Immigration restrictions, tariffs add to tough environment for mortgage lenders
South Florida's glimmering coastline, long adorned with towering condominiums and international appeal, now finds itself in the throes of a historic downturn. What was once a haven for foreign investment has devolved into a cautionary tale of rising costs, tightening regulation, and fading buyer confidence.
From Miami-Dade to Palm Beach County, a troubling convergence of financial burdens and legislative mandates has eroded demand, pushed inventory to new highs, and left many would-be sellers scrambling for the exits. Sales to foreign nationals — once the backbone of the region’s condo economy — have fallen to their lowest level in over a decade.
Foreign buyers retreat from a once-favored market
A decade ago, global investors flocked to Florida’s condo developments, lured by favorable exchange rates, lenient lending, and the security of U.S. property rights. In 2018, international buyers accounted for half of all condo sales across South Florida. Today, that figure has plunged to just 10 percent, according to a survey by the Miami Association of Realtors.
The steep decline can be traced to multiple culprits: currency volatility, a surging U.S. dollar, elevated interest rates, and heightened geopolitical tensions. But increasingly, foreign investors cite more recent policy shifts — including restrictive immigration laws and international tariff disputes — as reasons for cooling interest.
“There’s less incentive to park capital in Florida real estate right now,” said Peter Zalewski, a Miami-based condominium analyst. “The economics have changed, and so has the political climate.”
Post-Surfside regulation reshapes the landscape
The 2021 collapse of the Champlain Towers South condominium in Surfside — a tragedy that killed 98 people — spurred a comprehensive legislative response, fundamentally altering the risk calculus for buyers and lenders alike.
New state laws now require structural inspections and robust reserve funding, with enforcement mechanisms that have rendered hundreds of aging buildings ineligible for conventional mortgages. A growing number of condominiums are now listed on Fannie Mae’s “unwarrantable” blacklist, restricting access to government-backed financing.
The Department of Business and Professional Regulation reports that fewer than 25 percent of Florida’s condo associations currently meet the updated reserve and maintenance standards. That gap has triggered a surge in demand for non-qualified mortgage (non-QM) lending.
Read more: Non-QM takes center stage in Florida
Craig Garcia, president of Capital Partners Mortgage Services, said navigating the condo financing process has grown markedly more complex. “Half the listings we see today are condominiums, and for every one, there’s a checklist a mile long,” he said.
Insurance and HOA dues push affordability to the brink
Adding to the malaise are climbing insurance premiums and rising homeowner association fees. The spike in climate-related risk has prompted insurers to reassess — and in some cases exit — Florida’s volatile market. The result: some buildings are paying thousands of dollars in monthly dues, an untenable situation for many middle-class buyers and retirees.
“On some units, HOA fees now rival mortgage payments,” said Alexei Morgado, a Florida real estate agent. “And if the building can’t get full insurance coverage, it’s practically unfinanceable.”
While new construction remains attractive to wealthier buyers, older properties — particularly those built before 1990 — face steep hurdles in securing insurance, passing structural certifications, or attracting financing.
Market correction or long-term realignment?
Sales data from Redfin reveals a broader cooling trend across the Florida housing market. Condo and townhouse sales dropped 9.2% in the first quarter of 2025 compared with the same period a year ago. Meanwhile, active listings are up 35%, and nearly a third of homes are selling below asking price.
Still, some in the industry remain cautiously optimistic. While acknowledging the growing pains, Garcia believes the current upheaval may ultimately strengthen the condo sector. “These regulations were overdue. They’re painful now, but they’ll result in safer, more financially stable buildings in the long run.”
Yet, with global buyers sidelined, domestic affordability stretched, and insurance crises unresolved, many Floridians are left wondering: who will step in to fill the vacuum?
Until a clear answer emerges, Florida’s once-golden condo towers may stand a little emptier — and a lot less certain — than they have in years past.
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