Redfin Reports Condo HOA Fees Surge in Florida Amid Insurance Crisis

Rhea-AI Summary

Redfin's latest report reveals a significant surge in condo HOA fees across Florida, with Tampa, Orlando, and Fort Lauderdale experiencing increases of over 15% year-over-year. This trend is primarily attributed to the aftermath of the Surfside condo collapse, which led to new safety regulations, and skyrocketing insurance costs in the state. The median monthly HOA fee in Miami reached $835, the highest among analyzed metros. Consequently, condo prices are falling in many Florida areas, with Jacksonville seeing the largest decline of 6.6% year-over-year in July. The situation is impacting condo sales and forcing some owners to sell due to unaffordable fees.

Positive

• Redfin's comprehensive analysis of 43 U.S. metropolitan areas provides valuable insights into the condo market
• New safety regulations implemented in Florida aim to prevent future condo collapses

Negative

• HOA fees in Tampa increased by 17.2% year-over-year, the highest among analyzed metros
• Condo prices are falling across Florida, with Jacksonville experiencing a 6.6% decline
• Rising HOA fees and special assessments are forcing some condo owners to sell and relocate
• Skyrocketing insurance costs in Florida are contributing to increased HOA dues
• The condo crisis is spreading beyond Florida, affecting markets in other states

Insights

Real Estate Market Analyst

The surge in HOA fees across Florida represents a significant shift in the condo market dynamics. With increases of 15%+ in major metros like Tampa, Orlando and Fort Lauderdale, compared to a 5.7% median nationwide, this trend is putting substantial pressure on condo owners and potential buyers. The root causes—stricter safety regulations post-Surfside collapse and skyrocketing insurance costs—are creating a perfect storm that's depressing condo prices despite the fee hikes.

This situation is likely to reshape Florida's real estate landscape. We may see a migration away from condos, especially among retirees and fixed-income residents, potentially boosting demand for single-family homes or rentals. For investors, this presents both risks and opportunities: while current condo owners face challenges, there might be openings for those with the capital to weather higher fees and potentially benefit from price dips.

Insurance Industry Expert

The escalating HOA fees in Florida highlight a critical issue in the state's insurance market. With premiums soaring due to intensified natural disasters and insurers exiting the market, we're seeing a domino effect on property ownership costs. The fact that nearly three-quarters of Florida homeowners report insurance cost increases or coverage changes is alarming.

This crisis extends beyond individual homeowners to HOAs, which are raising dues to cover these inflated insurance costs. The situation may necessitate state-level intervention or innovative insurance solutions to stabilize the market. Without action, we could see a continued exodus of insurers and further strain on property owners, potentially leading to a broader real estate market downturn in Florida.

Financial Analyst

The divergence between rising HOA fees and falling condo prices in Florida metros is a red flag for the market's health. In Jacksonville, we see a 6.6% year-over-year drop in condo prices, coupled with a 7.6% increase in HOA dues. This inverse relationship suggests a market under stress, where increased ownership costs are directly impacting property values.

For investors, this trend raises concerns about the long-term viability of condo investments in these markets. The total cost of ownership is increasing while asset values are decreasing, potentially leading to negative equity situations. This could trigger a cycle of foreclosures or distressed sales if owners can't keep up with rising fees, further depressing prices. Prospective buyers should carefully consider these ongoing costs and their potential trajectory when evaluating condo purchases in Florida.

HOA dues are up more than 15% from a year ago in Tampa, Orlando and Fort Lauderdale, compared with a median gain of 6% across the 43 metros Redfin analyzed

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — In Tampa, FL, the median monthly homeowners association (HOA) fee jumped 17.2% year over year during the three months ending July 31, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the steepest increase among the 43 U.S. metropolitan areas Redfin analyzed, and compares with a median increase of 5.7% across those metros. Next came two other Florida metros: Orlando (16.7%) and Fort Lauderdale (16.2%). HOA fees also rose in West Palm Beach (12.8%), Jacksonville (7.6%) and Miami (5.7%).

Redfin analyzed condo/co-op HOA dues and sale prices on MLS listings in 43 of the most populous metropolitan areas. HOA dues are maintenance fees required by shared housing developments that go toward building repairs, operation costs, staff, amenities like pools and fitness centers, landscaping and more.

