The slowdown in the sales of South Florida condominiums continued in September.
The pace of sales last month fell by double digits across Miami-Dade, Broward and Palm Beach counties compared to a year ago. The fall-off in sales volume comes as more condos are for sale and it is taking considerably longer for a unit to find a buyer and close a sale.
The drop in sales activity comes as older condo buildings face a deadline to get a structural inspection and begin putting financial plans in place to fix and maintain a number of vital services. Buildings at least three stories tall and 30 years old have to undergo a milestone structural inspection by the end of the year. The mandate was put in place by a state law passed in the wake of the collapse of the Champlain Towers South building in Surfside, which killed 98 people.
Older condo buildings in Miami-Dade and Broward had previously been subject to similar inspections. But the reforms passed by Florida lawmakers after the Surfside tragedy also require condo associations to begin setting aside money to maintain certain systems such as electrical and plumbing. Previously, condo owner associations were able to waive saving money for regular repairs.
The cost and uncertainty is likely influencing the market for older condos. Sales volumes have dropped in Miami-Dade and Broward for five consecutive months. Palm Beach condo sales activity is down in each of the past 10 months.
The number of condos for sale keeps climbing. The total number of condos and single family homes for sale in Miami-Dade County is at its highest level since Feb. 2021. It is at a four-year high in Palm Beach County and a five-year high in Broward County.
A separate study from real estate firm ISG World finds 85% of condos listed for sale in the region are at at least 30 years old, making them subject to the mandatory structural inspection requirement before the end of the year. Those older condos are selling for less, too. The average sales price is down 21% this year, according to ISG World's data.
Still, the Miami Association of Realtors points out condo inventory remains below historic and pre-pandemic averages.
"The statistics would be much stronger," the association wrote in a news release, "if they included South Florida’s robust developer new construction market and volume. The decline is due to lack of condo financing and inventory at key price points."
The average 30-year mortgage hit an 18-month low last month before rising in October. More than half of all condo sales in the region last month were in cash, though. A cash deal avoids the cost of financing and possible complications as lenders scrutinize condo buildings and their association's finances in light of the new reforms.
"The lack of Federal Housing Administration loans for a large number of existing Miami condominium buildings is preventing further market strengthening," the association wrote.
These loans require a lower down payment for buyers and accept borrowers with lower credit scores. A condo building also has to meet certain requirements to have a potential buyer use an FHA loan. Just 23 condo buildings across the three counties are approved for FHA loans.
Single Family Homes
The drop in demand for condos continues putting a premium on single family homes. The average home sold for more than $600,000 in the three counties last month, marking the 8th consecutive month above that price.
Average sales prices are up 4% in Miami-Dade County and 7% in Broward. They are flat in Palm Beach County. Prices have cooled a bit as mortgage rates have remained elevated.
