Wow! Florida Condo Assessments are Crushing Owners

We bought our SE Florida condo eight years ago with quarterly fees of $2,000. We now pay $4,000/qtr to pay for a large loan to begin repairs a few years ago before the Champlain Towers collapse thirty miles south of us. We’re getting tapped at the end of this month with a $15,000 annual special assessment that will last four years to replace all elevators and to pay for repairs to our underground garage. Work has been ongoing for concrete restoration for a while and should be complete by this time next year. Once these items are complete, we hope prices will rise a bit to recoup our costs upon sale.
 
Dash man said:
Once these items are complete, we hope prices will rise a bit to recoup our costs upon sale.
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I would not bank on it. A local realtor friend of mine said condos would have to drop 70% before the market comes back. Not sure if that is realistic but she has been in the business in Florida for over 25 years. She said very few buyers are even considering condos near the coasts anymore. Town houses are now the go to for those previously looking at condos. Apparently, they are increasing in value at the same pace as SFHs. I am not sure if this is way of the future for multifamily buildings in Florida, but one can thank mismanaging HOAs for the trend.
 
ShokWaveRider said:
I would not bank on it. A local realtor friend of mine said condos would have to drop 70% before the market comes back. Not sure if that is realistic but she has been in the business in Florida for over 25 years. She said very few buyers are even considering condos near the coasts anymore. Town houses are now the go to for those previously looking at condos. Apparently, they are increasing in value at the same pace as SFHs. I am not sure if this is way of the future for multifamily buildings in Florida, but one can thank mismanaging HOAs for the trend.
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I did say “hope.” Nobody knows the future, so I don’t make decisions on financial matters, especially from Realtors who would benefit from panic sellers.
Insurers are crippling the single family home and townhome markets.
Some say developers will start buying out owners of old condos to tear down and build new luxury condos. Who knows what will happen? Fortunately we didn’t buy it as an investment and if we have to sell it at a loss, we can absorb it. A 1940 SFH we bought at the Jersey Shore in 2017 has doubled in value. You win some and you lose some. But I do love warm winters in Florida.
 
pb4uski said:
It's not unusual to have multiple HOAs or condo associations for a single property. One for your specific building(s) and another master association for the community that covers ammenities like pools, clubhouses, etc.
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Our is same, one payment for master (covers mostly the cable and internet discounted package), one for our own community (managed separate from the master) that covers maintenance (lawn/fertilizer of yards, painting of buildings, etc) and one for the clubhouse (pool, courts, etc). And we also enjoy a CDD for the operating expenses of the guard and gates for the broader community. Each has their own assets and responsibilities.
 
pb4uski said:
That is the hard part. The increasing cost of maintenance and periodic replacements are difficult for some people on fixed incomes. If they are in a SFH they can just ignore it and run the place into the ground, but that option isn't available in a condo.
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For many large condo high rise buildings, that was exactly what they were doing. And ended up collapsing to the ground which sparked the legislation.

As noted in reference below, "The condo association only had 6.9% of the recommended level of money to complete repair and replacement projects and stay financially secure, according to a March 2020 report from Association Reserves, a company that analyzes housing association finances."

Note in the reference there was a $15 million special assessment was levied (not collected) for repairs. As I heard though, the actual cost to address all known deficiencies was much higher, but it was what the association could get approval by unit owners. All this came way to late unfortunately for 98 people who passed as a result.

 
bobandsherry said:
For many large condo high rise buildings, that was exactly what they were doing. And ended up collapsing to the ground which sparked the legislation.
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I remember seeing photos of the interior of some units in the building that collapsed. They were very plush. To bad fancy window treatments, flooring, and accessories don't hold the building up.
 
