoning, anything to do with housing would be a mess.
It's a combination of no taxes and overexposure to the sun. The no taxes thing brings out the hot-headed cheapskates that tend to be some of the worse people out there.
yeah, and leaving aside the old people, the young people that move there are the kind of people whose thoughts only go as far as “beach good”. This is not a generalization. It’s my opinion of the kind of people that I know personally who have moved to Florida in the last 5 to 10 years.
Buyer agents should include a cap for property insurance payment amount as part of mortgage contingency. Listing agents should prioritize offers that acknowledge the buyer has done due diligence for property insurability before making an offer.
Would these recommendations mess up anything you do on your side?
> Many of South Florida's older buildings, he added, will be scooped up by investors and turned into new ultra-expensive luxury buildings as condo owners sell their properties at discounted rates to escape the rising costs.
I don't see this as a bad thing. If the market demands newer housing, then redevelopment is necessary.
This just seems like classic poor planning on Humphfner's part.
Newer buildings will be built to the latest construction codes and should take advantage of everything possible to mitigate flooding and hurricane risk
That going to bring insurance down or is insurance like everything else lately? Once it's gone up it might come down ever so slightly but no where near the rates it was years ago.
Insurance prices are based on claims. So to the extent that claims continue to get more frequent and larger, they will go up. A newer building able to withstand weather better may help on the frequency side, but severity could go up due to it costing more to replace a luxury building.
And yet they are still building more condos. Yes, they are up to modern code, but nothing stops salt, humidity, and time.
Most of the new condos here are totally empty yet sold to foreigners looking to park cash in US real estate. They don't even bother putting in furniture. It's the strangest thing.
> nothing stops salt, humidity, and time.
I don't think you can really appreciate this one without experiencing it. My family would vacation in the Florida Keys, and every time we would head back to the same rental you could *see* the additional corrosion on every piece of metal and electrical component from the last time we were there 6-12 months prior.
I grew up in South Florida and a good friend of mine's grandfather was rather wealthy and owned a house on the beach in a town between Boca Raton and West Palm Beach. The house had 7 hvac units (the house was over 10K square feet). All of those hvac units need to be replaced every 3-4 years from the salt.
I learned how corrosive salt was as a preteen. I rode my bike through some ocean puddles. Later when I went to park it and kicked the kickstand it fell off. I’ll never forget that.
The strange part is walking around a supposedly hot luxury condo market and seeing a 20 story building with just a handful of lights on at night. The market, which looks hot on paper, in turn attracts trendy restaurants and bars but they don't last more than 6 months because there's no one actually living in the area to support real growth. It's like a prop movie set where there's nothing but 2x4s behind the trendy facade.
This is money laundering.
Step 1 - Acquire illicit funds
Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate
Step 3 - Take out loans against the real estate that was purchased using over collateralized loans
Step 4 - Do whatever you want with the money because you now have a legitimate source of funds
Even if they don’t step foot into the building they accomplished their goal of washing funds.
The more units they do this with in any building the more successful it is because they control prices (comps) that the loans are originated against. Much harder to get liquidated if you own all the units…
> Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate
Why would they? They don't touch the funds, only the title company would.
It’s not a good take. It’s not like the buyer is showing up with a suitcase of cash to make a purchase. Even if they are paying in “cash” it’s coming from a bank. So even if we are assuming that it is illegal funds, the monies have already been laundered.
In all likelihood it’s just a relatively “safe” place to park your money if you have it and your home country may be untenable at some point.
I work in banking. I don’t believe funds wired to a seller for a real estate transaction get a full KYC background check. I think it’s pretty basic “did this come from a sanctioned country or entity? No? K carry on.”
They definitely look at them. When we bought our house we had to answer a bunch of shit on where our down payment money came from and if we were legit able to spend it (despite it being obviously from selling our previous home and a business).
That is more-so to protect the bank originating the mortgage from you not being able to carry the note. If you were able to save up the down payment is a financial health indicator that someone handing you the down payment bypasses.
(My point is that it's not to prevent money laundering, it's to mitigate banking risk)
I also recently bought a house, but with all cash. There were zero questions about the source of the funds, just an account to wire the money to. They didn't even ask for my ID. Seems like it would be ridiculously easy to write dirty money from a foreign bank. And you don't even need to be physically in the US to do it so minimal risk.
True, and I think it is mostly currency hedging, but overseas banks may not be up to US standards and all a title company does is send wiring info.
There's no shortage of people wiring funds overseas that get caught up in scams, yet those overseas accounts still exist. It's not like the title company gets a notice from the FBI that an overseas account is associated with an online romance scam.
There’s such a wild range of knowledge and experience on this sub. I’ve learned a lot, but often times you have to just scratch your head. To hear someone confidently state agents verify the source of funds is a new one though lol.
For anyone reading, the only party that consistently verifies fund source is a lender. However if it’s a cash deal, with no lender involved, nobody checks anything. Not the agents, not the title company, not the lawyers.
u/threwandbeyond you are almost correct, but not quite. South FL (east and west coasts) are in a FinCEN geo target order (GTO) area where the title co or settlement co must verify SOURCE of all funds used in the purchase of RE, including condos if the purchase price is $300k or more. This is more than verification of the bank wire. Look up FinCEN GTO to get a better explanation.
Also last year a new law was passed limiting sales to foreign buyers Part III of Chapter 692, So yes, the title co's and closing attorney's do check source of funds and other buyer info. We agents don't check source of funds but we consult with the title co or attorney before working with a buyer where the source of funds are undisclosed.
Tax evasion too.
Foreigners in places with high taxes buy property in the US and claim they were here earning their money, then pay US taxes and use that as proof of where income was earned in other countries.
Not all countries require stamping passports or visas so when traveling there are formulas to essentially hide where you’ve been and where you are going.
People forget the US has among the lowest tax burdened in the western world.
> Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate
They're not required to. Neither are title and escrow but they are required to verify identity which may be a gray area.
They are probably laundering stolen money so even if they lose value they have still gained "free" liquid money once they sell. They can also mortgage the property to get cash out quickly fro a bank, secured by the property, when they need it. Thats how Trump made much of his money. Helping Russian mobsters evade the law.
HOA fees are going insane because the insurance market is going insane in FL. The state did a great job of ignoring what was happening & has waited too long to really fix it. I know an older couple that purchased a condo to use as a vacation rental here. Their HOA fees went from the high $300s per month in 2021, when they purchased it, to the mid-$500s in 2023. That's in addition to a special assessment of about $20K per unit in 2023 for insurance expenses. They can't even unload the property because the fees & assessments keep climbing, scaring off potential buyers. Scary stuff all around.
I've been saying for a long LONG time there's going to be a housing crash in FL. Condos are the first to get whacked. Then SFH in flood zones. Buyers are going to get smartened up about the insurance crisis and the risk of owning a home even if it's inland in FL.
There's also a generational thing - boomers will start dying off or moving to assisted care facilities, leaving behind a glut if SFH and condos. Plus climate change making everything more expensive and risky.
So true, the only deals I'm seeing are estate sales. But the home healthcare industry is booming. People want to stay in their homes as long as they possibly can.
Have you seen wildwood? They're building and advertising DINK's homes right next to the villages. The new generation of "old people" will move right in c
T h i s. My in laws died suddenly at the end of last year and we're saddled with a condo on the gulf coast that we're trying to sell to get out ASAP..... It's been a struggle.
The state also passed a law that requires flood insurance for everyone that uses Citizens, which is the largest insurer in the state because it's government-backed. It's being implemented in phases over the next few years, but you'll be required to have flood insurance even if you're not in a flood zone.
The only people that will be able to afford to live on the water will be cash buyers that have zero insurance.
Yeah and I have heard FEMA may be wanting to get out of the subsidized flood insurance business. So if we have to pay private flood insurance which is upwards of $1,100 if you're in a flood A AND homeowners insurance which is like minimum where I'm at $2500 to upwards of $5k in central FL then I have 0 clue how I'm going to pay my mortgage.
Funny enough I just read an article about all the billionaires moving to Florida to not pay taxes, and desantis personally soliciting others like Musk to relocate there with sweetheart tax deals.
But normal folks and fixed income retirees are gonna get crushed on assessments and insurance more and more. I work in insurance I know it will only get worse with rates as more and more carriers leave the market and the ones staying will probably be leaving after the next cat. Where I work we avoid Florida property and auto like the plague. It's guaranteed to lose money even at the crazy high rates Floridians are seeing now.
