Miami condo crash due to insurance and new HOA mandatory reserves requirement??

Question

Any FL or Miami experts out there?  What is the condo market like these days for the $500K budget?

What s your take on the new mandatory condo HOA reserves requirement and also the insanely high insurance cost these days?  Have you started seeing condo HOA fees go up by 50% or more yet across the board?  Are there still demand for Miami condo these days for the $500K range even with these major headwinds, not to mention the spike in mortgage rates?

Would appreciate any feedback on the health of the Miami condo market these days. Thanks

Joe Biscaha · Answer

@Mary Joe My team and I primarily work the urban core of Miami (Brickell/Downtown/Midtown/Edgewater) and deal with a lot of Condominiums.

The average sold price last month was $600k. What you can get depends on what kind of building (full service amenities, concierge, etc) you are looking at.

Our clients have seen HOA maintenance go up, again, it's depending on the building. Some buildings have been poorly managed and not been collecting reserves, others have full reserves and are prepared.

In FL when you go under contract to purchase a condo you will receive the last 12 months of meeting minutes, budget and condo docs to do your own due diligence. Buyers have a 3 day recision period.

Almost everyone (Single family home & condo owners) are experiencing some kind of insurance increase because of the insurance carriers pulling out of the state.

Although mortgage rates have increased it does not really have an effect on our market, more than 50% of condo sales are purchased in cash.

Our market remains strong, and Brickell remains a top choice https://www.miamitodaynews.com...

Elisa Klein · Answer

I own a condo in Miami and my HOA increased this year due to the insurance policy. I did my research on the reserves regulations coming, and I expect my HOA to increase further in the next couple years to meet those requirements.

I personally think Condos are still a good investment in Miami -depending on the price you get. If you are looking to buy a condo, do your due diligence on the HOA management (some are better than others) and ask to see their annual budget (may not disclose unless you are a serious buyer - but worth asking). You can see a lot of info from their annual budget: reserves, capital projects, open loans, etc.

The other thing that you need to look at is the age of the building. The recertification requirements can be an unexpected hit or increase to your HOA short-term. A pro-active HOA will try to anticipate and mitigate the repair expenses so that it doesn't hit the owners as a huge lump sum. Unfortunately though, sometimes these lump sum hits can happen no matter how pro-active the HOA is.

If I were going to invest in another condo, I would invest in a newer building so that I wouldn't have to worry about the certification (and costs) for a little bit. I would also research the new regulations planned in the Miami area.

Ash Hegde · Answer

The reserve requirement does not really increase the long term costs of a condo. It's a pay now or pay later thing. There will always be larger maintenance projects that need to be done from time to time, if there are no reserves the condo would need to raise the funds with a special assessment.

Insurance on condo buildings are going up quite a bit, but the same is true of single family homes. The insurance market is in a bad place here at the moment.

Raymond J. Rodrigues · Answer

Hi @Mary Joe, reach out to @Malgorzata Sadowska. She is an expert in the area and am sure she can answer any questions that you may have regarding the Miami market. I hope this recommendation helps!

In regard to new mandatory condo HOA reserve requirements, was this a requirement that you saw for a particular condo that you are looking at or is this across the board? I have not heard of this as of yet.