A financial cliff may await Florida condo owners at the end of the year, as new regulations may cause association maintenance fees to skyrocket. Condo owners can take matters into their own hands to avert being shoved off the edge — but the window of opportunity is rapidly closing.
Florida has been in a state of reckoning over the last two years, after the collapse of Surfside’s Champlain Towers in 2021 set off a slew of new regulations. In the aftermath, lawmakers realized that the condominium law that allows associations to defer critical maintenance and not hold reserves for future repairs and maintenance may lead to more tragedy.
A lesson from Surfside?Underground assault from sea-level rise puts coastal structures at risk
Structures built in the 50s, 60s, and 70s have been slowly deteriorating and have become more difficult and expensive to maintain. Roofs and other components of these older buildings, meant to last 20-30 years, have been pushed beyond their lifespan. Senate Bill 4D, enacted during the 2022 session, created new standards for condo buildings over three stories tall.
Under SB4D, condo developments over 30 years old — two-thirds of all condos in Florida — must undergo inspections and immediately address critical defects. SB4D also eliminates the ability of COAs to waive reserve contributions, instead requiring that they collect the annual cost needed to repair and replace certain elements by the end of their life span, as determined by a 10-year Structural Integrity Reserve Study (SIRS).
The deadline to complete these inspections is Dec. 31, 2024. As inspection results come in, many condo associations and owners will realize the scale of the problem. Many associations may face repair costs in the millions. Even after allocating those costs among all unit owners, many owners in older buildings may not be able to afford the increased maintenance fees and special assessments to make immediate repairs.
Condo owners need to understand: they’re going to be on the hook. The state legislature is committing budget and resources to ensuring enforcement; avoidance will not be possible.
What happened in Surfside?Miami condo collapse: Damage photos, wreckage, search and rescue from Surfside devastation
Their monthly association fees will increase as the building works to replenish deficient reserves.
For millions of condo owners in Florida, the next year is going to be filled with painful choices. For many buildings, there is a silver lining – the land under their building is usually very valuable, so for most, the best chance of escaping the economic fallout will be to unite and sell the condo property to a bulk buyer rather than suffer under liens, credit hits and foreclosure.
Selling the units individually may not be an option for the majority of owners if their condos become distressed due to many owners being unable to pay their fees, as mortgage lenders are no longer willing to lend on condos in distressed buildings. The same factors that are pushing unit owners to sell will keep away buyers who can likely get property in a newer build for the same cost.
Developers, on the other hand, are likely willing to pay more for the valuable site. Of course, selling to a developer does require a fair amount of coordination. In order to get the best market value for owners, either an association needs to be united or owners need to organize to bring their property to market.
Association board members have the fiduciary duty to be proactive in bringing a proposal forward to owners, and raising the alarm about what’s to come if they believe that their condo building will not be financially viable in the future. If the value of the land that the condo complex sits on is greater than the value of the complex itself, associations need to alert owners: It is likely they’re past the point of no return.
Owners have options. They have the ability to shop for the best deal, and work out details that can be the difference between having a place to live next year and not.
But this window of opportunity won’t last forever. Once the structural studies are factored in, associations are looking at what’s likely to be a domino effect, as things like liens and foreclosures make it significantly more difficult to find a willing buyer.
Come Jan. 1, associations need to have a solution — which means that these boards need to start engaging legal counsel immediately to help understand the scope of their options, and what needs to be done in order to get owners the best deal.
SB4D is a vital update to Florida’s condominium regulations, and will undoubtedly help prevent tragedy. But the short-term impacts are going to be severe for owners.
Ignoring the problem or pushing this decision off will only worsen the outcome. Condo owners still have control over their fate but only if they act quickly.
Joseph Hernandez is a partner at the Miami law firm Bilzin Sumberg.
Good news for Southwest Florida home owners.
New research has revealed which states properties are most likely to be sold and rented this year. Florida is No. 2 on the list.
The research, pulled together by online self-storage finder Storage.com analyzed nationwide and regional Google searches for keywords related to real-estate sites such as Zillow and Trulia, to identify which states have the biggest interest in moving.
More:Top 10: February’s most expensive house sold for whopping $26M in Collier County
More:Top 10: February’s most expensive house sold for whopping $7.25M in Lee County
These searches were then compared against local populations to identify where reported the highest desire.
According to the research, “a huge 476,050,700 Google searches were made for property and rental sites last year across the US.”
Florida came in with 13,985 searches per 100,000 people – 18% above the national average.
Colorado topped the list as the state where properties and rentals are most in demand. The state averaged 14,414 searches per 100,000 residents, which is a fifth (21%) higher than the national average of 11,869 searches per 100,000 residents.