Dash man said:
I did say “hope.” Nobody knows the future, so I don’t make decisions on financial matters, especially from Realtors who would benefit from panic sellers.
Insurers are crippling the single family home and townhome markets.
Some say developers will start buying out owners of old condos to tear down and build new luxury condos. Who knows what will happen? Fortunately we didn’t buy it as an investment and if we have to sell it at a loss, we can absorb it. A 1940 SFH we bought at the Jersey Shore in 2017 has doubled in value. You win some and you lose some. But I do love warm winters in Florida.
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ShokWaveRider said:
I would not bank on it. A local realtor friend of mine said condos would have to drop 70% before the market comes back. Not sure if that is realistic but she has been in the business in Florida for over 25 years. She said very few buyers are even considering condos near the coasts anymore. Town houses are now the go to for those previously looking at condos. Apparently, they are increasing in value at the same pace as SFHs. I am not sure if this is way of the future for multifamily buildings in Florida, but one can thank mismanaging HOAs for the trend.
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Time will tell. There is a lot of appeal for a condo, especially for those interested in a "lock and leave" 2nd home. Maybe condos won't be as good as a retirement home for the next several years.

The condo reserve rules are hitting at the same time as prices spiked over the last few years and insurance costs are going up (and not exclusively due to the collapse and legislation). Tough time to be selling, or considering buying, but things will settle out over the next few years. I acknowledge that anyone looking to sell or buy until the dust settles (which it will, eventually) could find it very unappealing.

Buildings that have kept up with maintenance and have adequate reserves should be OK, but those won't be as relatively cheap as the ones that imprudently skipped on maintenance/reserves once were.
 
ShokWaveRider said:
I would not bank on it. A local realtor friend of mine said condos would have to drop 70% before the market comes back. Not sure if that is realistic but she has been in the business in Florida for over 25 years. She said very few buyers are even considering condos near the coasts anymore. Town houses are now the go to for those previously looking at condos. Apparently, they are increasing in value at the same pace as SFHs. I am not sure if this is way of the future for multifamily buildings in Florida, but one can thank mismanaging HOAs for the trend.
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It already has happened.... it is just that condo owners have not gotten the memo yet... eventually they will...

We bought our current house in the 08-09 real estate crash... the house was listed a LOT higher than what people would pay to get it and the owner kept coming down but not by enough... I eventually got the house after waiting about a year and a half when they finally figure out that there was one offer for that amount of time...
 
It's not just in Florida. I purchased a condo in an 50-year old building and HOA fees have gone up substantially in recent years. First, because of a new law requiring to maintain a proper reserve fund. And on top of that, electricity prices and insurance premiums have increased dramatically in the last 3 years (not just for us, for everyone). Of course maintaining a 50-year old building costs a lot of money. This year we completely overhauled the building's electrical panels and the ventilation system. A few years ago it was the renovation of the parking lot and garages underneath. Add to that new "needs" that arise with time. This community had very little "security" when it was built in 1975 but security featured are becoming more in demand. Last year, we installed gates and fences all around the property. We are now discussing whether to install cameras. In common areas, we now have fobs where there were keys before. New environmental regulations are also putting pressure on us to upgrade the building's energy efficiency, a costly endeavor. And on and on.

That being said, we've been able to stay on top of it all and the building is well maintained thanks to the dedication of the HOA board. And we have been able to stay out of debt so far. While on the increase, HOA fees remain somewhat reasonable (just slightly higher than newer buildings in the neighborhood). But it is definitely putting pressure on the older fixed income folks who have been moving out and have been replaced with higher income working folks.
 
W2R said:
I can understand the concern, after the catastrophic collapse of the Champlain Towers. That was shocking. But gee, I can also understand that people have budgets and that the costs of condo ownership are becoming insanely high in some places. My guess is that many, like you (Tekward) will have second thoughts about Florida condo ownership now.

Here in New Orleans we have been hit by huge insurance increases on single family homes, which Frank and I can (barely) handle for now. But many others with paid off homes like ours, are choosing to go without insurance because they can't afford it. Scary situation IMO. Maybe there will be a rush to rural locations in sparsely populated states with low insurance rates. Or, maybe there are other solutions that I haven't thought of.
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We have lived in our home for 40 years and paid it off about 25+ years ago. Estimated value is 26x what we paid but only because of the lot being 2 blocks from the ocean here in NE Florida. The house is probably not worth more than 1/5 of the estimated value. I declined hurricane insurance a year ago because of the increase. We still have Home Owners and Flood insurance. If it blew away we would still be ahead of the game. The only thing I would regret is losing a few sentimental items but that would happen whether we had insurance or not.
 