It’s common for HOA fees to increase over time as property prices increase, but that’s not what’s happening in Florida. Condo prices are actually falling in many parts of the Sunshine State, in part because HOA fees have surged so much. There are two primary reasons HOA dues are on the rise:

1. The Surfside condo collapse: On June 24, 2021, a 12-story condo building in Surfside, FL (part of the Miami metro area) partially collapsed, killing nearly 100 people. As a result, Florida on May 26, 2022 signed into law Senate Bill 4-D, which requires structural inspections for condos and additional money to be set aside for repairs. Many homeowners associations are hiking fees in order to comply with the new safety regulations, and also doling out hefty special assessments.
2. Skyrocketing insurance costs: Florida is the epicenter of the housing insurance crisis. Premiums have soared as natural disasters have intensified and insurers have stopped doing business in the state. Some homeowners associations are raising dues to help cover the increase in insurance costs. Nearly three-quarters of Florida homeowners say they’ve seen a rise in insurance costs or changes in coverage, according to a recent Redfin-commissioned survey.

Inflation, which has been growing quickly in Florida, is another reason HOA dues are climbing, as it means the cost of maintenance and repairs is rising.

“Many buildings—even those without amenities—now have HOA dues north of $1,000 a month,” said Rafael Corrales, a Redfin Premier agent in Miami. “And with special assessments getting tacked on, a lot of condo owners who are retired and/or on a fixed income are being forced to sell and relocate because they can’t keep up with the payments.”

Florida condo market summary

U.S. metro area	YoY change in median monthly HOA dues: 3 months ending July 31, 2024	Median monthly HOA dues: 3 months ending July 31, 2024	YoY change in median condo sale price: July 2024	Median condo sale price: July 2024
Tampa, FL	17.2%	$614	-4.9%	$237,750
Orlando, FL	16.7%	$467	-0.5%	$219,000
Fort Lauderdale, FL	16.2%	$611	-4.2%	$230,000
West Palm Beach, FL	12.8%	$652	1.9%	$265,000
Jacksonville, FL	7.6%	$470	-6.6%	$270,000
Miami, FL	5.7%	$835	-2.2%	$406,000

HOA fees in Miami likely posted the smallest increase among major Florida metros because they’re already so expensive. At $835, the median monthly HOA due in Miami is higher than any other metro Redfin analyzed. That’s in part because Miami HOA dues surged during the pandemic, rising as much as 66% during the three months ending May 31, 2021—just before the Surfside condo collapse.

Condo prices are falling across Florida

In Jacksonville, condo sale prices fell 6.6% year over year in July—the biggest decline among the metros Redfin analyzed. It was followed by Tampa, which saw a 4.9% drop. There were also declines in Fort Lauderdale (-4.2%), Miami (-2.2%) and Orlando (-0.5%). By comparison, condo prices posted a median gain of 1.9% across the 43 metros Redfin analyzed.

“Condos are really taking a hit. Prices are hurting,” said Eric Auciello, a Redfin sales manager in Tampa. “Condo fees are skyrocketing due to increased insurance costs. These additional fees have adversely affected the value of many units.”

Tampa has one of the lowest median condo sale prices among the metros Redfin analyzed ($237,750), but some of the highest median monthly HOA dues ($614).

The condo crisis isn’t just impacting Florida. Redfin agents from Seattle to Denver have reported jumps in HOA costs. Some said condo owners are having trouble selling as fees continue to rise.

“When a buyer falls in love with a condo, I make sure they do their homework by researching whether their lender will approve of the HOA,” said Julie Zubiate, a Redfin Premier agent in the Bay Area. “Lenders look to see whether a condo’s HOA is on the Fannie Mae approved list, and also look into whether the HOA is sufficiently insured and has any special litigation.”

To view the full report, including charts and additional metro-level data, please visit: https://www.redfin.com/news/hoa-fees-surge-florida-2024

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240822781813/en/

Redfin Journalist Services:

Angela Cherry

press@redfin.com

Source: Redfin

FAQ

What is causing the surge in HOA fees in Florida condos according to Redfin's report?

The surge in HOA fees in Florida condos is primarily due to new safety regulations following the Surfside condo collapse, skyrocketing insurance costs, and inflation affecting maintenance and repair costs.

How much did HOA fees increase in Tampa, FL according to Redfin's analysis (RDFN)?

According to Redfin's analysis, HOA fees in Tampa, FL increased by 17.2% year-over-year during the three months ending July 31, 2024.

What was the median monthly HOA fee in Miami, FL as reported by Redfin (RDFN)?

Redfin reported that the median monthly HOA fee in Miami, FL was $835, the highest among the 43 metros analyzed in the study.

How did condo prices in Jacksonville, FL change in July 2024 according to Redfin's report (RDFN)?

According to Redfin's report, condo prices in Jacksonville, FL fell by 6.6% year-over-year in July 2024, the largest decline among the metros analyzed.

What new law did Florida implement on May 26, 2022 affecting condo associations?

Florida implemented Senate Bill 4-D on May 26, 2022, which requires structural inspections for condos and additional money to be set aside for repairs.