Florida Condo Crisis: What Buyers and Sellers Must Know

Florida’s once-flourishing condominium market is now grappling with a major crisis. In recent years, a combination of new, stringent safety regulations and skyrocketing insurance costs has triggered a wave of selling among owners of older condos. Over just two years, property values in some areas have plunged by as much as 22%, dramatically altering the real estate landscape. Additionally, more than 1,400 buildings have been placed on Fannie Mae’s “blacklist,” making it exceedingly difficult for potential buyers to secure traditional mortgage financing. In this evolving environment, buyers and sellers alike must be more informed and strategic than ever before.

The collapse of the Champlain Towers South in Surfside, Florida, in 2021 was a pivotal moment that exposed serious flaws in building safety oversight. In response, Florida legislators enacted tough new laws mandating frequent inspections and mandatory repairs for aging condominium buildings, especially those located within three miles of the coastline. Buildings older than 30 years must now undergo expensive structural evaluations and, if necessary, undergo costly renovations to remain habitable. For many condo associations, these upgrades represent millions of dollars in unforeseen expenses, forcing special assessments on owners. Monthly dues in some communities have doubled or even tripled, pushing many residents — particularly retirees and middle-income families — to list their properties for sale at reduced prices.

On top of new safety requirements, condo owners and associations are being squeezed by soaring insurance costs. Many insurance companies, wary of potential disaster-related claims, have either sharply increased premiums or left the Florida market altogether. As a result, some associations have reported premium hikes of 200% to 300% within a single year. In extreme cases, buildings have been unable to secure full coverage, leaving unit owners exposed to significant risks. Without adequate insurance, mortgage lenders typically refuse to underwrite loans for those properties, limiting the pool of potential buyers to cash investors or those willing to pay inflated financing rates. This insurance crisis has further destabilized the market, deepening the cycle of falling property values and sluggish sales.

Perhaps the most formidable challenge for today’s condo buyers in Florida is navigating the growing list of blacklisted properties. Fannie Mae and Freddie Mac have flagged over 1,400 condominium developments as structurally unsound or financially risky, effectively cutting them off from the conventional mortgage market. Without access to traditional loans, buyers are often forced to seek high-interest, private financing options or make all-cash offers — both of which significantly reduce the pool of qualified buyers. This financing bottleneck is causing an even sharper decline in property prices for affected buildings. Sellers whose condos are in blacklisted developments must either accept deeply discounted offers or invest heavily in repairs to bring their properties back into compliance — both challenging prospects in today’s economy.

While the situation poses serious risks, there are also opportunities for savvy buyers and sellers. Buyers who have the ability to purchase in cash may find unprecedented bargains on the market, particularly in older coastal communities. However, caution is essential: before committing, buyers must thoroughly review a building’s inspection reports, reserve funding status, insurance policies, and any scheduled assessments. Hidden repair obligations can quickly turn a “good deal” into a financial burden. For sellers, the road ahead is no less complex. To attract buyers, many will need to price units competitively, offer concessions such as covering part of closing costs, or even provide private financing options. In some cases, investing in necessary repairs to improve a building’s financial health and remove it from the blacklist may be the only viable path to a successful sale.

Florida’s condominium market is undergoing a painful but necessary transformation. The new regulations and rising insurance costs are intended to protect residents and prevent future tragedies, but they have also triggered a financial squeeze that few owners or buyers anticipated. Moving forward, anyone involved in buying or selling a condo in Florida must approach the market with caution, armed with detailed knowledge and professional guidance. Those who adapt to the new reality — prioritizing safety, transparency, and financial stability — will be best positioned to succeed in a landscape that is still evolving and will likely remain volatile for years to come.