Condo sales fell sharply across South Florida in April even as median prices held steady thanks to newer and more expensive units.
The number of existing single family homes that sold last month also fell from the pace a year ago, according to monthly data from the Miami Association of Realtors. However, home prices increases have outpaced more volatility in condo prices.
The home real estate market continues adjusting to reforms impacting older condo building and broader economic uncertainty brought on by Pres. Donald Trump’s volatile tariff policies and sustained higher interest rates compared to a few years ago.
“ I think we are beginning to see the real pain in the condo market right now,” said Juan Arias, South Florida-based director of market analytics at real estate data firm Homes.com.
April was a month with a double-digit drop in the pace of condo sales. But it wasn’t unusual over the past year. Condo sales have collapsed as reforms put in place after the Surfside tragedy have led many older buildings to increase monthly fees to start saving money and charge special assessments for repairs.
A sign that the significant slowdown in condo sales will continue is the number of new pending sales reported by the association in April. It indicates another double-digital fall-off in closed deals, though not all pending sales will lead to a closed sale.
“We’re seeing a highly polarized market, with sales moving either in the lower price-tier markets that are affordable for most buyers or in the high-end markets where cash buyers make up about half or more of the sales,” Miami Realtors Chief Economist Gay Cororaton said in a press release.
I think we are beginning to see the real pain in the condo market right now.Homes.com Director of Market Analytics Juan Arias
Only sales of condos priced between $150,000 - $250,000 increased in Miami-Dade County in April. It was even lower-priced units in Broward and Palm Beach counties that experienced an increase in sales activity. Otherwise, condo sales in most price ranges, including more than $1 million, fell. The data does not include new-to-market condos, many of which are considered luxury units priced well above the median sale prices in the three counties.
“We're seeing continued development of million dollar-plus condos that are affordable for a certain segment of the population. But for local residents where the median household income is $80,000 a year, they tend to rely on the vintage type of condo product,” Arias said. “There are challenges for that entire market at this point in time.”
Tough condo market
Those challenges stem from new rules put in place for older condo buildings and their associations after the collapse of the Champlain Towers South condo building in Surfside. It killed 98 people and led to a series of laws requiring most older condo buildings in the state to undergo a structural integrity inspection and begin saving money for regular maintenance of roofs, plumbing, electrical and other vital systems.
The Florida legislature passed a new measure this spring that would delay some of the original provisions and provide additional financing options for associations. Gov. Ron DeSantis has said he will sign the bill into law.
Still, the inspection and financial requirements have clearly spooked condo buyers. The number of condos listed for sale continued increasing last month even as the number of sales fell. While condo inventory has risen sharply in all three South Florida counties, it remains below pre-pandemic levels. The difference is there are fewer buyers, too.
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One reason cited by the realtors association and Arias is the difficulty condo buyers have in securing financing. Very few condo buildings in the region qualify for the lowest mortgage rate financing backed by the U.S. government. Fewer than two dozen buildings have been approved by the Federal Housing Association for FHA-backed loans. Those loans allow buyers to put less money down when purchasing a unit and usually carry a more competitive mortgage rate. A condo building is required to undergo an FHA inspection to be approved for financing.
Diverging markets
These dynamics have helped support the single family home market in the region. While the condo market is described as “a buyer’s market” across the region by the realtors association, the market for single family homes continues to generally favor sellers.
Median home prices have been climbing even as the number of deals has been falling compared to a year earlier.
“ If you are lucky enough to find an attractive single family home below $1 million, well good for you,” Arias said. One out of every three homes listed for sale in April were asking at least $1 million.
“ Given the fact that we continue to see significant appreciation in single family homes and it is hard to find an attractively priced condo at this time, we are seeing a stickier renter base,” said Arias. That fuels lasting affordability concerns as home price increases keep outpacing wage growth.
Median home prices in Miami-Dade, Broward and Palm Beach counties have kept increasing year-over-year as condo prices haven’t.
“We'll continue to diverge between the haves and the have nots,” worried Arias. “I think that story is becoming more and more apparent nowadays, and I don't see any fix anytime in the near term.”