What state is at the bottom of the most searches list, or homes least likely to be sold or rented? Alaska sellers and landlords are least likely to receive interest, with only 6,025 searches per 100,000 people, which is 49% lower than the national average.
What is the best time of year to sell or rent a home?
As well as naming the states where properties and rentals will receive the highest and lowest levels of interest, the study also revealed the time of year that is best to list them.
Searches around real-estate websites peaked in March last year, with a total of 44,698,660 − 13% more than the monthly average of 39,670,892, so owners may have already missed the prime time to list unless they are ready to advertise their properties now.
A compound in Naples, Florida has hit the market for a whopping $295 million, reportedly the most expensive house on the market in America.
The Wall Street Journal first reported that the 9-acre gated compound in the Port Royal neighborhood with three houses and a private yacht-basin would shatter home sale records for the state if the owners get the asking price.
Though Naples Daily News, part of the USA TODAY Network, reported there are other pricy plots for sale in the area that could match it once the ink is dry.
The property known as Gordon Pointe has been growing under the ownership of the John “Jack” F. Donahue, a well-known Naples philanthropist, and his family since the 1980s. It is listed by the Coldwell Banker Realty’s Dawn McKenna Group, in partnership with The Leighton Candler Team of Corcoran and Rory McMullen of Savills.
Nick Saban:See retired Alabama football coach’s $17.5 million Florida home
Gordon Pointe: 9 acres, 3 houses, 1 yacht basin
Known as Gordon Pointe, the gated compound stretches a little over 9 acres. It includes about 708 feet of beachfront and Gulf of Mexico views, 952 feet of bay views, an “exclusive and extremely rare” yacht basin, measuring 231 feet, and a T-shaped dock for up to six boats.
There is not just one, but three houses on the property, built over time. There is also the potential to redevelop the site, with a larger family compound, or with a “subdivided community for a lucky few,” with at least six houses, according to the selling agents.
Home of Donahue’s more than 80 grandchildren
The property is owned by the Donahue family. A well-known Naples philanthropist, John “Jack” F. Donahue made his fortune running Pittsburgh-based Federated Investors, which he co-founded in 1955. He died in 2017, and his wife Rhodora died about five years later, in 2022. High school sweethearts, they started amassing the land in the 1980s, which is now in the hands of their many heirs. They had 13 children, and more than 80 grandchildren.
In 2017, the Donahue family made headlines when they began exploring the sale of 70 acres of beachfront property on Gordon Pointe and nearby Keewaydin Island, sending out a 62-page confidential offering memo to prospects worldwide. The offering was unpriced, and it included only a portion of what the family owned on Gordon Pointe, with Jack and Rhodora still alive and wanting to keep and enjoy two of their residences at the time.
Robert McEwan, one of two CBRE agents marketing that property, said parts of the listing sold for more than $45 million in 2019. Several lots that didn’t go the last time around are part of the new offering, he said.
Asked how long he thought it might take to sell the new listing, based on his own experience, McEwan said: “You never know with uber luxury things. A guy can see an article on it and come down and buy it right away.”
He commented that he wouldn’t be surprised if the eventual sale shatters records in Naples, and elsewhere in the country.
Most expensive listing in lux corner of Naples
Port Royal has long been known as a playground for the rich.
Nearly a year ago, a waterfront estate in the neighborhood came to market for more than $174 million. A price that was unheard of then. It’s still for sale.
The beachfront property, overlooking the Gulf of Mexico, is expansive, stretching more than 8.5 acres, making it a rarity, too.
More of a rarity: Neighboring property is up for sale on both sides, with the potential to carve out an even larger one-of-kind estate on Naples’ highly coveted Gordon Drive. Combined, they would cost $295 million, for more than 15 acres, with 812 linear feet of beach frontage.
Top selling homes in Florida
The most expensive home sold in the area last year fetched $46.8 million – also in Port Royal. The county record home sale price is $62 million, set in 2022.
On Florida’s other coast, a home sold for $173 million in 2022, which Palm Beach Daily News reported is a record high for the state. It was reportedly bought by software billionaire Larry Ellison of Oracle Corp.
A couple of other heavy hitter sales tailed behind it, like the $155 million sale for Rush Limbaugh’s compound, and the off-market deal for another Palm Beach County that came in at $170 million around the same time.
Contributing: Kimberly Miller and Darrell Hofheinz, USA TODAY Network
Would you rather rent than own, but hate the idea of living right next to someone else?
There’s a new trend afoot: newly built, single-family houses that are for rent only.
In the latest twist on the housing market, builders and analysts say the trend, prevalent in the western United States, is moving east, including into Florida.
More:Banyan Cay Resort restarts construction, will open in 2021 as boutique Hyatt brand
NexMetro Communities, a national home builder based in Arizona, is building a rental residential community in Tampa, and the company is eying Palm Beach County, too. NextMetro builds detached one- and two-bedroom single-family houses, and one-bedroom villas.
