Local condo prices fall in aftermath of new safety rules

New condo safety rules are taking a toll on the median sale price of condominium units along the Gulf Coast of the state as well as on the Atlantic coast.

According to a report issued by Redfin on Monday, the median price for a Gulf Coast condominium dropped 4.8% in January when compared with the same time frame last year. The price for a unit on the east coast of the state fell 3%.

Meanwhile, prices for units in the inland parts of Florida rose 5.4% from last year.

Locally, the Redfin report says the median sale price for a condo was down 6.8% to $326,250 in the Cape Coral metro area; down 0.9% to $522,500 in the Naples metro area; down 13.8% to $325,000 in the North Port metro area; down 39.7% to $180,950 in the Punta Gorda metro area; and down 6.4% to $220,000 in the Tampa metro area. (The North Port MSA includes Sarasota and Bradenton.)

The report from the real estate technology firm says Florida’s overall housing market has been slowing because of rising inventory, property insurance costs and stronger storms. But “the state’s condo market is enduring an especially severe downturn after a new law led to a surge in homeowners association fees and special assessments.”

The new condo rules were passed in the wake of the collapse of the 12-story Champlain Tower South in Surfside June 24, 2021, that killed 98 people.

They require milestone inspections for condominium buildings more than 30 years old and require that condominium associations have enough money in reserves to pay for issues affecting the structural integrity of a building and for maintenance identified in a structural integrity reserve study.

A building will have to be inspected once it reaches its 30th birthday — based on when it received its certificate of occupancy. For buildings within three miles of the coast, the inspection needs to be done at the 25th birthday.

(According to Redfin, 57.1% of the condominium buildings along the Gulf Coast are more than 30 years old.)

The deadline for the inspections was Dec. 31. From then on, inspections have to occur every 10 years.

The stated intent of the laws was to shore up older buildings and prevent condominium associations from continuing to defer much needed repairs, in essence kicking the bill down the road.

But the consequences of the new regulations have left condominium owners facing harsh special assessments and rising fees as associations look to complete needed fixes.

And, as real estate brokers have been pointing out for nearly two years now, selling is becoming less of an option for many condominium owners because of falling prices.

Some hope could be on the horizon for beleaguered condo owners, though. Legislative leaders and the governor have said they intend to take up the issue when the Legislature convenes March 4.

What that relief will look like is unclear still, especially since the stated goal is to find ways to bring relief to condo owners while maintaining tough safety rules that could another prevent disaster.