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'Worst case scenario' of Florida real estate crisis revealed as desperate residents flee
The Sunshine State continues to face a potentially catastrophic real estate crisis that could soon cause a mass exodus.
Real estate expert and realtor Steven Kupchan has revealed what he thinks the 'worst case scenario' would be as the costs of condos have soared, especially in southern Florida.
Homeowner association fees (HOAs) - paid by residents for general maintenance of the neighborhood or for condos in the shared building - have also caused skyrocketing insurance costs for residents.
Kupchan, an agent for One Sotheby's International Realty, told DailyMail.com he thinks the Florida housing market will become severely affected and cause an intense domino effect.
'In the worst-case scenario, a significant number of condo associations could go bankrupt due to the inability to cover the costs of necessary repairs and maintenance,' Kuplan said.
Real estate expert and realtor Steven Kupchan has revealed what he thinks the 'worst case scenario' would be as the costs of condos on the market have soared , especially in southern Florida. (pictured: A high rise condominium tower in St. Petersburg)
Kupchan (pictured), an agent for Top Miami Team, told DailyMail.com he anticipates that the Florida housing market will be severely affected and cause an intense domino effect
'This could lead to widespread foreclosures, plummeting property values, and a ripple effect throughout the local real estate market.
Recently, a new law was introduced that requires increased safety checks on Florida condos.
The legislation was brought in following the 2021 collapse of the Champlain Tower South in Surfside, which killed 98 people.
It later emerged that the condo association had postponed crucial repairs to avoid increasing costs, prompting lawmakers to introduce new regulations that are set to take effect at the end of the year.
Because of this, many residents have had to leave their condos and look elsewhere to call home.
'If the crisis deepens, there could be a mass exodus of residents from affected condo buildings, leading to a glut of unsold properties and further declines in prices,' he said.
The legislation was brought in following the 2021 collapse of the Champlain Tower South (pictured) in Surfside, which killed 98 people
'Insurance companies could refuse to cover certain buildings or raise premiums to unsustainable levels, making it difficult for buyers to obtain financing,' Kupchan said
He also predicted that buyers will face insurance nightmares due to the already soaring costs.
'Insurance companies could refuse to cover certain buildings or raise premiums to unsustainable levels, making it difficult for buyers to obtain financing.
'This could lead to a further contraction in the market and increased financial pressure on existing owners,' Kupchan added.
As for the state's real estate market as a whole, he suspects the industry will endure a series of changes because of the calamity.
Kupchan believes there will be 'market volatility,' or an unpredictable climate in the state's real estate industry, that could eventually 'affect property values in other sectors of the real estate market as well.'
Florida condo owners recently started slashing prices by up to 40 percent in an effort to dodge massive incoming repair costs. (Pictured: Vitas Building full of graffiti)
He also predicted the crisis will cause 'increased scrutiny and new regulations' in regard to financial and safety stability of condos in the Sunshine State, which could also 'impact the overall real estate market.'
As buyers start to turn away from condos, Kupchan thinks interest in single-family homes will start to trend, 'leading to a potential shift in the types of properties being bought and sold.'
Florida condo owners recently started slashing prices by up to 40 percent in an effort to dodge massive incoming repair costs.
Some units have had almost half a million wiped off their asking price as safety fears trigger a wave of sell offs in what realtors have described as the 'worst real estate crisis in decades.'
One three-bedroom, two-bathroom condo in Saint Petersburg was listed at around $1.2 million at the start of the year.
But still without a buyer, the owner slashed the asking price first to $898,000 and then $715,000.
DailyMail.com revealed an estimated 360,000 property owners in south Florida alone - the home of the condo boom - may not be able to afford the repairs required by the new law
Many could face fees greater than their mortgage payments, sparking a wave of distressed sales in the Sunshine State.
Karen Shipman, who bought a second-story condo in Venice, Florida, with her husband for their retirement in 2021, said she was no longer sure they could afford to keep their home.
'I feel like it's paradise lost now,' she told ABC Action News.
Most of those cut price sales were in Saint Petersburg, Sarasota and Venice on the west coast and Miami, Fort Lauderdale, Boca Raton and West Palm Beach on the state's south and east coast.
A Saint Petersburg property that has slashed its price by 40 percent was built in 1975.
It was highlighted on X by real estate expert Nick Gerli, who pointed out that the owner was selling their unit for less than they bought it for in 2020.
'Worst of all: check out the HOA fee. $2,300/month. Ouch,' he added.
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, up from 8,353 in the same time frame in 2023.
DailyMail.com revealed an estimated 360,000 property owners in south Florida alone - the home of the condo boom - may not be able to afford the repairs required by the new law.
Nearly 90 percent of the 20,000-plus units listed for sale in Palm Beach, Broward and Miami-Dade are in buildings aged 30 years and above
The increased safety checks are pushing up Homeowners' Association fees, prompting many to sell
The Champlain Tower disaster lifted the lid on the widespread neglect of old condominiums, with associations postponing crucial repairs to save cash.
It prompted lawmakers to introduce the SB 4-D Bill in May 2022, which requires all Florida condos aged 30 years and older to undergo an inspection by the end of the year.
Condo owners and associations must start repairs and maintenance works flagged in the report within a year of receiving it.
Nearly 90 percent of the 20,000-plus units listed for sale in Palm Beach, Broward and Miami-Dade are in buildings aged 30 years and above.
In Tampa, the median monthly HOA fee jumped 17.2 percent over the year to July 31, according to Redfin.
In Orlando, the fees soared by an average of 16.7 percent, and in Fort Lauderdale they rose by 16.2 percent, it found.
This is compared to an average hike of 6 percent across the 43 most populous metro areas which Redfin analyzed.
HOA fees also rose in West Palm Beach by 12.8 percent, by 7.6 percent in Jacksonville and by 5.7 percent in Miami.