At the end of June, every waterfront condo owner in the state of Florida had what may have been the shock of their real estate lives. The collapse of the oceanfront Champlain Towers South in Surfside, Florida changed our waterfront living comfort zone from a little risky to outright dangerous. The question is, is this a temporary spike in the risk factor radar, or is Florida in for a sea – so to speak – change?
According to realtor.com, many property owners, at least in southeast Florida along the barrier islands, are expected to put their condos on the market. In the near term, this is going to have a big impact on the luxury real estate market. Frightened buyers will be more hesitant even at discounted prices to go forward with a purchase, particularly in older buildings, but newer buildings will feel the fallout as well.
Since it will take at least a year to determine the reason for the building collapse, it will take at least that long as well for the southeast Florida beachfront real estate market to stabilize.
For those properties already under contract, buyers will be looking to modify the contract insisting on the results of additional inspections prior to concluding the transaction. Going forward, we can expect engineer and building inspections of properties on the beach to expand with specialists in this field being hired in addition to regular home inspectors.
Overall, condo fees are sure to go up. Condo boards will be more inclined to hire experts to review work on the building structure and have them sign off on major improvement projects. Some of these extra expenses may not have been budgeted for, leaving special assessments as the only option. I’ve talked a lot in this space about choosing the correct condo board and if this incident doesn’t reinforce that, I don’t know what will. Gone are the days where condo boards make structural decisions without a professional study, or at least those days should be gone.
Anna Maria Island thankfully only has one tallish condo complex. The Martinique is a mid-rise complex with two buildings built in the 1970s with each building having seven stories, built directly on the sand with magnificent Gulf views. After these were constructed, the zoning for all three cities on the Island changed so that no more high buildings were allowed. We can consider ourselves lucky that town commissioners at the time made this decision, avoiding high-rise condos lined up on the beach like so many other barrier island towns in Florida.
So, what’s next? To start with, a task force has already been created to investigate Florida’s laws surrounding condominiums and make recommendations for legal reforms to the governor’s office and state Legislature. Their goal is to determine whether regulatory changes could minimize the likelihood of another tragedy like the Surfside building collapse. Gov. Ron DeSantis has not fully signed on to the task force and is of the opinion that Champlain Towers South has been shown to have had structural problems from the beginning. Nevertheless, he left the door open as to whether he would support the outcome of the task force’s findings.
Is this the tip of the iceberg, or the one-off event that we hope it is? Is it a teaching moment and a warning, or is it a knee-jerk reaction? Either way, never underestimate the lure of the ocean. Buyers will be nervous, but this too will pass, leaving in its place the possibility of better building codes and regulations for older buildings and new ones going forward.
