After five decades
working as a teacher and school administrator, Janet Stone
envisioned a relaxing retirement in her condo overlooking
Florida’s Atlantic coast.
Instead, she’s gone back to work teaching preschoolers with
disabilities and living with her son in Las Vegas to pay off
a $100,000 bill from her condo association — her portion of
a multimillion-dollar project to replace the 53-year-old
building’s deteriorating concrete.
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Rubble at the Champlain Towers South Condo in Surfside on June 25, 2021. |
In Florida, like across the country, the soaring cost of housing has become a major pressure point on household finances. Home prices in Florida have increased 67% since 2020 and homeowners insurance was up 42% last year. In the vast majority of Florida counties, the median-income household can’t afford the median-priced home, according to NBC News’ Homebuyers Index.
Older condominium buildings have provided
an alternative for those who have been unable to afford a
single-family home or are looking for a lower-maintenance
alternative. The buildings are often home to retirees — some
of whom have lived there for decades — along with
single-income households and renters.
But now, affording to live in even those buildings is
becoming out of reach for some. Under legislation passed by
the Florida state Legislature following the Champlain Towers
collapse, condo buildings over three stories and older than
30 years must pass a structural inspection by the end of the
year. That requirement applies to roughly 900,000 condo
units across the state. It also requires condo associations
to keep a minimum amount in their reserves to fund future
repairs, requiring many buildings to increase their monthly
association dues.
In Miami, residents at the Palm Bay Yacht Club, where
two-bedroom units have sold this year for between $400,000
and $500,000, are having to pay $140,000 each toward a
special assessment for a range of building improvements.
Owners at the Surfside condos in Daytona Beach, where a
two-bedroom unit is currently listed for $415,000, have paid
between $50,000 and $60,000 in assessments to have their
building’s concrete repaired and windows replaced. In
Orlando, owners at the Regency Gardens, where two-bedroom
units are listed for around $160,000, were told they would
have to pay $22,000 each for building upgrades, but
residents have recently removed the board and are working to
lower the price tag.
In the worst cases, residents are being told they have to
evacuate their buildings because of structural deficiencies
found during inspections, said Greg Batista, a professional
engineer who has worked in Florida for more than 20 years.
He said he’s currently working on a building in Miami Beach
that residents may have to vacate because of safety
concerns, and he recently worked on a 20-story condo
building in Hollywood, Florida, where the three-story
parking garage had to be vacated until the structure can be
repaired.
Stone purchased her condo at the Surfside Club in Ormond
Beach to be closer to her daughter and grandchild. As a
widow, she hoped living in a condo would provide a greater
sense of community, less maintenance, and an added layer of
security compared to a single-family home.
Within a year, she was notified that she owed a $100,000
special assessment to the condo association for concrete
restoration, new windows and an increase in the
association’s reserves. Stone said she had used most of her
retirement savings for the down payment on the condo and
didn’t have the money for the assessment. Condo owners
unable to pay an assessment can be foreclosed on by their
condo association.
She considered selling, but the assessment was driving down
property values in the building. A unit similar to the one
Stone paid $400,000 for in 2021 is currently listed for
$335,000 after multiple price reductions.
Her only option, she said, was to go back to work. She
reapplied to the school in Las Vegas where she had been
working before she retired and is now teaching 3- to
5-year-olds with autism, she said.
“I am exhausted every single day,” Stone said. “I come home
and promptly fall asleep and get up and do it the next day.”
She said her entire paycheck is going toward the condo
assessment, which she estimates will be paid off after two
years of working full time. After that, she plans to move
back into her Florida condo, but in the meantime, she’s been
living with her adult son.
“This was supposed to be the time when I was really going to
retire and be close to my daughter and my granddaughter and
enjoy life,” said Stone. “That didn’t happen.”
The rising costs of owning a condo have been driving up the
number of units on the market and pushing down prices, said
realtors. Statewide, the number of condos on the market has
increased 23% over the past six months while prices are down
4.5%, according to an NBC News analysis of data from Redfin.
In Volusia County, where Stone’s building is located, condo
inventory is up 28% over the past six months and sale prices
are down 9%.
“All the realtors are talking about how long their listings
have been sitting, how things aren’t moving, and that
there’s not enough buyers,” said Krista Goodrich, a realtor
in the Daytona Beach area who also manages vacation rentals.
“Condos are being hit the worst because the people that are
buying, they’ve seen what happens when the hurricanes come,
they’ve seen what happens when the condos aren’t built
properly, and so they’re hesitant to buy a condo on the
beach.”
