FirstService Financial Vice President John Lee offers insights on Florida's condo market challenges
Dania Beach, Fla. (July 31, 2024)
Florida's condominium market is facing significant challenges due to a combination of rising insurance costs and new safety regulations. The Condo Safety Act,(remove) passed in response to the 2021 Surfside collapse, requires milestone inspections for older buildings and mandates fully funded reserves for critical structural components. This has led to increased maintenance fees and special assessments for many condo owners.
Insurance costs have also skyrocketed, particularly for master insurance plans. John Lee, vice president of FirstService Financial, provides insight on the insurance situation:
"Things have gotten a little bit better this year, but it is a very low bar because the pricing increases over the past several years were so drastic," Lee said.
He notes that milestone inspections are prompting associations to make repairs that can improve their insurance risk profile. However, Lee cautions against simply raising deductibles to lower premiums:
"Raising the deductible is an option, and yes, it may save you on your insurance premium, but there is an element of self-insurance there too," Lee explained. "If you are raising the deductible, you are raising your out-of-pocket exposure. Even if you move from a 3% to a 5% deductible, on a property that is worth millions of dollars, that is millions of dollars in additional exposure for you."
The article also discusses how these changes are affecting the condo market, with increased inventory and longer selling times. Some complexes are seeing drops in property values as owners struggle with affordability. Real estate agents advise potential buyers to thoroughly research condo associations' financial health and inspection reports before purchasing.
Overall, the Florida condo market is navigating a complex landscape of regulatory changes and insurance challenges, with both buyers and current owners needing to carefully consider the financial implications of condo ownership in the state.
To read the full article from HousingWire, click here.
Florida's condominium market is facing significant challenges due to a combination of rising insurance costs and new safety regulations. The Condo Safety Act,(remove) passed in response to the 2021 Surfside collapse, requires milestone inspections for older buildings and mandates fully funded reserves for critical structural components. This has led to increased maintenance fees and special assessments for many condo owners.
Insurance costs have also skyrocketed, particularly for master insurance plans. John Lee, vice president of FirstService Financial, provides insight on the insurance situation:
"Things have gotten a little bit better this year, but it is a very low bar because the pricing increases over the past several years were so drastic," Lee said.
He notes that milestone inspections are prompting associations to make repairs that can improve their insurance risk profile. However, Lee cautions against simply raising deductibles to lower premiums:
"Raising the deductible is an option, and yes, it may save you on your insurance premium, but there is an element of self-insurance there too," Lee explained. "If you are raising the deductible, you are raising your out-of-pocket exposure. Even if you move from a 3% to a 5% deductible, on a property that is worth millions of dollars, that is millions of dollars in additional exposure for you."
The article also discusses how these changes are affecting the condo market, with increased inventory and longer selling times. Some complexes are seeing drops in property values as owners struggle with affordability. Real estate agents advise potential buyers to thoroughly research condo associations' financial health and inspection reports before purchasing.
Overall, the Florida condo market is navigating a complex landscape of regulatory changes and insurance challenges, with both buyers and current owners needing to carefully consider the financial implications of condo ownership in the state.
To read the full article from HousingWire, click here.