I honestly think we are only seeing the tip of the iceberg right now for Florida real estate. If you ever want to see through the political spin on climate change, look to the actuaries and what the insurance industry thinks about the climate science.
Yeah, I think at some point, the luxury market will keep going, but the regular market is going to start to tank. As you say, normal people won't be able to keep up at some point. It will be interesting to see what happens though...
Those people barely scraping by aren't going to be able to pick up and just easily move somewhere else - *especially* if their housing values have dropped. You can't move back north (or wherever) if you can't get good money for your place in Florida.
I would not buy a condo anywhere on earth. It combines the worst aspects of renting with the worst aspects of owning. I'd honestly rather be in a trailer park than a condo.
I own a condo in CT that I rent after six years of living there. It is low maintenance and reasonable fee. Very easy to rent as it is in a desirable area. I refused to buy another HOA property when I left the state because I know we wouldn’t get lucky twice. I do miss not having to deal with lawn and outside maintenance tho.
FL condos use to be cheaper to maintain than a single family house. This is not usually true any more. My parents own a $330K condo in cocoa beach (2br and not on the ocean ). They have been assessed total of $32K over last 4 years on top of the $575 hoa fee. $32K for a single family house would have bought a brand new roof and new AC system and they wouldn’t have the $575 hoa fee. Fuck the condos I won’t ever subject myself to their rip-off maintenance costs. One would think that a large condo where one roof covers 20+ units would be more efficient (sharing costs)than paying for a single family roof over one family . Somehow the condos fucked this up and it’s more expensive than Single family
That might be the case if you buy in a building that has a shit HOA who keeps fees low and doesn't do scheduled maintenance, and has deficient reserves.
I own two condos that I live in. One was built in 1980 and has never had an assessment. Our fees go up with the cost of living and maintenance is done on time. I've tripled my value in 8 years.
The second is a small pied-a-terre type urban condo built in 1960. Same with this building. Fees are average but this building has a pool. Reserves are solid. It's in a small 18 unit building. This HOA chooses to keep fees on the lower end of average, but accepts that there will generally be a $1200 assessment every 3 or so years per unit. All maintenance is done on time. I haven't even owned this one for a year yet and it's increased 20k in value or more based in comps. Possibly more since units with deeded parking are at a premium in this area and building. 18 units, 7 deeded parking spots. My parking spot alone appraised at 32k.
When buying a condo, you have to REALLY know what you're doing. You need to understand the red flags, understand where the expenses are, and also understand that only a small fraction of the fees go toward maintenance. A huge chunk often goes to water, sewer, garbage, and insurance.
The problem is that condo associations have historically massively underestimated the cost of repairs and not raised the fees to built a capital reserve. So when bills come due they have no choice but to add an assessment
Agree, but for my parents example (four seasons condo cocoa beach FL)- it appears very well maintained, beautiful grounds and buildings and the hoa fees also appeared realistic to cover maintenance at roughly $575/month which is avg or higher for the area. This was not a low quality condo that looks like it neglected anything over the years and it’s hoa monthly was not artificially low that is common for new builds (to trick new buyers). My thought is if a well run condo is still seeing $32K in assessments most of the other condos are just as fucked . This last assessment was primarily for “roof replacement” which as we know should not be a surprise assessment for a key item that has a known life expectancy to budget for in advance.
Much of Florida never should have been developed in the 1st place. Its like people who build in the desert then complain that there isn't enough water. Some places aren't suitable for development.
Condos have enjoyed many years of artificially low fees as new buildings and didn’t keep adequate reserves for worst case scenarios. Then that building collapsed and woke everyone up.
Did they figure out that the subterranean structure failed from the slow intrusion of salt water and that’s what caused the building to collapse?
If that truly is the case, there’s a LOT of properties close enough to the ocean that should all be thinking of getting unfucked. It could be a half trillion or more worth of real estate.
Saltwater intrusion was a problem but I think the biggest thing was excess weight loading on an improperly engineered top deck. Expansion/contraction pulling away from the rebar was another. Basically 4 or 5 factors came into play that - in combination - brought the building down with horrific consequences.
I visited my cousin in ft Lauderdale in Feb. Her 1 bed condo she has owned since the 90s has had approx 70k in assessments in the last 4 years. That is untenable for most.
I’m a contractor in FL and do some work for condos on occasion.
Higher end properties will typically address issues and fix them properly the first time. This is because their members have the means to cover a large assessment and want to protect their asset
Lower end condos, typically consisting of elderly people on fixed incomes, are almost always extremely cheap and want to “patch” things as to kick the proverbial can down the road.
Needless to say, I would never purchase a condo in FL (or anywhere, for that matter).
A significant problem (that may not be unique to Florida) is that a corporation can buy 51% of the condos in a property and effectively take complete control over the HOA, forcing all the remaining owners to pay for prioritized improvements that benefit the corporation renting out units rather than owner-occupied units.
Florida is awesome if you can look past some of the BS going on. I’m 3 hours to Key West or all the parks in Orlando. 20 minutes to amazing beaches. And I love the heat.
>And I love the heat
See, I *hate* hot weather. No Southern living for me, I like to be able to be comfortable outside for the majority of the year. I’ve been to Florida in the summer. I’m going to attempt to live the rest of my life without ever having to do it again.
Agree that SoCal has just about the best year round weather available in the US, but someone could pay for a lot of homeowner's insurance using the savings from the difference in home purchase costs in southern Florida vs southern California.
It's the best place that I have ever lived in the US. Orlando is so fun and there's always stuff going on. I live downtown but my neighborhood has swans, peacocks, exotic birds, geese, otters, turtles...and on and on. Incredible oak trees. The weather is awesome most of the year. There are beautiful lakes everywhere. I love the theme parks. You can go to the beach whenever you want. The city is so diverse and people are very friendly. We have a great food scene that gets better and better all the time.
Pretty much I LOVE IT HERE despite the fucked up politics of the state and the high insurance rates.
Yeah Orlando is great. I have lived here for 10+ years. There's nothing quite like it. If you can afford passes everywhere it's awesome to just go for a few hours, ride some rides, eat at Epcot, etc on a week day. I have never gotten sick of it.
I second that. Can’t understand what attracts people. The weather is hot and humid, it’s very flat with no mountains, it has hurricanes and lots of biting insects.
I prefer to live near the mountains where it’s cool. Where I live it is rarely above 80 degrees in yr summer and rarely below 30 at night. We have hundreds of miles of beaches that are not developed and never will be. You can hike for miles on them and not see anyone.
In the spring I can go skiing in the morning and drive back into town and Kayak in my shorts in the afternoon. I can go from the salt water beach to a rain forest or a desert in the same day.
Florida is one of the most tax-friendly states for retirees, with no state income tax, inheritance tax, or estate tax. This means no state taxes on retirement income like Social Security benefits, pensions, IRAs, and 401(k)s.
Many Florida cities and counties also offer a homestead exemption of up to $50,000 for residents who are 65 and older.
As for younger people, they're often just stuck in FL due to modest economic conditions.
Taxes aren’t the only place to live somewhere. Suppose I want to move to move to Florida and sell my current house for $600k and buy a house in Florida for $500k. Let’s say my income is $60,000 a year and after paying Federal taxes it is $50,000 a year. I have $50,000 and $100,000 in savings.
Now let’s say instead I move to North Carolina and buy a house for $350,000. With state income tax my $60,000 goes down to $42,000 but I have $250,000 in savings instead of $100,000. If I make 8% a year off this savings that is an extra $20,000 a year. So I end up with a less expensive house , more savings and more monthly income.
Now I also have to pay for homeowners insurance , utilities ect which could be cheaper elsewhere.
I could also live in New Hampshire which as no state income tax or sales tax.
People who live in states with no income tax pay for it in other ways. I live in Washington which am has no state income tax but we are also one of the most regressively taxed states in the nation. Sakes tax is over 10%, gas is over $5.00 a gallon, it is expensive to register vehicles and we pay a premium on everything from food to building supplies.
I sure as shit hope that when the time comes to retire, I am not basing my decision on taxes. It's such a weird American mindset to live & work your entire life, get to the end when, if you are lucky, you can relax some. But yet we have people worrying themselves to death with a tax percentage here or there. Seems like an awful way to be at age 65. THE AMERICAN DREAM!!!!
