Florida condo prices are dropping thanks to high insurance and HOA fees

Condo prices in Jacksonville dropped nearly 7% year-over-year, while Miami’s decreased almost 3%. Meanwhile, average U.S. condo list prices are up over 8%, according to Redfin. The major culprit? Climbing costs associated with owning a condo in Florida, namely surging insurance and HOA costs in the aftermath of the collapse of the Champlain Towers South condominium in Surfside, Fla., experts say. In 2021, the beachfront condo building collapsed and killed 98 people.

“Two events happened recently that affected the Florida housing market: Hurricane Ian in 2022 and the Champlain Towers collapse in 2021,” Craig Stunicky, founder and CEO of South Florida luxury real estate firm ISG World, tells Fortune. “In reaction to the hurricane, flood insurance rates went up.”

Now, the state of Florida requires that all condos have “adequate reserve for replacements,” Stunicky says, meaning that condo associations must have enough money on reserve to replace structures. Take a roof’s lifespan, for example, which is about 25 years. “If the estimated replacement cost for a roof is $2 million, the association must collect $80,000 annually to accumulate the replacement cost by the end of the 25-year period,” according to insurance firm CRC Group. 

Needing that cash on hand makes HOA fees higher—and more condo properties out of reach for homebuyers.

“Realtors are not selling the properties well,” Stunicky says. “The single-family home market sales are not affected as much, although flood insurance has doubled or even tripled. South Florida is unique because there is very little inventory and huge demand, so condos are really being affected.”

Where and why condo…