An oversupply of condos within the boomtowns of Florida and Texas

In TampaThe variety of condominiums on the market rose by around 57% in July in comparison with the previous 12 months. HoustonThe variety of condos on the market increased by nearly 36% throughout the same period. Prices in each metropolitan areas fell in response. The median sales price for condos in Tampa fell by nearly 5% in a 12 months to $237,750; in Houston, the typical price fell by 6.5% to $159,000.

This is the case in Austin, Dallas, Fort Worth, San Antonio, Fort Lauderdale, Jacksonville, Miami and Orlando, to various degrees. But it doesn’t exactly reflect what’s happening nationally. “Nationally, condo inventory is increasing and the number of pending sales is declining — although not as much as in Florida and Texas — and prices continue to rise,” the evaluation says.

So why is that this happening in these cities that were once considered pandemic darlings? Ever-increasing homeowners association fees and rising insurance costs mean that nobody desires to take care of a condo anymore.

In Florida, HOA fees are a selected problem. Currently, they’re greater than 15% costlier in Tampa, Orlando and Fort Lauderdale in comparison with last summer. “HOA fees are rising because the Surfside condo collapse created additional condo maintenance costs and because insurance costs increased,” Redfin said. (In the summer of 2021, a 12-story beach house was in-built a Miami suburb. Residential tower collapsed; 98 people died. Investigators found that the constructing’s construction had several defects, which led to recent requirements.)

Then there are the prices of insurance, alluded to above, because the two are closely linked. The frequency and severity of maximum weather events is increasing. Florida, for instance, has lost several insurers who’ve left the state, which only exacerbates the issue for homeowners as they’re either faced with extremely high costs or struggle to search out insurance in any respect. “These rising costs, along with the natural disasters themselves, are deterring homebuyers and motivating homeowners to sell,” Redfin said.

Two other, smaller reasons for the oversupply of condos within the boomtowns of Texas and Florida are: fewer investors and a construction boom. Investors in all places are buying fewer condos, and a surge in condo construction throughout the Sunbelt is barely adding to the already stacked supply of those units.

“The condo market isn’t moving,” a Tampa-based Redfin agent said within the evaluation. “Most of today’s buyers want move-in-ready single-family homes. It’s much harder to sell a condo. Buyers are aware that we’re at an inflection point for condos and that their value could continue to decline as HOA fees rise and people become more cautious about buying in a waterfront building.”

The president of CoreLogic’s global insurance solutions business once told me that constructing code updates would not have a direct impact, but they might matter in the long term. Buildings can be more resilient and insurance costs would go down. But we’re not there yet – and natural disasters aren’t going away. Landlords are nervous, builders are nervous about nervous buyers, and each 12 months it is a billion-dollar problem.