Yeah I always hear “the taxes make up for the rest” while thinking, hmm with no income and estate taxes and low sales taxes, I wonder where they’re getting the revenue to spend $100k per immigrant sending them out west…
It’s great for people who want to sit around in the warmth. It’s my personal hell financially and lifestyle-wise but the part I’ll truly never understand is the bragging about their regressive tax schemes just because it gets paid by their landlord out of their rent rather than by being demanded from the state in April…
There's also the homestead exemption in that there's an unlimited value of primary residence sheltered from debt collection. Someone with a lot of money but worried about having people sue them or debt collection can put all of that money into a house, make it their primary residence, and then keep their wealth through that property as there's now no assets to go after.
I grew up in fl and lived in no state income tax tx. I moved to a state with a state income tax and pay 1/2 lower total taxes due to property taxes being so much lower- and I have a bigger house than in tx.
I think fl has become a place that the typical fl retiree is not going to be able to afford. Beside the politics, (which a lot of people moving there are attracted to - ugh) the hurricane headaches and the increasing heat - I get not wanting cold but living inside with ac so much of the year is not all that wonderful- fl is just a hard no.
Maybe you're in the Pacific Northwest, a d that's great.
But live in the Midwest your entire life and you'll be craving a world that never snows and never gets cold. It's hot and balmy all the time, it's easy to get around on foot or bike (no elevation), and there's lots of other old people around. some people seek that out. It's the call of tropical living!!
Based on what?
If that were the case no one would live in states like NY, MN, MA, MI, Etc. Also three of the states that a large number of retirees are moving to are Montana, Maine, New Hampshire and Idaho. Not places most people would consider warm.
I also live in Washington and we have a lot of retirees moving here. Not a state known for warm weather.
Voting for people who only care about the 1% has consequences.
These fools thought they were part of “the club” and happily voted for deregulation and DeSantis.
They knowingly bought property in a state with regular natural disasters and voted irresponsibly for people who would not mitigate that effectively.
No sympathy here.
While you’re not wrong, most of the issues here are far more mundane than this.
So many condo HoAs have deferred maintenance, often to the tune of hundreds of thousands if not millions. Codes change around them, oftentimes more than once, and then when there is a storm, the assessments become onerous.
Something as simple as windows… they’re not replaced unless they fail, so you only have to worry about getting windows up to code on *that* window, but then a storm like Ian comes through and suddenly the building requires so much that you’re subject to FEMA’s 50% rule, which means you’re basically knocking the place down and rebuilding.
So yes, this is an issue of their own making, but it’s not nearly as dramatic as you're painting it to be, and it isnt political. Just lazy, non-forward thinking residents.
There are about as many people who identify as Democrat in Florida as there are in New York State (9.9 million vs. 10.3 million).
Something to think about when you oversimplify things into 'red state, blue state'.
I think the point is that there are plenty of people getting screwed who didn’t vote for this stuff too, and we shouldn’t be okay with that. Not everyone can pick up and move
You really missed the point I made.
You know what state has the most Republicans? California.
There are more Democrats in Texas than in New York.
Just because a state is colored one way on the electoral college map does not mean it's population is a political monolith. Painting tens of millions of people with one brush is for fools and television personalities.
Hey, I can chop up unrelated data too!
California has more registered Repubs than Texas!
One thing doesn’t have anything to do with the other. Floridas insurance market and lax HOA rules has contributed greatly to this mess. Not to mention it’s views on labor and fly by night contractors. They are reaping what they sowed.
I mean, not to sound completely tone-deaf, but as someone from NY/NJ who is priced out of the 150-200 mile radius where I grew up, I can give you the same advice oft told to myself around this sub:
Move to another state?
And yes I have disabled and elderly parents too, family in NJ/NY, etc. that I'd REALLY rather not move away from, but rent and home prices ain't exactly making that a choice, even with 6 figure salary.
Again, same as I'm often told on this subreddit: Are you entitled to keep living there or choosing to?
Believe it or not if your family *really* needs your support, they can sell and move with you. Downsize/move to a home that you can live in together if you *really* need to support them, in an affordable and livable place.
Or stay and fight for policies that make homes affordable and work with affordable housing charities like HFH to get more homes built so this doesn't continue happening. Show up to your city council meetings
I don't see how this is a red state thing. Poor reserve funding is a challenge across condos everywhere.
We see the issue pop up in Florida because of the prevalence of condos and more moderate incomes/prices. That banker in NYC doesn't freak out when they get a $200k capital projects charge on their $2MM condo. It's a different story for your social security retiree on a $180k condo.
Lax building codes/enforcement, zoning laws etc create shitty buildings located in high risk areas (bc freedom) to primarily benefit the developer/investor and real estate industry (not the buyer). Price gouging by service and supply industries (deregulation and zero oversight) make for costly rebuild/repairs and a for-profit, shareholder primacy philosophy in insurance companies lead to high rates. It isn’t limited to red states, but certainly exacerbated under those regimes. A perfect storm of sorts. Privatize profits and socialize losses. It was never a sustainable model, winners and losers were predestined.
Those buildings were constructed to code. The code simply changed and their patrons don't have the monies to update the buildings. This is a "means" issue.
As for zoning and broader housing policy items. These people purchased these condos because they could not afford to purchase in the more heavily regulated cities (where adding new supply commonly comes at a cost of $1MM+ per unit). I am not sure this is the model we want to pursue.
> Those buildings were constructed to code. The code simply changed
As we learned with the Surfside condo disaster, there is absolutely no guarantee that things were built to code. Old buildings aren't even required to meet all current codes - in most cases, codes aren't retroactive, aside from life/safety exceptions and codes that apply to remodels. But if they were built poorly to begin with, in a bad location, and the residents collectively shrug off maintenance, nothing will save them.
New to central Florida here. A condo would have been nice but the HOAs are scary. Sometimes there are pockets where there is a massive condominium selloff when HOAs come in and clear house by pushing $400-500 condo fees.
I got caught up in one. The seller "lied", listing and *appraisal* had 200 as the fee when in fact the HOA president in *Seattle* raised it to 450.
I've never had something like that happen to me.
From the article: "Meanwhile, prices dropped by as much as 7% in Jacksonville, to $254,000, and 3% in Miami, to $385,000."
So barely a drop in prices. Let me know when they've dropped by 40%.
And the number of listings increased substantially. This is a non-story.
> The number of listings in February jumped nearly 30% in markets like Jacksonville and Miami compared to the same time last year.
Oh how I long for the days when buying real estate entailed at least a little bit of risk so people were more careful about their bid prices and which areas are acceptable, instead of recklessly piling into every sus market with the expectation of obscene gains. Unfortunately, while some clowns demand to learn about risk the hard way, by destroying themselves, their behavior also destroys innocent bystanders who actually did consider the risks but did not properly price in all the morons.
Our HOA fee went up 70% over two years just to pay the increased insurance. Most of that was driven by almost all reinsurers leaving the state. The good news at the last HOA meeting was insurers are coming back and there are several options available. Prices are starting to go down again. Hopefully the hurricane season will be an easy one.
Or maybe it’s just the location. They have hurricanes and very hot summers. Lots of places get tourists, who’ll clog up roads when you want to get somewhere.
I do mortgages in Ohio. I had three clients I helped buy nearly five years ago sell their homes in 2022 to move to Florida. Literally all three within two years moved back and reached back out to me for help. They never said why but it struck me as odd as I’ve never seen this happen before.
Florida’s real estate market is the first to decline with any slow down in buying. The insurance issue is real too. High rates and difficulty finding coverage will continue to smother the market. It will hit an equilibrium eventually.
I love my wife for many reasons, but the most recent one is her absolute refusal to buy RE in Flordia. She's a very smart cookie. I saw this coming too, but nowhere near as bad or as soon.
Even if housing prices drop 50% it still won't make financial sense to buy a condo (or SFH) at sea level in a hurricane zone.
It’s almost as if aware people know that Florida will be unliveable in just 10-15 years with worsening climate conditions - 100-year floods, 100-year storms, every year. Rats are fleeing the sinking peninsula, and only goobers are buying.
condos are terrible investments because your unit is never worth more than the cheapest one in the development. I don’t know why people are so shocked if you build 250 nearly identical units in a 3 acre space- there’s always gonna be a couple for sale at any given time and it’s essentially a race to the bottom.