Meanwhile, plans are afoot to sell the closed Mizner Trail golf course in Boca Raton to an unnamed developer who plans single-family rental houses, according to housing analyst Brad Hunter. The golf course, now owned by Boca Raton-based Compson Associates, once was slated for 252 townhomes and apartments, but the project never was built.
Here’s why new, detached single-family homes for rent are in demand, said Hunter, owner of Hunter Housing Economics in West Palm Beach.
People already were seeking the space and privacy of single-family homes before the coronavirus pandemic, but now the stand-alone home is even more desired, especially in suburban locations.
People seeking to avoid the highly contagious coronavirus want to live in places where they can bypass a lobby, or enter a residence without having to stand by an elevator with other people, Hunter said.
Residents wanting to live in a single-family house may also be unable to afford to buy a home, which makes rentals an attractive option, Hunter added.
Despite low interest rates, many people do not have the money for hefty down payments on single-family houses, Hunter said. This is especially the case with millennials dealing with student loan debt and a tight job market. Consequently, renting is the only option for many residents, but some people still want to live in a house with a backyard and playground for children.
“Then there are the renters by choice, who could afford to buy a home and come up with a down payment, but prefer the lifestyle of renting,” Hunter added.
Among these renters are baby boomers dubbed the “Baby Chasers.” Hunter said these older residents want to live near their children and grandchildren, but they don’t want to be tied down by buying a house, especially if their children might be moving in the future, too.
More:Juno Beach luxury townhouse being built near the beach sells 60% of units in one month
Jacque Petroulakis, executive vice president of NexMetro Communities, said the company attracts three types of renters.
They are millennials who don’t want to be tied down; renters who are in a “life transition,” either newly married or newly divorced who do not want to make a mortgage commitment; and baby boomers selling their homes to get away from the hassle of household maintenance, but still wanting the privacy they had living in a single-family house.
“Consumers have fundamentally changed the way they think about the American Dream, what they value, and how they choose to live,” Petroulakis said. “And for a growing number of people, that means choosing to rent rather than own.”
Single-family rental homes long have been owned by individual real-estate investors. After the 2008 recession, however, something new happened: Big companies scooped up homes lost by homeowners to foreclosure.
Today, many homes for rent are owned by companies such as Invitation Homes, a unit of the Blackstone Group. But these homes are all existing houses, and in many cases, they are older and lack the technology and amenities sought by residents these days.
Petroulakis said a group of entrepreneurs saw the home-rental trends after the recession and began building a few rental-only housing communities in the Tuscon, Ariz., area.
One thing led to another, and they realized there was demand for new houses from people who could afford to buy, but instead, chose to rent.
But building for-rent single family homes in Palm Beach County is not an easy prospect, one builder said.
More:COVID keeping Canadian tourists away from Palm Beach County this winter
Dania Beach-based Stellar Communities is building, or will build, new homes for rent in Orlando, Port St. Lucie and Pompano Beach. The rental homes include townhomes, villas and detached single-family houses.
But two housing projects in Palm Beach County will be for-sale homes, said Larry Baum, Stellar Communities’ managing partner. One is a 40-home project planned in Delray Beach off Barwick Road; another is a 25-home community planned off Congress Avenue in Boynton Beach.
On both sites, the land is too expensive to build rental houses and realize a good return on investment, Baum said.
In addition, demand for home sales is so hot, “people are paying top dollar for homes. There’s no reason not to make less money.”
Baum said Stellar’s rental project in Pompano Beach, near Palm Aire Country Club, works because the company has owned the land for a long time. The homes, when completed starting in January, will rent from $2,500 to $2,900 per month.
More:Uptown Boca welcomes REI, apartment dwellers as mixed-use project opens despite pandemic
Baum said he’d still like to build a rental-only community in Palm Beach County, and he even approached developers of major housing communities being built in western Palm Beach County.
All said they’d rather sell than rent new homes, Baum said.
That’s not to say the build-to-rent single-family housing market will be limited to only a few players. Toll Brothers, the national home builder, is teaming with BB Living to build new, for-rent houses in states throughout the country, including in Florida.
And NexMetro said South Florida remains a region of “specific interest” as the company seeks areas with strong population growth and occupancy rates.
NexMetro’s Tampa community, Avilla Suncoast, could be a harbinger of things to come.
The community is under construction and scheduled to open in June 2021. Rental pricing isn’t available yet, but other NextMetro rental house communities in Phoenix, Dallas and Denver start at $1,200 for a one-bedroom villa to more than $2,500 for a three-bedroom single-family house.
aclough@pbpost.com
@acloughpbp
“