Insurance costs, fees drive down Florida condo values

Condo values are falling in Florida as the effects of severe weather drive the cost of ownership up and insurers out, according to new Redfin research. 

Sales of condo units fell 6.8% in January from one year earlier in the Sunshine State. At the same time, prices climbed up 2.4%, but the upturn was attributed to depressed values within two counties in January 2023 after Hurricane Ian. 

In other major population centers further from the natural disaster, median prices fell from one year ago, declining 1% in the Tampa market and 6.5% in Jacksonville. 

Changes occurring in the Florida condo market are running counter to overall statewide trends that show home prices still accelerating on a year-over-year basis. Sales of single-family homes rose 9%, while the median price rose by double digits.

Florida condo price movements are also bucking growth seen in the rest of the U.S., the online real estate brokerage said. The median of a Florida unit came in at $317,000 in January compared to $340,000 nationwide. 

"Condos are sitting on the market much longer than they used to, with less interest from buyers," said Heather Kruayai, a Jacksonville Redfin agent, in a press release.

The volume of active condo listings on the market expanded by 40% across the entire state from a year earlier, with two communities hit the hardest by Ian  — Cape Coral and North Port — seeing increases of over 80% each. But even in Miami, available condo inventory grew 14%.

The surplus of condo units on the market comes as insurance and homeownership fees head dramatically higher. The Insurance Information Institute found costs for coverage increasing 102% over the last three years in Florida, making them three times higher than the national average. 

The rapid rise in prices for coverage from the National Flood Insurance Program, required for homeowners in many communities, led to a lawsuit from several state attorneys' general, including Florida's, last year.

While driving policy costs up, the impact of climate-related disasters also led Farmers Insurance to cease opening new policies for state residents.

Similarly, homeowners association fees are jumping higher at a faster clip than previously to address the risk from natural disasters. The 2021 structural failure of a condominium tower in Surfside, Florida resulted in the introduction of new regulations, which mandate HOAs conduct regular safety inspections and collect money for necessary maintenance. Association fees may often help pay for the property owner's insurance costs, while the homeowner is still responsible for obtaining their own coverage. 

"Condo costs are shocking," said Juan Castro, an Orlando Redfin agent. "Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It's causing buyers to rethink their plans."

The rise in insurance and HOA expenses is making the idea of condo ownership unappealing or even unaffordable for many who might otherwise consider purchasing one.

"Sky-high HOA costs are pushing buyers out of their monthly budget," Kruayai said.