Florida hit by 'worst housing crisis in decades' as desperate homeowners slash prices by as much as 40%: 'This is paradise lost'

In Florida, condo owners are cutting their prices by as much as 40 percent to avoid the enormous repair costs.

Some units have seen their asking price reduced by nearly half a million dollars as safety concerns sparked a wave of selling. Agents are calling this the worst real estate crisis in decades.

A three-bedroom, two-bathroom condo in St. Petersburg was offered for sale earlier this year for around $1.2 million.

However, since no buyer was found, the owner initially lowered the asking price to $898,000 and last week to $715,000.

State legislation enacted after the 2021 collapse of the Champlain Tower South in Surfside, Miami-Dade County, which killed 98 people, means hundreds of thousands of homeowners now have to shell out large sums for previously neglected maintenance.

Many of them could face fees higher than their mortgage payments, leading to a wave of distressed sales in the Sunshine State.

Karen Shipman, who bought a second-floor condo in Venice, Florida, with her husband for their retirement in 2021, said she is no longer sure they can afford to keep their home.

“I feel like paradise is lost,” she told ABC Action News.

ISG World recently reported that there were 20,293 condo listings in Palm Beach, Broward and Miami-Dade in the second quarter of the year, compared to 8,353 in the same period in 2023.

Now, DailyMail.com can reveal that an estimated 360,000 property owners in South Florida alone – home of the condo boom – may not be able to afford the repairs required by the new law.

Joseph Hernandez, a real estate attorney and partner at the Bilzin Sumberg law firm in the state, said many of them were already trying to sell their units at a loss before facing huge repair bills.

However, they face the problem of whether anyone is willing to buy the products, even with massive discounts and given the conditions attached.

The Champlain Tower disaster revealed widespread neglect of old condominium complexes: homeowners associations postponed important repairs to save money.

This prompted lawmakers to introduce bill SB 4-D in May 2022, which would require all Florida condominiums 30 years or older to undergo an inspection by the end of the year.

Condominium owners and condominium associations must begin the repairs and maintenance work identified in the report within one year of receiving the report.

In the second quarter of the year, there were 20,293 condo listings in Palm Beach, Broward and Miami-Dade, including this one in Surfside, which first appeared on Zillow in 2022 for $699,000 and is now available for $545,000, a 22 percent reduction

The price of this two-bedroom, two-bathroom condo in Tampa has dropped from $515,000 to $449,900 since May, a 12 percent reduction.

And in Naples, the asking price of a two-bedroom, two-bathroom condo, also built in 1981, has been cut 21 percent, from $439,000 to $345,000, since its initial listing last year.

Nearly 90 percent of the more than 20,000 residential units for sale in Palm Beach, Broward and Miami-Dade are in buildings that are 30 years old or older.

Last week, a total of 45,890 condos were listed for sale on Zillow in Florida.

According to Newsweek, 9,546 of them had their prices reduced.

Most of these discounts were in St. Petersburg, Sarasota and Venice on the west coast and in Miami, Fort Lauderdale, Boca Raton and West Palm Beach on the south and east coasts.

The property in St. Petersburg, whose price has dropped by 40 percent, was built in 1975.

Real estate expert Nick Gerli highlighted this on X, pointing out that the owner sold his unit in 2020 for less than he paid for it.

Worst of all: Look at the HOA [homeowner association] Fee. $2,300/month. Ouch,” he added.

According to RedFin data obtained by the Miami Herald, fees in South Florida have increased nearly 60 percent over the past five years.

The increase is intended to partly meet the special assessment requirements under the new Security Act.

Following the collapse of the Champlain Tower South in Surfside (pictured), which killed 98 people, a state law was passed in 2021 that means hundreds of thousands of homeowners must now pay large sums for previously neglected maintenance.

As insurance premiums are also rising rapidly, the horrendous additional costs have led to warnings of a “mass exodus” from the market.

Hernandez told DailyMail.com he expects “serious consequences” for thousands of homeowners, including many retirees on fixed incomes.

“They will suddenly find themselves in a situation where they can no longer pay the amounts required by law,” he said.

“Condominium communities are in distress because owners cannot make payments.”

He said many are already trying to sell off their properties at huge discounts, adding: “If you want to live really cheaply for a few years, you could probably come to Florida, but I don't know if I would do that.”

Hernandez said it's unlikely the condo owners will find individual buyers willing to take the risk, but their salvation could be developers willing to buy the land – which in many cases is more valuable than the dilapidated units themselves.

This could prove difficult, however, as developers would be legally required to persuade at least 80 percent (and more often nearly 95 percent) of a building's homeowners to sell in order to purchase the property.

But apparently condo owners are still interested in trying their luck on the regular market. Several ads on Zillow are offering discounts of around 20 percent.

Increased security checks are driving up homeowners association fees and causing many to sell.

A 1981 one-bedroom, two-bathroom condo in Surfside that was listed on Zillow for $699,000 in 2022 is now on sale for $545,000, a 22 percent drop.

In Naples, the price of a two-bedroom, two-bathroom condo, also built in 1981, has fallen 21 percent, from $439,000 to $345,000, since it was first listed last year.

And in Tampa, the price of a two-bedroom, two-bathroom condo built in 1991 has dropped from $515,000 to $449,900 since May – a 12 percent drop.

There are 1.5 million condominiums in Florida, according to data from the Condominium Division.

About 925,000 of them are 30 years old or older, about half of whom live in South Florida.

Hernandez estimates that around 80 percent of these are in buildings that he describes as “functionally obsolete” – in other words, whose owners have not built up sufficient reserves to pay for the repairs that are now required by law.

That equates to about 360,000 units in South Florida alone.

There is talk of an intervention by Governor Ron DeSantis, although it is unclear what form this will take.

A years-long investigation into the collapse of the Champlain Towers found that faulty support columns in the tenant garage and adjacent pool deck caused the devastating destruction.

Investigators concluded there was “strong evidence” that the pool deck caused the collapse by destabilizing the base of a support beam on the lower floor of the tower.

After the structural failure of the beam, the tower section collapsed before an adjacent part of the residential tower collapsed on it, according to the March 2024 report.