’Turmoil’: Inside property market freefall in Florida retirement haven

A growing crisis could reshape a US state’s reputation as an affordable beachside retreat for retirees.

A slow-motion crisis is unfolding in Florida’s apartment market, threatening to up-end the state’s image as a haven for retirees and reasonably-priced beach living.

Owners of the state’s older apartments are bracing for steep special assessments, while racing to sell their homes and receiving only tepid buyer response.

Amid a property market that’s still vibrant for nearly every other segment, Florida’s ageing apartments are losing value. And nearly 1400 buildings are now black-listed from receiving mortgage financing, making those apartments an even-tougher sell.

The 2021 Surfside building collapse killed 98 people. Picture: AP

At the heart of this turmoil is a basic reality: Florida’s ageing buildings desperately need repairs, and state officials are forcing them to assess (and pay for) those long-overdue upgrades.

Under a law enacted after the tragic 2021 collapse of Champlain Towers South in Surfside, which saw 98 people lose their lives, apartment boards may no longer defer major structural improvements to another day — or decade.

The “Building Safety Act” required every apartment tower in Florida aged 30 years or older to complete a structural integrity study by the end of 2024, to get a full grasp of what problems need fixing.

This year, the tab for those repairs comes due. Boards must now set aside funds to fix the issues found in those studies — from concrete restoration to balcony overhauls. And the assessments on individual owners are looking both pricey and unsettling.

“You’re going to see a massive reduction in the value of these buildings based on these giant special assessments and the work that has to be done,” said Orest Tomaselli, CEO of Strategic Inspections, which advises apartment boards nationally on how to shore up their reserves.

In Florida buildings he’s worked with, Tomaselli has seen special assessments as low as $250 (400 AUD) per month, to a property that levied $2,500 (4,000 AUD) per month, per unit owner, for a three-year stretch.

“There are real people in these units that may be displaced,” Tomaselli said of the assessments, “that may lose their nest egg and may lose tremendous amounts of value in their units”.

At Aventura’s Mediterranean Village, a waterfront complex with a marina out front, unit owners were hit with six-figure special assessments last year, some as high as $400,000 (643,000 AUD), according to published reports.

At Miami’s Cricket Club, a 50-year-old waterfront tower burdened with $134,000 (215,000 AUD) special assessments per condo, 23 of the building’s 217 apartments are currently for sale, according to brokerage Compass.

In a Miami market where the median apartment price was $445,000 (716,000 AUD) in the fourth quarter of last year, owners at the Cricket Club are seeking buyers with prices as low as $220,000 (354,000 AUD) for a 1,950-square-foot (181sq/m) two-bedroom on the 19th floor. The owner initially sought $330,000 (530,000 AUD).

Meanwhile, at Summit Towers in Hollywood, a building-wide special assessment of $56 million (90 mil AUD) led to the ousting of four board members in a January election, in favour of new members who promised “a more moderate approach” to building up reserves, said Amy Greenberg, a broker and resident of the building with several listings there.

The Surfside condo collapse has changed Florida real estate forever. Picture: Getty

“A lot of people moved here to be able to retire and live their life here, and they’re on fixed incomes,” said Kathleen DiBona, a 50-year resident of Hollywood who serves as president of the Hollywood Beach Civic Association. “They’re having a difficult time being able to manage all that’s coming and hitting them.”

Many owners whom DiBona knows in Hollywood, a city dotted with older towers, are seeking to off-load units with little success. Others, she said, have dropped insurance coverage for their apartments so they can manage to pay their special assessments.

Failure to pay these assessments will impact more than just the individual owners who can’t afford them. If 15 per cent of unit owners in a building default, the entire property could become ineligible for mortgage financing, according to Tomaselli of Strategic Inspections.

“What happens if nobody can get a loan to buy a unit in your building?” says Joseph Hernandez, a Miami-based partner in the real estate group of law firm Bilzin Sumberg. “It essentially makes the units in your building unsellable and it makes the value of those units go down.

“We may see a lot of condo projects go into distress.”

