Florida Condo Crisis: People Are Forced Out Of Their Homes

Introduction

Inside the building, Nicolas, one of the unit owners, was waiting for us. He was packing his belongings. He has to be out of the unit he owns tomorrow.

“My property’s not for sale. I never put my property on the market. I came to this apartment in my wedding dress with my husband, got married in downtown, and made my children in this unit. I wanted to come and retire here,”. This is heart-wrenching because if they can take that, they can take anything.”

Imagine the Unthinkable

Imagine coming home one day to your condo. You own a condo in South Florida. You’ve been in this condo for 30 years. You paid $170,000 for it a long, long time ago. You’ve loved this home where you get to watch the sunrise every single day. One day, just one day, you come home and you notice that all the lights are off in the building, that the lobby itself is dark, and that the elevators don’t work. So, you’re 65 and you decide, “Hey, I’m gonna hike the stairs up 20 floors to my place.”

After you’ve arrived home, after getting over the creepiness of walking down a long hallway to your property completely dark, it sets into you that you may actually be forced out of your home. My friends, there’s a saga unfolding in the condo market in Florida. Honestly, I’m not an attorney, but looking at it, this looks perfectly legal. My friends, this phenomenon is gonna start unfolding all across the state as many homeowners come to reckon with a massively shifting condo market that stems from outlandish hidden costs which people across the state can no longer afford.

The Cost of Ownership

Mixed with surprise assessments that are landing on owners out of nowhere, some of which you’ll see are hundreds of thousands of dollars per unit. People that in years past bought these properties for much less than they’re selling for today get pushed into a situation where they can no longer afford it. Now, you’re seeing an opportunistic investor coming in and doing the unthinkable—buying off enough owners where they can control the association and then, in turn, dissolve it and shut the building down on top of those holdouts that resist selling to the investor in the first place.

My friends, sometimes I have to tell stories just to be sensational, but this particular story absolutely terrifies me. If you own an older condo in Florida now, or you’re thinking about buying one, or you’re just interested in knowing what’s going on in this particular crisis segment, I’m gonna walk you through how we got here and a massive new segment of victims that need to watch out for what is happening in this particular marketplace. And my friends, if you appreciate the research, jump down, smash the like button, and help the video. It means a lot to me for you doing it. If you like all things real estate, consider subscribing to the channel so you don’t miss out on my next video.

The Opportunists

So, how did we get here? Number one, we have a crisis unfolding. And number two, like any crisis, there become opportunistic people who want to take advantage of a crisis situation and owners who are struggling within it. In Florida, you have 100% more condos on the market than a year ago. To give you context, we have so much supply on the market in the condominium market. It’s a number that we haven’t seen in 13 years. We’re talking numbers at the tail end of the GFC when there was an enormous amount of inventory. Yes, it’s piling up again.

Now, it’s not a head-scratcher as to why. Number one, there are massive high hidden costs of ownership. A lot of condos are built on beautiful land running water, and those are obviously at high risk of storms. They tend to have high costs to insure. Now, insurance on its own is very costly all around Florida, no matter where you are. It’s even higher when a building or a home you live in is trying to insure is at higher risk of wind or flood damage, which a lot of condos are.

The Additional Burdens

Couple that with the fact that Florida has one of the highest shadow inventory numbers, meaning we have a very high number of discretionary-owned condos. This means this isn’t people’s primary home; this is a second home. This is high mounting cost on top of a place that they own somewhere in Connecticut, Washington, Michigan, Ohio, wherever. This is not their main spot. Additionally, when you have a second home and prices make a massive run-up like they have in the past few years, particularly in the southeast, your property taxes shot through the roof. There are stories all over of people’s property taxes doubling and tripling. As an example, a condo owner from five years ago might have only had to pay $2,000–$3,000 a year in taxes. Those taxes now are probably $7,000–$12,000 per year.

The cherry on top of all of this and what’s really precipitating one of the biggest crises in Florida real estate is the high cost that older condo owners face in the face of new laws that were recently passed to prevent another condo tower from falling and killing people like what recently happened a few years back in Miami.