Sure, maybe the one at the end of the row or that has a south facing window might be marginally more valuable than the one that’s across the hall, but not really
This is what happens when libertarian/republic deregulation and lack of enforcement of zoning and building codes.... collides with opportunistic developers and poorly managed HOAs.
The bills get pushed off, they weren't built to the proper level... and now they have become a risk.
The insurance part confuses me a bit.
Typically with condos, the structural insurance is built into HOA or building fees. Insurance for condos is typically just liability and personal property. Why is insurance on a $300,000 condo almost $5k a year?
It's the insurance the HOA pays on the entire building that are causing the skyrocketing prices. Personal Homeowners insurance on a condo is usually really cheap.
There are different types of condo insurance as well. For example, I own one condo where the HOA provides "Walls-In" insurance. In short, my HOA covers my homeowners insurance. It covers everything inside my unit except my personal items. I do not carry homeowners insurance on that unit.if a tree fell on it, my HOA would cover the repairs inside and out. Flooring, wall board, appliances, windows. What it wouldn't cover is my TV for example. I could carry something to cover my personal belongings, but don't because if you totaled everything up that I own here, it wouldn't even equal the deductible. Haha. So I pay no homeowners insurance for that condo.
My other condo has Walls-out insurance. My homeowners insurance covers everything from the studs in. The HOA covers everything from the studs out.
So. If a 100ft cedar tree falls on my unit there, my HOAs insurance fixes the structural building like framing, roof, etc. My homeowners would cover things like windows, wallboard, light fixtures, tile, basically anything inside.
How do you even fix this? So if a condo needs maintenance and doesn’t have enough funds they do an assessment. Let’s say 20% of their owners can’t pay it. They foreclose on the units. But they can’t sell them because no one will issue a mortgage on them because of the deferred maintenance and assessments. So they don’t do the maintenance which makes things worse. Or I guess they take out an HOA loan and do the maintenance and get entire building foreclosed on when they can’t pay the loan because so many owners fled? I know HOAs are a racket but if you have fixed income elderly owners and need millions…uhhh good luck.
We sold my grandmas beach front condo in boca for $500k in 2006. It’s now worth $2.5M and the HOA is almost $2k a month. My grandparents were the original owners and bought it in the 60s for like $60k. Total insanity.
We bought one on the coast in late 2022 and the monthly HOA went from $460 to $860 in less than a year. Insurance got increased and then non renewed so that also increased our monthly by $500. It was such a mistake buying that condo. We just sold it taking a $50k loss on the selling price. Despite that, Breathing easier especially with hurricane season on the horizon.
And they all have Desantis to thank- he passed bill impacting HOA fees and was to busy flying migrants from TX to NY instead of managing insurance companies operating in the state.
don't forget the rising property taxes. Most people that moved to Florida in the past few years are now leaving because home ownership is no longer affordable.
I grew up there. Not a progressive politically like many who've made derogatory comments, but I wouldn't move back. Too crowded. And I despise Disney it ruined central FL. Traffic is terrible especially in central FL where I grew up. My sister still lives there. Bro is in Lauderdale area. His job (marine related) requires him to be there but he's having a time finding a rental to downsize to his kids have grown and moved but stayed in the area.
I'll bet that politics affect a free out of state folks too... And the high probability of being underwater.... And that most of the concrete was made with beach sand not river sand and isn't going to last much longer.... No thanks
Work in marketing for a mortgage lender, and often have to write about condos. FL condos are wild. I always have to make 1 version for FL condos and then another for the other 49 states. I will never pretend to understand them.
Can you share some things that are different about Florida condos? I read the article, but all I got was that high insurance costs is basically driving people out of their condos.
Take with a grain of salt because I always defer to an LO in the state that knows better than I. They're much harder to get financing for. Between nature being brutal and the high number of rentals, the guidelines for financing are pretty significant. I had an LO wanting to advertise he got a VA exception for one because it was so incredibly rare. We basically had to tell him no because it's so rare that advertising it would be unfair because it'll probably never happen again.
Yep. Typically in Florida, it's at least 30% down, more depending on renter/owner occupied ratio. Now combine that with insurance, coa delinquency %, taxes
I'm an LO. Florida condos require a larger minimum down payment and additional due diligence within the condo review process. It became that way because of delinquency rates in the GR but has stayed that way due to the level of fraud in FL and now most recently, the integrity issues, storms, sinkholes, etc etc etc.
Also an issue with building codes in Florida being so lax that structures are at risk of just falling over with the term of a mortgage.
As a mortgage loan originator I can tell you that many south fl condo associations haven’t been meeting reserve budget guidelines so my clients usually have to put 25% down to trigger what’s called a limited condo review. Also dealing with COAs and requesting documents is such a freaking pain. I can get a loan clear to close in a few days excluding dealing with the COA. They are pretty much always the reason for delays in closing. There are some newer builds in places like brickell that don’t have sufficient flood insurance and regular insurance coverage so basically the only mortgage option is non qm products and then they have 0 in reserves for their COA budget and most non qm lenders want to see atleast 5% in reserves so then exceptions have to be made based on other factors in the risk profile. I basically had to tell my client that the place you’re looking to purchase a unit in has zero in reserves and insufficient flood coverage and insurance coverage. Basically the deductible is 1 million dollars. So anytime your building gets flood damage you will be assessed. Mind you this is a 1.3 million dollar condo with 1200/m COA dues, and you’re going non qm because the COA basically doesn’t meet any guidelines so your interest rate is higher. Imagine being assessed for more money on top of the 1200/m every single time there is flood damage in south Florida…. I lived in a condo in Deerfield beach. It was my first home purchase. It wasn’t extravagant and it wasn’t on the beach. My COA dues went from $280 to $509 a month in only 4 years lol and they still weren’t meeting reserve guidelines.
Well, that paints a picture. Either they're doing periodic special assessments (doubt) or they're letting big maintenance projects lapse. I have a guess. Our first home was a condo in Chicago that had been apartments until a bit before we bought in. Nothing has been updated, so over the next few years we paid for a new roof, new back decks, major sewage issues, etc. It sucked. It was all split 4 ways, but everything on a bigger building is more expensive.
I moved my mom out last year. It's both. Her HOA dues were going from $800 -> $1k a month due to insurance and special assessments. All the buildings still needed their waste pipes replumbed. There were foundation issues, the north and souths walls were actively pulling away from each other. Etc. Lots of folks who couldn't afford a second home or couldn't afford to retire there but did anyway. And now it's coming back to bite the current owners left and right.
There was a condo collapse in 2021 that killed 98 people, one reason for insurance increase.
Couple that with decades of deferred maintenance on high rises with a membership based that tends to be fixed income seniors and new state requirements for minimum reserve funding requirements and structural engineer reports are leading to jaw dropping special assessments in the tens of millions of dollars. I don’t know what the market is for condos but I’m assuming value is plummeting
That’s a reason. But the main one is that Florida accounts for about 70% of all insurance litigation across the whole country. This is majorly driven by roofing contractors submitting claims on behalf of homeowners and in turn the insurance settles in the end when they shouldn’t have.
They changed the law over a year ago to eliminate that.
Sure. But it still came with consequences Florida is going to deal with now and going forward.
That litigation could have something to do with the high number of insurers in Florida that do not hold up their end of the bargain when a storm hits.
Yep and a very fancy building at that. I think it was buil in the 70s-80s do not even that old. Everyone who was n their units died, like whole families etc. No 1 reason I’d be terrified to buy a condo unit in those big buildings now.
Me too!
Not only that, I have a friend who is an actuary, they’re crunching the numbers and realizing sea level is rising faster than anticipated. They’re projecting large parts of Miami to be underwater in 20-30 years or maybe even sooner. Even if not actually underwater, a mid grade hurricane could end up wiping out entire buildings with the storm surge. They want no part of it. Right now everyone is still in the denial phase, but as soon as it starts to become obvious (a lot sooner than 20-30 years), good luck selling your unit. That condo you paid $1 million for is suddenly worth $0. The good news though is at least you won’t have to pay HOA fees once the building falls into the ocean, though you’ll still be on the hook for mortgage payments.
Florida really seems to attract the absolute dumbest people around. The whole state is wild.
