Miami Condo Prices Could Collapse From HOA Fee Increases

The Miami condo building collapse on June 28 that claimed 12 lives and left 149 still unaccounted for has caused a flurry of building inspections nationwide.

The result could be an increase in homeowner’s association (HOA) repair fees in older buildings, and a possible change in Miami condo prices for newer buildings with no known defects.

The collapsed Champlain Towers South Condominiums needed millions of dollars in repairs. Damage to the structure was reported in a 2018 building inspection. A letter dated April 9, 2021, to residents of the building in Surfside, north of Miami, warned of worsening structural damage.

The letter was sent by the president of the Champlain Towers South Condominium Association and said that “observable damage” had gotten “significantly worse.” It warned that “concrete deterioration is accelerating.” The letter also discussed roof damage, and estimated that fixing the 40-year-old building’s problems would cost about $15 million, BBC reported. 

With all of this coming to light, Miami may be forced to crack down on building inspections and repairs. And who will pay for the repairs? Condo owners. HOA fee increases from expensive repairs will likely cause an uproar among condo owners.

Increased repair cycles, code oversight and enforcement will surely change in the near future to mitigate future disasters, said Greg Mangram, a South Florida real estate finance professional, in an email to The Moguldom Nation.

“It absolutely could and likely will put pressure on the condo market,” Mangram said, “surely for those buildings that were developed more than couple of decades ago, or those that already have structural deficiencies.”

Miami-Dade and Palm Beach counties in Florida have some of the highest HOA fees in the U.S., according to the real estate website Trulia. Residents in Miami-Dade pay an average of $415 a month in HOA fees, ranking fifth among the 50 largest U.S. metropolitan areas, the South Florida Sun-Sentinel reported. 

But HOA fees in Miami can be much higher — more than $1,000 a month, Condo Blackbook reported. And this is in addition to the monthly mortgage payment. 

Over the last 10 years, the average HOA fee increased 53 percent in Miami-Dade. Nationwide, by comparison, the average HOA fee rose 32 percent to $331, while U.S. median home prices increased 15.1 percent over the same period, the Sun-Sentinel reported.

It is possible that Miami condo prices in newer buildings could actually see a bump, Mangram told The Moguldom Nation.

“I’d assume newer buildings without any known defects may actually see price increases as condo buyers avoid older builders and those in need of structural remediation,” he said.

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Condo HOA fees cover several things, from basic utilities and amenities such as the pool, gym and landscaping to building maintenance and other repairs.

“One of the joys of living in a condo is that you are not responsible for the maintenance or repair of anything beyond your condo walls and balcony. This maintenance, however, needs to be done on a regular basis and must be paid for,” the Condo Blackbook reported.

Photo by Leif Christoph Gottwald on Unsplash

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