The Hidden Costs

This article goes on to talk about the increased insurance premiums. Even before these buildings had to cover the high cost of new maintenance related to new bills to make sure their condos don’t collapse, they already had massive sweeping insurance premiums that jacked up the HOA fees, cost of maintenance, and inflation of all kinds. This man, Howard, has mentioned he’s a condo owner in Aventura, Florida, living out this nightmare. He was interviewed by Local 10 News and said that his condo fees have jumped from $1,500 to $3,000 a month. Then he was hit with an assessment of $224,000, meaning that the $3,000 a month he’s already paying will be divided up over a series of months in order to be paid on top of it. And a reminder, it’s an HOA—it’s tied to your deed, the collection of which results in foreclosure if you do not pay or cannot pay.

The Outrageous Assessments

This is just outrageous. South Florida condo owners are dumping their homes after getting slapped with six-figure assessments. And again, an assessment is a collective bill. The HOA then says, “Hey, you’ve gotta pay this lump sum. You’ve gotta catch it up on top of your existing maintenance fees that you’ve already been paying.” The story continues. Maria and her husband shelled out $490,000 for a seventh-floor apartment with a terrace and a balcony boasting incredible views of South Florida’s Biscayne Bay. In 2022, the couple coughed up an additional $100,000 to renovate their unit in the Cricket Club condominium tower, installing beautiful Italian porcelain tile and marble, and so on. Two years later, the couple got hit with a special assessment of over $600,000.

The Surfside Tragedy

The article goes on to talk about the Surfside condo tragedy that killed 98 people, which created new bills, which forced the Cricket Club to recently propose a $30 million special assessment. The Cricket Club has to cover all the costs of roofing, waterproofing, wind preparation, and all the things this building needs. Maybe some architectural work, like the architect comes in and says, “Hey, this building will collapse like Surfside did if you do not put in new whatever—steel beams, whatever the securing items are.” But that is a $30 million bill for the old Cricket Club, which then comes out to $134,000 on top of what these folks just paid when they bought in in 2021.

This story is phenomenal on its own. No matter if you’re talking about a person who bought their place 30 years ago for next to nothing or they bought it in 2021 like these people that paid almost $500,000, put another $100,000 in, then surprise! Their HOA bill probably went up before the $130,000 assessment. It’s just insanity that is crushing these people to the degree they’re having to put these into the market and makes them highly motivated to sell it.

The Crushing Expenses

So, long story short, even people with paid-off condos are having a cascade of expenses that are crushing them and in turn, they are putting these properties on the market. Now, being specific, this is radically hitting buildings that are higher than three stories and older than 30 years old or approaching that age. You may be surprised to know that’s a lot of buildings. Miami, for instance, has nearly 70% of all of its sales coming from a condominium or a townhome development. It is a huge factor for their marketplace.

The Financial Pressure

Now, stepping back, you see the dynamic. You have a percentage of these condo owners that are desperate to sell. Tons of them are hitting the market, inventory is stacking up, it’s taking them longer and longer to sell while expenses are crushing them.

You also have to understand that in reality, if a homeowner cannot pay their HOA bill, this new assessment that could be $100,000, the HOA may then require them to pay that $100,000 at $1,000 per month or $2,000 per month, which might be a doubling or tripling of what they were paying before.

The Foreclosure Threat

You have to understand that the HOA can then foreclose on that person for not paying their HOA bills. We already know the state’s not gonna wait for you to pay their bill for property tax, but it needs to be understood that if people go behind on all these high costs for these buildings, they become extremely motivated to sell.

Simply put, what these investors are doing is swooping in, hoping to buy enough properties in a building in order to dissolve it and demolish the building. Sounds crazy, but it’s happening. I’m gonna show you case evidence right now.

The Case of Angelica Avila

Take a look at a specific case covered by the Wall Street Journal. A lady named Angelica Avila never wanted to sell her condo overlooking Biscayne Bay. This is in the Miami area. She liked to watch the sunrise each morning from her balcony. An investor comes in and offers her nearly $700,000, which is more than triple what she paid when she bought the place 30 years prior. But she rejected the offer. As I told you in the opener, the developer then acquired enough units to take control of the building and then terminate the condo association, paving the way for its demolition.