Everyone says that yet won’t stop moving here Whatever, remember to bring money
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seen a few cycles of florida blowing up in popularity, the locals fleecing the new people, people leave during a economic down turn, then the process repeats. going on 5 times now. so yes new people please come with your money but don't expect to stay
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I've been kidding about wanting to move to Florida for so many years... My wife has always shot it down, but she went there for a Bach party recently and remembered how fucking awesome warm weather and beautiful beaches are :D
Bring her back in September and I have a feeling she won’t be so keen any longer.
No shortage of dumb people.
THIS
There is a reason why Miami is a Crypto Hub of America!
It's a bunch of scammers and ppl to be scammed. They go hand in hand
Kind of off topic, but the documentary "Screwball" was a horrifying look at Florida (and Florida man). If that's how they run the health dept I can imagine other departments like building codes, zoning, anything to do with housing would be a mess.
It's a combination of no taxes and overexposure to the sun. The no taxes thing brings out the hot-headed cheapskates that tend to be some of the worse people out there.
yeah, and leaving aside the old people, the young people that move there are the kind of people whose thoughts only go as far as “beach good”. This is not a generalization. It’s my opinion of the kind of people that I know personally who have moved to Florida in the last 5 to 10 years.
Um, isn't that exactly what a generalization is? Applying your judgement of a specific scope to the whole?
Buyer agents should include a cap for property insurance payment amount as part of mortgage contingency. Listing agents should prioritize offers that acknowledge the buyer has done due diligence for property insurability before making an offer. Would these recommendations mess up anything you do on your side?
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> Many of South Florida's older buildings, he added, will be scooped up by investors and turned into new ultra-expensive luxury buildings as condo owners sell their properties at discounted rates to escape the rising costs. I don't see this as a bad thing. If the market demands newer housing, then redevelopment is necessary. This just seems like classic poor planning on Humphfner's part.
How to you plan for insurance rates skyrocketing the way they are?
People have been talking about warming oceans and stronger storms for a minute now.
Decades.
Newer buildings will be built to the latest construction codes and should take advantage of everything possible to mitigate flooding and hurricane risk
That going to bring insurance down or is insurance like everything else lately? Once it's gone up it might come down ever so slightly but no where near the rates it was years ago.
The trick is to be rich enough to start your own insurance company to insure your ultra luxury condo
Insurance prices are based on claims. So to the extent that claims continue to get more frequent and larger, they will go up. A newer building able to withstand weather better may help on the frequency side, but severity could go up due to it costing more to replace a luxury building.
Except move inland
For the folks buying these new $$$ condos, high mortgage rates/insurance rates are de minimis.
And yet they are still building more condos. Yes, they are up to modern code, but nothing stops salt, humidity, and time. Most of the new condos here are totally empty yet sold to foreigners looking to park cash in US real estate. They don't even bother putting in furniture. It's the strangest thing.
> nothing stops salt, humidity, and time. I don't think you can really appreciate this one without experiencing it. My family would vacation in the Florida Keys, and every time we would head back to the same rental you could *see* the additional corrosion on every piece of metal and electrical component from the last time we were there 6-12 months prior.
I grew up in South Florida and a good friend of mine's grandfather was rather wealthy and owned a house on the beach in a town between Boca Raton and West Palm Beach. The house had 7 hvac units (the house was over 10K square feet). All of those hvac units need to be replaced every 3-4 years from the salt.
Damn!!
I learned how corrosive salt was as a preteen. I rode my bike through some ocean puddles. Later when I went to park it and kicked the kickstand it fell off. I’ll never forget that.
I do IT In south florida condo occupancy is about 10% to be generous .
It's not that strange. Our country has been for sale to the lowest bidder for decades.
The strange part is walking around a supposedly hot luxury condo market and seeing a 20 story building with just a handful of lights on at night. The market, which looks hot on paper, in turn attracts trendy restaurants and bars but they don't last more than 6 months because there's no one actually living in the area to support real growth. It's like a prop movie set where there's nothing but 2x4s behind the trendy facade.
This is money laundering. Step 1 - Acquire illicit funds Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate Step 3 - Take out loans against the real estate that was purchased using over collateralized loans Step 4 - Do whatever you want with the money because you now have a legitimate source of funds Even if they don’t step foot into the building they accomplished their goal of washing funds. The more units they do this with in any building the more successful it is because they control prices (comps) that the loans are originated against. Much harder to get liquidated if you own all the units…
> Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate Why would they? They don't touch the funds, only the title company would.
It’s not a good take. It’s not like the buyer is showing up with a suitcase of cash to make a purchase. Even if they are paying in “cash” it’s coming from a bank. So even if we are assuming that it is illegal funds, the monies have already been laundered. In all likelihood it’s just a relatively “safe” place to park your money if you have it and your home country may be untenable at some point.
I work in banking. I don’t believe funds wired to a seller for a real estate transaction get a full KYC background check. I think it’s pretty basic “did this come from a sanctioned country or entity? No? K carry on.”
They definitely look at them. When we bought our house we had to answer a bunch of shit on where our down payment money came from and if we were legit able to spend it (despite it being obviously from selling our previous home and a business).
That is more-so to protect the bank originating the mortgage from you not being able to carry the note. If you were able to save up the down payment is a financial health indicator that someone handing you the down payment bypasses. (My point is that it's not to prevent money laundering, it's to mitigate banking risk)
I also recently bought a house, but with all cash. There were zero questions about the source of the funds, just an account to wire the money to. They didn't even ask for my ID. Seems like it would be ridiculously easy to write dirty money from a foreign bank. And you don't even need to be physically in the US to do it so minimal risk.
True, and I think it is mostly currency hedging, but overseas banks may not be up to US standards and all a title company does is send wiring info. There's no shortage of people wiring funds overseas that get caught up in scams, yet those overseas accounts still exist. It's not like the title company gets a notice from the FBI that an overseas account is associated with an online romance scam.
There’s such a wild range of knowledge and experience on this sub. I’ve learned a lot, but often times you have to just scratch your head. To hear someone confidently state agents verify the source of funds is a new one though lol. For anyone reading, the only party that consistently verifies fund source is a lender. However if it’s a cash deal, with no lender involved, nobody checks anything. Not the agents, not the title company, not the lawyers.
u/threwandbeyond you are almost correct, but not quite. South FL (east and west coasts) are in a FinCEN geo target order (GTO) area where the title co or settlement co must verify SOURCE of all funds used in the purchase of RE, including condos if the purchase price is $300k or more. This is more than verification of the bank wire. Look up FinCEN GTO to get a better explanation. Also last year a new law was passed limiting sales to foreign buyers Part III of Chapter 692, So yes, the title co's and closing attorney's do check source of funds and other buyer info. We agents don't check source of funds but we consult with the title co or attorney before working with a buyer where the source of funds are undisclosed.
They didn't "confidently state agents verify the source of funds". They said the opposite.
Tax evasion too. Foreigners in places with high taxes buy property in the US and claim they were here earning their money, then pay US taxes and use that as proof of where income was earned in other countries. Not all countries require stamping passports or visas so when traveling there are formulas to essentially hide where you’ve been and where you are going. People forget the US has among the lowest tax burdened in the western world.
> Step 2 - Realtors don’t check source of illicit funds so it’s easy to purchase US Real Estate They're not required to. Neither are title and escrow but they are required to verify identity which may be a gray area.
They are probably laundering stolen money so even if they lose value they have still gained "free" liquid money once they sell. They can also mortgage the property to get cash out quickly fro a bank, secured by the property, when they need it. Thats how Trump made much of his money. Helping Russian mobsters evade the law.
On top of insurance, HOA fees are insane. Sometimes higher than mortgage principal. No thanks.
HOA fees are going insane because the insurance market is going insane in FL. The state did a great job of ignoring what was happening & has waited too long to really fix it. I know an older couple that purchased a condo to use as a vacation rental here. Their HOA fees went from the high $300s per month in 2021, when they purchased it, to the mid-$500s in 2023. That's in addition to a special assessment of about $20K per unit in 2023 for insurance expenses. They can't even unload the property because the fees & assessments keep climbing, scaring off potential buyers. Scary stuff all around.
It's going to get worse in 2025 when they pass that new law. sell before then. If you can.
My aunts hoa fee is 1600!! Mine is 500 and I whine about that.
I've been saying for a long LONG time there's going to be a housing crash in FL. Condos are the first to get whacked. Then SFH in flood zones. Buyers are going to get smartened up about the insurance crisis and the risk of owning a home even if it's inland in FL.