While some buildings will need little or no work, Florida
building engineers, real estate lawyers and realtors say
many are now having to pay the price for years of lax
maintenance, subpar building standards before the 1990s, and
the effects of Florida’s saltwater on the concrete and rebar
that holds the structures together.
“When you put the maintenance on a second tier and you don’t
do simple but very important things, such as painting the
building, that has a very bad effect on the long-term
longevity of a building,” said Batista. “But a lot of
people, they’d rather put nice carpet in the lobby as
opposed to taking care of real issues.”
For developers, the cost pressure on condo owners is
providing an opportunity because many older properties
dominate prime oceanfront real estate. In some cases, the
value of the land may exceed the value of the building once
the cost of bringing it up to code is factored in. If enough
owners are unable or unwilling to pay for the necessary
repairs, developers can attempt to buy up the building and
redevelop the property.
“These properties are in very desirable locations. If you
build a new project on them, in many cases luxury condos, it
could fetch $3,000 to $5,000 a square foot,” said Joseph
Hernandez. “That is a tremendous development opportunity.”
Developer Edgardo Defortuna, whose firm Fortune
International Group has developed some of South Florida’s
most high-profile luxury buildings, said his firm is eyeing
several older condo buildings in prime waterfront locations
in Miami Beach and downtown Miami that could be torn down
and replaced with luxury high-rises. But he said it can be
difficult to convince enough owners to sell even at
above-market prices.
“I think that many people have yet to really face the music
or understand that it is better to sell than to stay around
and fund those really large improvements and reserves that
you need to in order to comply with the law,” Defortuna
said.
Jeremy Maurice, who was the condo board president at Stone’s
building when the repairs were approved, said he felt the
board had little choice but to fund the repairs and blamed
the cost on a lack of proper maintenance to the building’s
concrete over the decades.
“If you don’t do anything, this building will become
worthless and you’re going to have to sell to a developer
and it’ll be knocked down,” said Maurice, who said he had to
use some of his retirement savings to pay for the work. “So
there’s no choice, really. You have to do the work. And
that’s a hard pill to swallow. I don’t think anyone is
jumping for joy. But that’s what happens when prior boards
don’t do their job.”
But the decision ended up pitting the building’s owners
against each other, with some owners saying the work was
unnecessary.
“It was extremely toxic. That is an understatement,” Maurice
said. “I don’t talk to some people there today. I’ll be
polite, but I won’t talk with them anymore because they
treated me so badly. They cussed at me at meetings, sent
anonymous emails, just nasty, nasty stuff.”
At the Palm Bay Yacht Club, condo owners were told they
would need to pay for a $33 million construction project,
prompting a group of residents to sue the condo board, the
building management company and the firms hired to complete
the work. The lawsuit alleges the owners are being
overcharged for the project, citing exaggerated measurements
and items outside the scope of structural repairs such as
cosmetic and amenity improvements. It also claims the condo
association has previously mishandled funds.
Steve Davis, a lawyer representing the defendants, denied
the allegations and said the work was legally required under
the 40-year recertification needed for buildings in
Miami-Dade County and that owners were charged for only the
necessary work that was done. He said the Palm Bay board did
everything possible to help the unit owners.
Among those suing is Cristian Murray, who bought his condo
in 2016 and had recently retired after working as a health
care administrator at the University of Miami for 20 years.
Now, he’s planning to go back to work to pay off the
$140,000 special assessment.
To make the payment, he took out a 20-year loan on which
he’s paying $1,000 a month on top of the $3,000 a month he
owes toward his mortgage and other condo association fees.
“Pardon my language, but we’re screwed,” Murray said. “These
guys ruined my early retirement plan.”
Lopez, who helped craft the legislation, said she is looking
for ways to provide relief to condo owners once Florida’s
Legislature reconvenes next year. She said she’s collecting
data to understand the full impact of the legislation to
determine what adjustments may be needed.
Stone would like to see the state Legislature give buildings
and condo owners more time to comply with the regulations so
they would be able to spread out the costs. While she thinks
the requirements will be a good thing in the long run, she
doesn’t foresee being able to recover the money she’s had to
spend on her condo.
“I’m going to be there until I die because I’m not going to
recoup that money before I die,” she said. “If I could ever
recoup my money, I would probably look at selling and
getting a single-family home again. But I don’t see that
happening, not in my lifetime.”