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I live in a modest, very well kept condo in St. Pete, Florida and it really wasn't bad at all. Last year we had three assessments each one inbetween $2,500 - $3,5000 depending on how many bedrooms you have. However, many of my friends at the gym who also live in modest condos in the area have gotten much, much larger assessments. Our monthly HOA did just about double though. I guess some of the takeaways here are take condo Board elections very seriously. We were always lucky to have very competent Treasurers, etc. And of course before purchasing a condo in Florida know the exact status of the assessment situation and the financial health of the condo you are interested in.
 
jazz4cash said:
I was looking at a condo for investment but a realtor told me the HOA would only divulge if they met requirements for FHA financing. No other details from their books would be available until after an offer was made. That seems to be a flaw in the sales process.
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In the words of the Monty Python crew; "RUN AWAY!"
 
I’m surprised that in some states the owners have to vote for increases. In Nevada the board makes those decisions.
 
pb4uski said:
Having served on our Board and served as Treasurer, totally true... in fact I used that exact same phrase for a couple of our Board members.
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Alarmingly, this is true for almost all BoDs, including the public ones with highly compensated directors.

I was heavily engaged with a non-profit and got on the board, thinking I'd know everything. I didn't know squat, and it has taken 4 years to even get close to knowing something.

I still don't know what I don't know, and there are surely things lurking out there.
 
MC Rider said:
Something something about a rock and a hard place. :eek:

My solution? Don't buy a condo. Or anything with an HOA. :rolleyes:
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It depends on what the HOA is responsible for. If it is maintaining the common grounds, arranging trash pickup, and making sure the neighbors don't leave a car engine hanging from a tree on their front lawn, that's manageable. In our current neighborhood, that would be very desirable.

If they are arranging all exterior repairs and common plumbing/electricity, that's considerably more involvement and isn't for everybody.
 
MC Rider said:
What about when the buildings reach the end of their useful life? o_O
Nothing lasts forever.
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Given the quality of a lot of 1970s and early '80s frame construction, this is a real issue.

There are a lot of older condos in the Maryland suburbs where poorer owners can't afford the major renovations required. IIRC, at least one such condo has voted to dissolve and sell their building for redevelopment.

 
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We are fortunate. Our HOA is in a cul-de-sac with 18 homes, all duplex. High end residential area with a park at the top of the street for when our grandchildren come and a forest reserve at the botton of the street. Mostly retired oil execs and professionals. No gates, just a normal residential street. One would be hard pressed to recognize that it is an HOA. We purposely did not want a condo. Rented one for five years. Owner had two assessments. One for 27K, another for 5K. Lots of other issues.

HOA board is first rate. All that is covered is outside lawn mtce, sprinkler system, and snow clearing. City is responsible for the street, etc. The only restriction is paint color.

It has been 7 years. Perfect for us. Essentially a lock and leave thanks to our neighbour who collects our mail from the box. No pets, no indoor plants.
 
Out of Steam said:
Given the quality of a lot of 1970s and early '80s frame construction, this is a real issue.

There are a lot of older condos in the Maryland suburbs where poorer owners can't afford the major renovations required. IIRC, at least one such condo has voted to dissolve and sell their building for redevelopment.

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Interesting article. I suppose that is one of the few ways to solve the problem, sell the whole shebang to a builder to start over.

Brett's thing is I guess legally condos, but does not have a lot of the issues of a high or mid rise. Sounds like Townhomes, which is really just a style of building.
 
MC Rider said:
Interesting article. I suppose that is one of the few ways to solve the problem, sell the whole shebang to a builder to start over.
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In an older suburban or urban area that can now support higher-density redevelopment, it's a reasonable choice.
 
Come to think of it I'm sure some condos were wrecked beyond repair in the 94 Northridge quake. But I don't recall what happened with them. Maybe some were rebuilt with SBA loans, but either way a big hardship on the owners.
 
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