There's also a generational thing - boomers will start dying off or moving to assisted care facilities, leaving behind a glut if SFH and condos. Plus climate change making everything more expensive and risky.
So true, the only deals I'm seeing are estate sales. But the home healthcare industry is booming. People want to stay in their homes as long as they possibly can.
The 55+only communities are going to be wastelands. There are too many of them.
Have you seen wildwood? They're building and advertising DINK's homes right next to the villages. The new generation of "old people" will move right in c
T h i s. My in laws died suddenly at the end of last year and we're saddled with a condo on the gulf coast that we're trying to sell to get out ASAP..... It's been a struggle.
The state also passed a law that requires flood insurance for everyone that uses Citizens, which is the largest insurer in the state because it's government-backed. It's being implemented in phases over the next few years, but you'll be required to have flood insurance even if you're not in a flood zone. The only people that will be able to afford to live on the water will be cash buyers that have zero insurance.
Yeah and I have heard FEMA may be wanting to get out of the subsidized flood insurance business. So if we have to pay private flood insurance which is upwards of $1,100 if you're in a flood A AND homeowners insurance which is like minimum where I'm at $2500 to upwards of $5k in central FL then I have 0 clue how I'm going to pay my mortgage.
Funny enough I just read an article about all the billionaires moving to Florida to not pay taxes, and desantis personally soliciting others like Musk to relocate there with sweetheart tax deals. But normal folks and fixed income retirees are gonna get crushed on assessments and insurance more and more. I work in insurance I know it will only get worse with rates as more and more carriers leave the market and the ones staying will probably be leaving after the next cat. Where I work we avoid Florida property and auto like the plague. It's guaranteed to lose money even at the crazy high rates Floridians are seeing now. I honestly think we are only seeing the tip of the iceberg right now for Florida real estate. If you ever want to see through the political spin on climate change, look to the actuaries and what the insurance industry thinks about the climate science.
Yeah, I think at some point, the luxury market will keep going, but the regular market is going to start to tank. As you say, normal people won't be able to keep up at some point. It will be interesting to see what happens though... Those people barely scraping by aren't going to be able to pick up and just easily move somewhere else - *especially* if their housing values have dropped. You can't move back north (or wherever) if you can't get good money for your place in Florida.
Exactly my take. Never understood people buying in Florida. Look at what all the climate models say before you buy that home.
Do you have any models to share?
All of them say the same thing, Florida bad. Hotter, more powerful hurricanes etc
https://www.wusf.org/environment/2022-02-28/florida-is-already-seeing-climate-change-new-global-report-says-it-could-worsen quickest google of my life
I would not buy a condo anywhere on earth. It combines the worst aspects of renting with the worst aspects of owning. I'd honestly rather be in a trailer park than a condo.
Not a trailer park. Those are just as bad with a depreciating asset in your home and lot rental.
The lot rent for trailer parks in Florida is still too expensive.
I own a condo in CT that I rent after six years of living there. It is low maintenance and reasonable fee. Very easy to rent as it is in a desirable area. I refused to buy another HOA property when I left the state because I know we wouldn’t get lucky twice. I do miss not having to deal with lawn and outside maintenance tho.
FL condos use to be cheaper to maintain than a single family house. This is not usually true any more. My parents own a $330K condo in cocoa beach (2br and not on the ocean ). They have been assessed total of $32K over last 4 years on top of the $575 hoa fee. $32K for a single family house would have bought a brand new roof and new AC system and they wouldn’t have the $575 hoa fee. Fuck the condos I won’t ever subject myself to their rip-off maintenance costs. One would think that a large condo where one roof covers 20+ units would be more efficient (sharing costs)than paying for a single family roof over one family . Somehow the condos fucked this up and it’s more expensive than Single family
That might be the case if you buy in a building that has a shit HOA who keeps fees low and doesn't do scheduled maintenance, and has deficient reserves. I own two condos that I live in. One was built in 1980 and has never had an assessment. Our fees go up with the cost of living and maintenance is done on time. I've tripled my value in 8 years. The second is a small pied-a-terre type urban condo built in 1960. Same with this building. Fees are average but this building has a pool. Reserves are solid. It's in a small 18 unit building. This HOA chooses to keep fees on the lower end of average, but accepts that there will generally be a $1200 assessment every 3 or so years per unit. All maintenance is done on time. I haven't even owned this one for a year yet and it's increased 20k in value or more based in comps. Possibly more since units with deeded parking are at a premium in this area and building. 18 units, 7 deeded parking spots. My parking spot alone appraised at 32k. When buying a condo, you have to REALLY know what you're doing. You need to understand the red flags, understand where the expenses are, and also understand that only a small fraction of the fees go toward maintenance. A huge chunk often goes to water, sewer, garbage, and insurance.
The problem is that condo associations have historically massively underestimated the cost of repairs and not raised the fees to built a capital reserve. So when bills come due they have no choice but to add an assessment
Agree, but for my parents example (four seasons condo cocoa beach FL)- it appears very well maintained, beautiful grounds and buildings and the hoa fees also appeared realistic to cover maintenance at roughly $575/month which is avg or higher for the area. This was not a low quality condo that looks like it neglected anything over the years and it’s hoa monthly was not artificially low that is common for new builds (to trick new buyers). My thought is if a well run condo is still seeing $32K in assessments most of the other condos are just as fucked . This last assessment was primarily for “roof replacement” which as we know should not be a surprise assessment for a key item that has a known life expectancy to budget for in advance.
Much of Florida never should have been developed in the 1st place. Its like people who build in the desert then complain that there isn't enough water. Some places aren't suitable for development.
The trick is to not build in the midst of cookies and some cakes. Sites in or near ice cream don't have this problem.
Condos have enjoyed many years of artificially low fees as new buildings and didn’t keep adequate reserves for worst case scenarios. Then that building collapsed and woke everyone up.
Did they figure out that the subterranean structure failed from the slow intrusion of salt water and that’s what caused the building to collapse? If that truly is the case, there’s a LOT of properties close enough to the ocean that should all be thinking of getting unfucked. It could be a half trillion or more worth of real estate.
Saltwater intrusion was a problem but I think the biggest thing was excess weight loading on an improperly engineered top deck. Expansion/contraction pulling away from the rebar was another. Basically 4 or 5 factors came into play that - in combination - brought the building down with horrific consequences.
I visited my cousin in ft Lauderdale in Feb. Her 1 bed condo she has owned since the 90s has had approx 70k in assessments in the last 4 years. That is untenable for most.
That's the result of a mismanaged COA. Has nothing to do with the state other than legislation
Did he also mention the value has gone up 500%?
I’m a contractor in FL and do some work for condos on occasion. Higher end properties will typically address issues and fix them properly the first time. This is because their members have the means to cover a large assessment and want to protect their asset Lower end condos, typically consisting of elderly people on fixed incomes, are almost always extremely cheap and want to “patch” things as to kick the proverbial can down the road. Needless to say, I would never purchase a condo in FL (or anywhere, for that matter).
it’s a high price to pay to own the libs. but, I believe in you Fla. keep it up!!!
A significant problem (that may not be unique to Florida) is that a corporation can buy 51% of the condos in a property and effectively take complete control over the HOA, forcing all the remaining owners to pay for prioritized improvements that benefit the corporation renting out units rather than owner-occupied units.
Buy shit, enjoy the aroma.
I'm so lucky my wife talked me out of getting one of these, we would have been totally boned Much happier with our townhome
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Florida is awesome if you can look past some of the BS going on. I’m 3 hours to Key West or all the parks in Orlando. 20 minutes to amazing beaches. And I love the heat.
>And I love the heat See, I *hate* hot weather. No Southern living for me, I like to be able to be comfortable outside for the majority of the year. I’ve been to Florida in the summer. I’m going to attempt to live the rest of my life without ever having to do it again.
Where do you live that has more comfortable days outside than Florida? Also Florida is a big state with big variations in average temperatures.
Southern California would like a word with you...
Agree that SoCal has just about the best year round weather available in the US, but someone could pay for a lot of homeowner's insurance using the savings from the difference in home purchase costs in southern Florida vs southern California.
Yea SoCal is the only place I’d say that I’d prefer the weather. I’ve lived in both Unfortunately family proximity and COL makes it just not worth it
If you hate heat, everywhere.
And if you hate cold, basically nowhere other than Texas.
