Florida Gov. Ron DeSantis speaks during a roundtable discussion with condominium owners, at the Roberto Alonso Community Center, Sept. 9, in Miami Lakes, Fla.Wilfredo Lee/The Associated Press
Gus Carlson is a U.S.-based columnist for The Globe and Mail.
As snowbirds prepare for their annual pilgrimages to Florida, local lawmakers are scrambling to address a crisis that has become one more blemish on the Sunshine State’s changing complexion from an affordable tropical getaway to an expensive nightmare for condominium owners.
The issue centres on skyrocketing monthly maintenance fees and stiff one-time assessments being imposed on owners by condo associations racing to comply with stringent new laws requiring adequate reserves to cover building maintenance and repairs. Those regulations are fallout from the 2021 collapse of the 12-storey Champlain Towers South condo in Surfside that killed 98 people, a disaster linked in part to lax building oversight, inspection and maintenance.
In a rush to meet the Jan. 1, 2025, deadline for compliance, associations’ aggressive measures to raise funds have inflicted significant damage on the market, driving out thousands of owners who can’t afford to pay monthly fees that have doubled in some cases and assessments of tens of thousands of dollars. Estimates by local real estate associations suggest the problem has driven down values in the statewide condo market by more than 13 per cent this year.
The situation is so severe, Florida Governor Ron DeSantis called this week for a special session of the legislature to find solutions before year-end.
“We want our condos to be safe in the State of Florida but we also want to make sure any safety measures are implemented in ways that are reasonable and affordable to the residents,” Mr. DeSantis said. “We don’t want to see people forced out of a unit because they have a crushing assessment.”
It is a Gordian knot that has become particularly tight for Canadians who own condominium properties in Florida. For years Canadians have been the largest block of foreign owners of Florida property, with much of that investment in condos.
When coupled with soaring home insurance rates, the rising ownership costs for condos represent a one-two punch that has quickly turned Florida from a relatively value-priced refuge from northern winters into an expensive proposition. Over the past few years, several insurers have left Florida, wary of high claims rates because of risk factors such as hurricanes, especially in coastal areas. Insurers that remain have driven up premium rates, sometimes by a factor of 10.
A weak Canadian dollar, hovering in the low-70-US-cents range, makes the situation particularly acute for Canadian owners and buyers.
The problem has become more pronounced as Florida’s population has boomed. Last year the state surpassed Texas as the fastest-growing state in the union, topping 22 million people on its way to 30 million by the end of the decade.
That growth, and the demand for housing it has generated, has generally propped up house prices. But the condo crisis has stunned newcomers who fall in love with the easy-lifestyle amenities of condo living but quickly sour when they see the maintenance fees and assessments – and the insurance premiums, especially on oceanfront properties, even if they can find a carrier. For condo owners who need to dump their units because of rising fees, buyers are scarce and prices are depressed.
A solution will require a delicate balancing act. The Champlain Towers South collapse exposed the critical need for a wholesale program to inspect, repair and upgrade aging buildings, especially those built in coastal areas decades ago when building codes were lax. While many stricter codes were imposed after Hurricane Andrew, a Category 5 storm that delivered a direct hit to the Miami area in August, 1992, there was little done to impose and enforce tougher standards on existing structures.
Now, everyone is expected to pay the piper, but few can. The aggressive timetable and higher-than-expected costs related to bringing so many buildings up to snuff so quickly has exposed the flawed reality facing the new laws: There simply isn’t enough money among condominium unit owners to cover the past sins of the developers who built the buildings and the associations accountable for maintaining them.
Among the remedies being floated is a low-interest loan program designed to help owners spread out their payments over longer periods of time. It is unclear whether any relief measures will be accessible to foreign owners.
Whether or not Florida lawmakers can find solutions that address both sides of the crisis – the safety and security of the buildings as well as the affordability for owners – the economic impact on the state is serious enough for Mr. DeSantis to make fixing it a priority. That’s potentially good news for condo owners, including Canadians, who will be watching Tallahassee closely to see if New Year’s will be a day of celebration or mourning.