The Forced Move

The next steps? The investor then forces her out by a threat of turning off all services of the building, including air conditioners, elevators, security, and obviously maintenance and all kinds of other things, forcing Avila to basically move out and rent a room in a house further inland. On top of that, the story goes that she herself had to get a storage locker to hold her clothes and her personal belongings because the room that she leased out nearby was too small to contain her personal items. Think this through: she doesn’t sell her place, she gets kicked out, she starts renting a room, and she then has to hire an attorney.

The Legal Battle

What’s happened recently? Here’s my understanding of this process: all of these buildings are governed by documentation. All of the buildings have clear written rules about what can be done and can’t be done with their association. In all likelihood, an investor walks up, lawyered to the gills, reviews all of this, knows full well they can take in overriding authority to then crush the association and run out the holdouts. Eventually, they know that this is a legal process that they can do upfront. They’re not going in with some preconceived notion that, “Hey, we might need a plan B in case there are five people we can’t get rid of.” They know how this game will unfold.

The Court Ruling

It just so happens that a court so far has upheld the right of the remaining owners to keep their place. This is prime property in South Florida. Two of the owners filed a lawsuit in mid-May in Miami-Dade Circuit Court. They are suing Two Roads Development, the real estate firm that now owns the building. Unit owners allege they were manipulated, deceived, bullied, and pressured to sell their units to the developer.

The Emotional Toll

There is so much pain, anguish, and attachment. This is the letter they received informing them that the building services would be discontinued on Friday. But this wasn’t the first they had heard they needed to leave. Residents first heard about it as early as March of this year. The building is in need of significant deferred maintenance, which precedes TRD Biscayne LLC’s completed acquisition of the property in December 2022. About 184 units at the property have been successfully vacated, with the exception of six remaining units.

The Emotional Testimony

“My property is not for sale. I never put my property on the market. I came to this apartment in my wedding dress with my husband, got married in downtown, made my children in this unit, and wanted to come and retire here,” said one of the remaining residents. “The building owner told me, ‘The last remaining residents of Biscayne 21 rejected above-market proposals for their units, refused our offer to cover hotel stays as they transitioned from their former homes.’ It’s just heart-wrenching because if they can take that, they can take anything.”

The Uncertain Future

So far, Angelica and her friends, the holdouts, have actually won a court case to stall the demolition of this building. But the question becomes, will the court precedent hold? Will it be very hard in the future for investors who welcome the notion of taking some dilapidated building on some premier spot of land that overlooks an amazing water view with a goal of getting everybody out, destroying it, and starting over? This particular story is at a pivotal moment, and we’ll just have to see how it shakes out.

What Should You Do?

Let’s say this is your situation. You live in one of these buildings that’s super prone to a buyout where a lot of the owners are getting restless and you yourself have no goal or intention of moving. What should you do next?

Know the Law: Familiarize yourself with your own condo association’s laws and also seek legal counsel on this particular situation as it relates to your building.

Stay Informed: Join a coalition of other people in your building that might face the same fate and have no intentions of moving regardless of those higher assessments, higher taxes, and higher insurance. Yes, this includes attending your condo association meetings. If you’re not already, make sure you’re there and available to help craft possibly some preventive measures to keep this from happening to the building you live in.

Assess Your Finances: If you’re one of the first owners that gets one of these offers, see if you might be better off taking an offer and moving right away. We’ve seen from recent cases that they definitely pay more to the earlier units than they do to the later ones.

This, my friends, is a crazy twist in an already insane saga that I honestly did not expect to read. But what do you think about it? Let’s continue the conversation in the comments and we’ll see you in the next one.

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As a top real estate agent with nearly 4,000 homes sold and over 20 years of experience in the Florida real estate market, I have the expertise needed to help you navigate today’s evolving landscape. Whether you’re looking to buy or sell, my deep understanding of market trends and personalized approach will provide you with the insights and strategies required for success.

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