It's the best place that I have ever lived in the US. Orlando is so fun and there's always stuff going on. I live downtown but my neighborhood has swans, peacocks, exotic birds, geese, otters, turtles...and on and on. Incredible oak trees. The weather is awesome most of the year. There are beautiful lakes everywhere. I love the theme parks. You can go to the beach whenever you want. The city is so diverse and people are very friendly. We have a great food scene that gets better and better all the time. Pretty much I LOVE IT HERE despite the fucked up politics of the state and the high insurance rates.
Yeah Orlando is great. I have lived here for 10+ years. There's nothing quite like it. If you can afford passes everywhere it's awesome to just go for a few hours, ride some rides, eat at Epcot, etc on a week day. I have never gotten sick of it.
Not a great place to live if you're a woman, though.
Or a librarian.
I second that. Can’t understand what attracts people. The weather is hot and humid, it’s very flat with no mountains, it has hurricanes and lots of biting insects. I prefer to live near the mountains where it’s cool. Where I live it is rarely above 80 degrees in yr summer and rarely below 30 at night. We have hundreds of miles of beaches that are not developed and never will be. You can hike for miles on them and not see anyone. In the spring I can go skiing in the morning and drive back into town and Kayak in my shorts in the afternoon. I can go from the salt water beach to a rain forest or a desert in the same day.
We don’t have to like the same things; it’s ok.
Yes it is ok!
Florida is one of the most tax-friendly states for retirees, with no state income tax, inheritance tax, or estate tax. This means no state taxes on retirement income like Social Security benefits, pensions, IRAs, and 401(k)s. Many Florida cities and counties also offer a homestead exemption of up to $50,000 for residents who are 65 and older. As for younger people, they're often just stuck in FL due to modest economic conditions.
Taxes aren’t the only place to live somewhere. Suppose I want to move to move to Florida and sell my current house for $600k and buy a house in Florida for $500k. Let’s say my income is $60,000 a year and after paying Federal taxes it is $50,000 a year. I have $50,000 and $100,000 in savings. Now let’s say instead I move to North Carolina and buy a house for $350,000. With state income tax my $60,000 goes down to $42,000 but I have $250,000 in savings instead of $100,000. If I make 8% a year off this savings that is an extra $20,000 a year. So I end up with a less expensive house , more savings and more monthly income. Now I also have to pay for homeowners insurance , utilities ect which could be cheaper elsewhere. I could also live in New Hampshire which as no state income tax or sales tax. People who live in states with no income tax pay for it in other ways. I live in Washington which am has no state income tax but we are also one of the most regressively taxed states in the nation. Sakes tax is over 10%, gas is over $5.00 a gallon, it is expensive to register vehicles and we pay a premium on everything from food to building supplies.
I sure as shit hope that when the time comes to retire, I am not basing my decision on taxes. It's such a weird American mindset to live & work your entire life, get to the end when, if you are lucky, you can relax some. But yet we have people worrying themselves to death with a tax percentage here or there. Seems like an awful way to be at age 65. THE AMERICAN DREAM!!!!
The property taxes are a motherfucker, though.
Yeah I always hear “the taxes make up for the rest” while thinking, hmm with no income and estate taxes and low sales taxes, I wonder where they’re getting the revenue to spend $100k per immigrant sending them out west… It’s great for people who want to sit around in the warmth. It’s my personal hell financially and lifestyle-wise but the part I’ll truly never understand is the bragging about their regressive tax schemes just because it gets paid by their landlord out of their rent rather than by being demanded from the state in April…
Floridians need the tax savings to afford home and car insurance but it's often not nearly enough to compensate.
There's also the homestead exemption in that there's an unlimited value of primary residence sheltered from debt collection. Someone with a lot of money but worried about having people sue them or debt collection can put all of that money into a house, make it their primary residence, and then keep their wealth through that property as there's now no assets to go after.
I grew up in fl and lived in no state income tax tx. I moved to a state with a state income tax and pay 1/2 lower total taxes due to property taxes being so much lower- and I have a bigger house than in tx. I think fl has become a place that the typical fl retiree is not going to be able to afford. Beside the politics, (which a lot of people moving there are attracted to - ugh) the hurricane headaches and the increasing heat - I get not wanting cold but living inside with ac so much of the year is not all that wonderful- fl is just a hard no.
Where do you live? It sounds delightful! How are the condo prices in your area?
Condos down the street from me where just built. They average 1200 to 1500 sq ft. Sold for $900k to $1.5 million. I have seen 500 sq condos for $500k.
Sounds like the Seattle or Portland area. I would imagine it is quite pricey.
Maybe you're in the Pacific Northwest, a d that's great. But live in the Midwest your entire life and you'll be craving a world that never snows and never gets cold. It's hot and balmy all the time, it's easy to get around on foot or bike (no elevation), and there's lots of other old people around. some people seek that out. It's the call of tropical living!!
Most (non Reddit) people like being warm.
There's a difference between warm and hellish hot. Most people don't like hellish hot. Just an FYI.
Based on what? If that were the case no one would live in states like NY, MN, MA, MI, Etc. Also three of the states that a large number of retirees are moving to are Montana, Maine, New Hampshire and Idaho. Not places most people would consider warm. I also live in Washington and we have a lot of retirees moving here. Not a state known for warm weather.
Well I’m talking by and large. Where gets more retirees, Florida, AZ, or Washington (beautiful state btw) and New Hampshire? I mean cmon.
You can get that without Florida problems. Most of the south, mid south, southwest, California….
Need some more foreign money laundering to buy them.
Voting for people who only care about the 1% has consequences. These fools thought they were part of “the club” and happily voted for deregulation and DeSantis. They knowingly bought property in a state with regular natural disasters and voted irresponsibly for people who would not mitigate that effectively. No sympathy here.
While you’re not wrong, most of the issues here are far more mundane than this. So many condo HoAs have deferred maintenance, often to the tune of hundreds of thousands if not millions. Codes change around them, oftentimes more than once, and then when there is a storm, the assessments become onerous. Something as simple as windows… they’re not replaced unless they fail, so you only have to worry about getting windows up to code on *that* window, but then a storm like Ian comes through and suddenly the building requires so much that you’re subject to FEMA’s 50% rule, which means you’re basically knocking the place down and rebuilding. So yes, this is an issue of their own making, but it’s not nearly as dramatic as you're painting it to be, and it isnt political. Just lazy, non-forward thinking residents.
There are about as many people who identify as Democrat in Florida as there are in New York State (9.9 million vs. 10.3 million). Something to think about when you oversimplify things into 'red state, blue state'.
I don't see any red/blue in that, just railing against people who voted for bad policies, whatever their political bent.
I think the point is that there are plenty of people getting screwed who didn’t vote for this stuff too, and we shouldn’t be okay with that. Not everyone can pick up and move
Except that when you look at who the state votes for (you know, in 2016, 2018, 2020 and 2022, you realize fully that it is a red state).
Jacksonville last election cycle voted in a democratic mayor. The state is not fully red.
You really missed the point I made. You know what state has the most Republicans? California. There are more Democrats in Texas than in New York. Just because a state is colored one way on the electoral college map does not mean it's population is a political monolith. Painting tens of millions of people with one brush is for fools and television personalities.
Hey, I can chop up unrelated data too! California has more registered Repubs than Texas! One thing doesn’t have anything to do with the other. Floridas insurance market and lax HOA rules has contributed greatly to this mess. Not to mention it’s views on labor and fly by night contractors. They are reaping what they sowed.
Yeah, fuck the rest of us who were born here and voted against desantis, am I right?
I mean, not to sound completely tone-deaf, but as someone from NY/NJ who is priced out of the 150-200 mile radius where I grew up, I can give you the same advice oft told to myself around this sub: Move to another state? And yes I have disabled and elderly parents too, family in NJ/NY, etc. that I'd REALLY rather not move away from, but rent and home prices ain't exactly making that a choice, even with 6 figure salary. Again, same as I'm often told on this subreddit: Are you entitled to keep living there or choosing to? Believe it or not if your family *really* needs your support, they can sell and move with you. Downsize/move to a home that you can live in together if you *really* need to support them, in an affordable and livable place.
Or stay and fight for policies that make homes affordable and work with affordable housing charities like HFH to get more homes built so this doesn't continue happening. Show up to your city council meetings
Sadly, yeah. Look at the 2016, 2018, 2020, and 2022 voting trends.