Some could already be getting close. In February, Fannie Mae, the national mortgage finance agency, updated its running list of “unavailable” US apartment buildings, meaning they are no longer eligible for mortgage financing. Of the 4885 buildings currently on the list, 29 per cent are located in Florida, the highest share of any state. The top reason: “critical repairs or deferred maintenance”, according to a person familiar with the roster.

One newly flagged example is 4000 Island Blvd, a 32-story condominium in Aventura’s exclusive Williams Island, which was built in 1985 and added to Fannie Mae’s no-lending list in January.

At least 24 unit owners are trying to sell, according to Compass. Barry Sytner, the board’s president, called the building’s inclusion on Fannie Mae’s list “incorrect”, noting that the property just secured a bank loan commitment to cover expenses tied to its 40-year inspection.

There are roughly 1.1 million units in Florida that are 30 years old or more, and subject to the new law, according to the Florida Policy Project. Of those, 58 per cent are concentrated along the Southwest and Southeast coastal counties, in places like Tampa, Clearwater and the greater Miami metro area, including Fort Lauderdale and Palm Beach County.

That means the law’s reach extends to more than half of all owners in Florida’s famed retirement enclaves. According to brokerage ISG World, apartments that are over 30 years old accounted for 86 per cent of all Southeast Florida condo listings in the fourth quarter of 2024 — a total of 17,198 properties for sale across Miami-Dade, Broward and Palm Beach counties.

Yet even as thousands of newcomers flock to the region, these abundant and discounted units are languishing on the market, weighed down by the threat of special assessments and uncertainty over looming repair costs.

“The fear of the unknown is scaring the hell out of potential buyers,” said Craig Studnicky, ISG’s chief executive officer.

“Remember that show, Let’s Make a Deal?” Studnicky said. “They may get a special assessment and it could be quite modest, which means you just made one hell of a deal. But what if you’re wrong, and the special assessment is gargantuan? Not only is the special assessment big, but the scope of construction is big, and you’re going to be living in a construction site for the next two years.”

The full extent of special assessments is still an open question for many Florida properties. While the state deadline for condos to submit their structural integrity studies was on December 31, only 39 per cent of buildings in Southeast Florida have done so, according to the Miami Association of Realtors.

The Summit Towers in Hollywood is facing a $56 million assessment. Picture: Google Maps

Some of that’s because engineers were simply not available, amid a statewide rush to get these studies completed. Others could be gambling that enforcement won’t be robust or swift, said Peter Zalewski, a Miami-based broker, analyst and condo investment consultant.

“You have buildings that are shopping for studies, because maybe they’re coming in too high, and maybe they can find someone who can lowball it,” Zalewski said.

“People are figuring out what to do,” Zalewski added. “They think there will be a silver bullet, some kind of cure in the upcoming Florida legislative session” amid outcry from owners.

The state legislature, which convenes its 2025 session March 4, has no plans to bail out owners or offer reprieve from the deadlines to fund repairs, Florida legislative leaders said at a conference last month held by Miami Realtors, according to Homes.com.

Politicians, however, might consider financing solutions to help cover the cost of structural studies and maintenance, including allowing reserve funds they set aside to be invested.

Despite some maintenance challenges, Florida’s older apartments still reflect the only affordable opportunity at homeownership for those who can’t swing the price tags of Miami’s new crop of ultra-luxury developments, says Scott Diffenderfer, a Miami-Beach-based broker for Compass who specialises in sales of older units.

He says he’s pretty upfront with potential buyers these days about the scope and costs of repair that some of his listings will undergo.

Brokers view the new regulations and mandatory repairs as a necessary correction to Florida’s once-lax standards, Diffenderfer explained.

Previously, buyers had little insight into a building’s true condition — much like purchasing a used car without a report. Now, with stricter enforcement requiring proper reserves and full disclosure of maintenance history, brokers say the market could become more transparent and ultimately unlock greater value for owners.

“For probably 75 per cent of the buildings in South Florida, when the dust settles, people are going to say, ‘You know what? That was painful. But look at these buildings!’ ” Studnicky said. “They’re in great shape.”

This story first appeared in the New York Post and was republished with permission.