South Florida Condos - Buying, Holding or Selling?

[Joe Morello]

Hi Everyone,

With the current dynamics in the South Florida real estate market, I'm curious to hear your thoughts and strategies regarding condo investments.

On one hand, we are seeing rising monthly dues, special assessments, and skyrocketing property insurance costs. On the other hand, Florida continues to be a highly desired market for out-of-state and foreign buyers, keeping demand strong.

Given these factors, what are you currently doing with your condo investments in South Florida? Are you:

- Buying: Taking advantage of the demand and potential for long-term appreciation?

- Selling: Cashing in on the high property values and avoiding increasing costs?

- Holding: Waiting to see how the market evolves while managing the higher expenses?

I’d love to hear your perspectives and experiences. How are you navigating these challenges and opportunities?

Looking forward to your insights!

[Francesco Ponticelli]

Hi Joe,

I own condos in Miami and I have clients, each one with different financial situations, owning condos too. I have been investing in Miami Dade County area, so i can't talk for the rest of FL that is a different beast, county by county, so I give you my point of view of Miami.

The key point is which type condo are we talking about: newer >2010 condo, old condos, in key growth areas or not.

Data, as always, speaks: condo sales ares slowing down, overall Miami is close to be a Buyer market overall (it is already a Buyer's market in many zip codes...), while appreciation is on average +5.5YoY. Some areas have higher appreciation, some areas lower. 

Condos are also unique because each condo is different from another, so the strategy is really building by building, and there are buildings which match each of the options you listed above.

June 2024 showed clearly the increase (and rush to sell) of inventory, that for 90% is driven by older buildings (40 years+).  Days on Market is increasing steadily, driven by those older condos. 

Newer ones (2008+) are suffering from seasonality now but will pick it up in Q3-Q4: if you look at historical data, Miami Dade county has always had seasonality low volumes during summer time, due to hurricane season, holidays and less tourists visiting. Those are the ones who most likely will be less hit by Special Assessment and, with the current "fear" in the market, are a good option to buy at a discounted price. Again, being very focused on key buildings close to new constructions being delivered in 2-4 years, in key growth areas, you can get good deals and cash in apprecitation in the mid-long run.

In older buildings, if you are not financially solid, it's recommended to sell before HOA and Special Assessment will put you out of business.

Key drivers of the HOA fee increases have been insurance and special assessments. Newer building has seen huge increases in insurance in the past years because of the collapse of the Champlain Towers and hurricanes, but that is over and there is more competition now in the market: I have already seen the cost of insurance going down -8% in the negotiation for 2025 in one building where I sit in the HOA.

In my condos, I hold: they are pretty new, with healhy equity already, and solid, with no Special Assessment at the horizon. And they are located beside multi-million development which will bring up the value in 4-5 years, if the market remains the same.

I have clients who are selling because they have some equity but are cash flow neutral/negative and fear some assessment. I have sold one in 40 days and others are on the market. 

I have 3 clients willing to buy: they are highly focused on specific buildings (and line) they want, and are watching the market to attack potential distressed owners and grab the best deal.

Hope it gives the perspective, even if it's only focused on Miami, that is one of the hottest market nation-wide and some dynamics that are very local (i.e. latin-american buyers buying cash to take $ out of their country)