For condominium owners or buyers in Florida, it was a one-two punch, a vicious combination that nevertheless failed to put the market down and out, despite gloomy recent news reports describing a slumping condo market, Realtors and analysts say.

Although sales were reported down earlier this year by 6.8% from the same time last year, “the entire housing market has softened, not just condominiums,” says Pam Lemmerman, a Fort Myers-based Realtor for Barclay’s Real Estate Group. “They’re saying everyone is trying to do this exodus (from condos) because the HOA fees went up so much, but we’re not seeing it. Some people want to move to North Carolina to be with their grandkids, and that’s why they move. We still have cash buyers.” And sellers are willing, these days.   The HOA fees have gone up so much — those monthly or quarterly fees all owners pay to ensure buildings are structurally sound and amenities maintained as promised — because new Florida laws require associations to have deep pockets and to hire engineers or architects who can make in-depth or “Milestone” structural inspections.

That’s particularly true of buildings three stories or higher, 25 years of age or older and near the coastlines.

It started when the first blow fell almost three years ago.

Without warning, on the morning of June 24, 2021, the 12-story, 39-year-old Champlain Towers South building in Surfside, a northern Miami suburb, suddenly failed.

The building’s collapse is generally thought to be a consequence of badly degraded foundational materials residents and the Homeowners’ Association had put off paying to repair. It cost 98 people their lives.

It also continues to cost many condo owners in the state significantly higher monthly HOA fees and insurance premiums as new rules for HOA reserves have been legislated —but it’s not the only factor.

The second market-altering blow that affected housing in general arrived on Sept. 28, 2022, when Hurricane Ian slammed into and devastated the southwest coast. The cost in lives was horrific, again — this time 161 — and so was the dollar cost. Ian became the most expensive storm in Florida history, with $113 billion in damages.

And now new laws require HOAs not only to have condominium buildings inspected by engineers or architects but also to maintain sufficient reserves to meet the costs of future work, such as repairs to foundations, new roofs or other project necessities.

“The new legislation puts an end to this historic option to ‘pay now or pay later,’ and creates mandatory legal requirements upon projects 25 years or older to ascertain, budget for and fund these future activities,” according to lawyers specializing in real estate law at the firm Gould, Cooksey, Fennell.

“Unit owners, and the Associations that administer condominiums of heights three stories and greater, are required to ‘pay now,’ so the financial resources are available later when the corrective or remedial work must be performed.”

That’s not all, for condominium owners wresting with the new, mandated economics.

“The new statutes also require Associations to play catch up in terms of funding the reserve accounts which will be used to discharge future capital expenditures. Equalizing insufficient and inadequate reserves with future anticipated repair expenses is a duty placed directly upon unit owners in the form of increased assessments and special assessments.”

For example, residents at an older condominium community called Summerlin Trace in South Fort Myers, where several longtime residents live on fixed incomes, not only have seen their association dues climb from the low $400s to $650 per month but they were recently told to expect a special assessment per household of $4,000 for a new roof, residents there say.

In some condominium complexes, especially older highrises on the ocean or Gulf, residents conceivably could face one-time assessments of $100,000, Realtors say.

“When you have interest rates above 7% and condo association fees of $2,000 to $3,000 a quarter — that’s a high cost, and it’s not considered in the monthly mortgage payment schedule,” explains Nelson Taylor, vice president of Market Research for LSI companies, analysts and brokers operating on the southwest coast in Collier, Lee and Charlotte counties.

The so-called “Structured Reserve Integrity Study,” part of the updated condominium law, “has forced all these condominium projects to do a reserve budget,” but even in that case, unanticipated needs may arise.

“Say an elevator shaft breaks or the cost of a roof is estimated at $100,000, but now they’re being told it’s $200,000 in an inflationary market with increasingly costly construction materials — they may need to do a one-off, and that could crush some people,” Taylor explains of the more difficult market.

Especially for old condominium properties on the coastlines themselves, the economics of the new rules are literally changing the face of communities.

In effect, says Paula Wittman, a Realtor who specializes in the luxury market for William Raveis South Florida, with her partner, Michelle Noga, “It’s time to pay the piper because you tried to kick the can down the road.”

Putting off costly assessments has not been uncommon — people often said, “let’s wait until we have to do it,” added Noga, but now they’ll be required to by next year, the deadline established by the new legislation.

That’s created the “termination” effect, especially on the Atlantic coast, a word that describes a condo complex buyout by an investor or developer. If 80% or more of residents decide that paying huge extra fees for structural renovations just isn’t worth it, and they agree to sell, the investor can take the property and redevelop it.

As a result, says Noga, “developers may be gleefully eyeing some of these properties.”

Terminations will change the face of some communities, especially in Miami, where 21 have taken place in the last five years, Miami Beach (13), Bay Harbor Islands (8), and Fort Lauderdale (8), the Miami Herald reported last month.

And it isn’t just there.

“Down in Collier, a group spent $102 million to buy out a condo project — I think there were 35 units,” says Taylor. It’s an enviable location, near the beach and the vibrant downtown.

“The age of the product is no longer in the current appetite. So, you’re assigning land value, and the land might be worth more on a per-unit basis than what an existing product is worth.”

What it amounts to for owners or prospective buyers in the condo market is this, says Denny Grimes, president of Denny Grimes & Team Realtors in Naples and Fort Myers: Getting through the unknowns in the current quarter and year.

The ultimate effect on the market probably isn’t identifiable now.

“There is no doubt the condo market is softening, but so is the single-family home market,” Grimes explains.

“For a home, you have to deal with insurance, and you know it will go up.”

Insurance analysts have reported that homeowners’ insurance has jumped more than 100% since 2021, and the average cost of it in Florida is three times higher than the national average.

“For condos: because of the hurricane and what happened in Surfside, they have to send engineers to do studies, so the condo associations cannot yet finalize fees.

“It’s like walking into a restaurant where a meal is listed as ‘market price’ and you say, ‘what’s the market price?’ and they say, ‘I don’t know but go ahead and order it.’ We know there’s going to be a bump, but we don’t know what it is, yet.

“But it’s not that condos are dead in the water. It doesn’t affect every condo association, but it affects enough to open up the conversation.”

That leads to some good advice for any considering the purchase of a condominium: research its circumstances and conditions.

“I think it is important to look at the minutes, (from association meetings) and request the Milestone Inspection study to see what will be undertaken,” Noga advises.

In general, Milestone Inspections for buildings three stories or taller and 25 or 30 years of age must be complete either by Dec. 31 of this year or Dec. 31, 2025, depending on their age.

“It’s a hard thing to forecast — to create a fixed budget that anticipates future costs,” Taylor says.

“An older condo project might need near-term projects if the HOA budget hasn’t been properly maintained. So, I would want to see what repairs have been done to individual condominiums or buildings.”

But condominiums may still be the best deal, all things considered, Lemmerman concludes — in part because buying a house comes with its own rising costs, especially if it’s not brand spanking new.

“If you own a home, you’re going to have to do the landscaping, clean the pool, repair screens, do the new roof and pay for the amenities, along with the utilities — water, sewer, trash and wi-fi — and all those are included in HOA fees. If you buy a house in a community, you’ll pay monthly fees, anyway,” she points out.

“The Milestone surveys (or in-depth inspections) have to be done by next year, and if they find issues, people are going to run into extra fees.

“Some people are worried about that, but I don’t see a lot of people saying that to me.” Instead, it’s wait and see.