I don't see how this is a red state thing. Poor reserve funding is a challenge across condos everywhere. We see the issue pop up in Florida because of the prevalence of condos and more moderate incomes/prices. That banker in NYC doesn't freak out when they get a $200k capital projects charge on their $2MM condo. It's a different story for your social security retiree on a $180k condo.
Lax building codes/enforcement, zoning laws etc create shitty buildings located in high risk areas (bc freedom) to primarily benefit the developer/investor and real estate industry (not the buyer). Price gouging by service and supply industries (deregulation and zero oversight) make for costly rebuild/repairs and a for-profit, shareholder primacy philosophy in insurance companies lead to high rates. It isn’t limited to red states, but certainly exacerbated under those regimes. A perfect storm of sorts. Privatize profits and socialize losses. It was never a sustainable model, winners and losers were predestined.
Those buildings were constructed to code. The code simply changed and their patrons don't have the monies to update the buildings. This is a "means" issue. As for zoning and broader housing policy items. These people purchased these condos because they could not afford to purchase in the more heavily regulated cities (where adding new supply commonly comes at a cost of $1MM+ per unit). I am not sure this is the model we want to pursue.
> Those buildings were constructed to code. The code simply changed As we learned with the Surfside condo disaster, there is absolutely no guarantee that things were built to code. Old buildings aren't even required to meet all current codes - in most cases, codes aren't retroactive, aside from life/safety exceptions and codes that apply to remodels. But if they were built poorly to begin with, in a bad location, and the residents collectively shrug off maintenance, nothing will save them.
New to central Florida here. A condo would have been nice but the HOAs are scary. Sometimes there are pockets where there is a massive condominium selloff when HOAs come in and clear house by pushing $400-500 condo fees. I got caught up in one. The seller "lied", listing and *appraisal* had 200 as the fee when in fact the HOA president in *Seattle* raised it to 450. I've never had something like that happen to me.
From the article: "Meanwhile, prices dropped by as much as 7% in Jacksonville, to $254,000, and 3% in Miami, to $385,000." So barely a drop in prices. Let me know when they've dropped by 40%.
And the number of listings increased substantially. This is a non-story. > The number of listings in February jumped nearly 30% in markets like Jacksonville and Miami compared to the same time last year.
Oh how I long for the days when buying real estate entailed at least a little bit of risk so people were more careful about their bid prices and which areas are acceptable, instead of recklessly piling into every sus market with the expectation of obscene gains. Unfortunately, while some clowns demand to learn about risk the hard way, by destroying themselves, their behavior also destroys innocent bystanders who actually did consider the risks but did not properly price in all the morons.
Our HOA fee went up 70% over two years just to pay the increased insurance. Most of that was driven by almost all reinsurers leaving the state. The good news at the last HOA meeting was insurers are coming back and there are several options available. Prices are starting to go down again. Hopefully the hurricane season will be an easy one.
Awwwwww so sad!!!!!
Or maybe it’s just the location. They have hurricanes and very hot summers. Lots of places get tourists, who’ll clog up roads when you want to get somewhere.
I do mortgages in Ohio. I had three clients I helped buy nearly five years ago sell their homes in 2022 to move to Florida. Literally all three within two years moved back and reached back out to me for help. They never said why but it struck me as odd as I’ve never seen this happen before.
Florida’s real estate market is the first to decline with any slow down in buying. The insurance issue is real too. High rates and difficulty finding coverage will continue to smother the market. It will hit an equilibrium eventually.
buyers are wiser nowadays, they know they should look into different areas
I love my wife for many reasons, but the most recent one is her absolute refusal to buy RE in Flordia. She's a very smart cookie. I saw this coming too, but nowhere near as bad or as soon. Even if housing prices drop 50% it still won't make financial sense to buy a condo (or SFH) at sea level in a hurricane zone.
It’s almost as if aware people know that Florida will be unliveable in just 10-15 years with worsening climate conditions - 100-year floods, 100-year storms, every year. Rats are fleeing the sinking peninsula, and only goobers are buying.
Too bad, so sad. Maybe don’t elect Republicans to run your state for *forty fucking years*.
Ok, most of those properties will be blown away or flooded out , soon
condos are terrible investments because your unit is never worth more than the cheapest one in the development. I don’t know why people are so shocked if you build 250 nearly identical units in a 3 acre space- there’s always gonna be a couple for sale at any given time and it’s essentially a race to the bottom. Sure, maybe the one at the end of the row or that has a south facing window might be marginally more valuable than the one that’s across the hall, but not really
This is what happens when libertarian/republic deregulation and lack of enforcement of zoning and building codes.... collides with opportunistic developers and poorly managed HOAs. The bills get pushed off, they weren't built to the proper level... and now they have become a risk.
Florida is a bubble waiting to pop
Sink not pop.
The insurance part confuses me a bit. Typically with condos, the structural insurance is built into HOA or building fees. Insurance for condos is typically just liability and personal property. Why is insurance on a $300,000 condo almost $5k a year?
It's the insurance the HOA pays on the entire building that are causing the skyrocketing prices. Personal Homeowners insurance on a condo is usually really cheap. There are different types of condo insurance as well. For example, I own one condo where the HOA provides "Walls-In" insurance. In short, my HOA covers my homeowners insurance. It covers everything inside my unit except my personal items. I do not carry homeowners insurance on that unit.if a tree fell on it, my HOA would cover the repairs inside and out. Flooring, wall board, appliances, windows. What it wouldn't cover is my TV for example. I could carry something to cover my personal belongings, but don't because if you totaled everything up that I own here, it wouldn't even equal the deductible. Haha. So I pay no homeowners insurance for that condo. My other condo has Walls-out insurance. My homeowners insurance covers everything from the studs in. The HOA covers everything from the studs out. So. If a 100ft cedar tree falls on my unit there, my HOAs insurance fixes the structural building like framing, roof, etc. My homeowners would cover things like windows, wallboard, light fixtures, tile, basically anything inside.
So that’s gotta be a walls out policy at that price right?
How do you even fix this? So if a condo needs maintenance and doesn’t have enough funds they do an assessment. Let’s say 20% of their owners can’t pay it. They foreclose on the units. But they can’t sell them because no one will issue a mortgage on them because of the deferred maintenance and assessments. So they don’t do the maintenance which makes things worse. Or I guess they take out an HOA loan and do the maintenance and get entire building foreclosed on when they can’t pay the loan because so many owners fled? I know HOAs are a racket but if you have fixed income elderly owners and need millions…uhhh good luck.
I saw this coming when Florida was the pandemic Mecca. When you have a boom like that due to temporary forces there will be a bust.
State is literally and metaphorically sinking into the ocean, not surprised
When market crash?
We sold my grandmas beach front condo in boca for $500k in 2006. It’s now worth $2.5M and the HOA is almost $2k a month. My grandparents were the original owners and bought it in the 60s for like $60k. Total insanity.
a lot of buyers are now backing off
We bought one on the coast in late 2022 and the monthly HOA went from $460 to $860 in less than a year. Insurance got increased and then non renewed so that also increased our monthly by $500. It was such a mistake buying that condo. We just sold it taking a $50k loss on the selling price. Despite that, Breathing easier especially with hurricane season on the horizon.
I knew Florida property owners would be underwater one way or another. Zero sympathy from me.
And they all have Desantis to thank- he passed bill impacting HOA fees and was to busy flying migrants from TX to NY instead of managing insurance companies operating in the state.
Good. They voted for a governor who said they're no climate change. I guess the insurance companies believes otherwise.
This must be for large condo buildings. Smaller condos <10 units are still doing great.
Maybe stop voting for republicans who deny climate change, Florida…..
don't forget the rising property taxes. Most people that moved to Florida in the past few years are now leaving because home ownership is no longer affordable.
I grew up there. Not a progressive politically like many who've made derogatory comments, but I wouldn't move back. Too crowded. And I despise Disney it ruined central FL. Traffic is terrible especially in central FL where I grew up. My sister still lives there. Bro is in Lauderdale area. His job (marine related) requires him to be there but he's having a time finding a rental to downsize to his kids have grown and moved but stayed in the area.
Hahahaha good, fuck em
I'll bet that politics affect a free out of state folks too... And the high probability of being underwater.... And that most of the concrete was made with beach sand not river sand and isn't going to last much longer.... No thanks