Supply is surging as sellers eye an exit from an increasingly problematic sector
Florida’s condo market crisis is gathering pace, with sellers rushing to offload properties amid surging ownership costs in what a realtor based in the state has described as a “perfect storm” of financing, regulatory, and insurance challenges.
Closed sales of townhouses and condos across Florida dived by 9.2% in 2025’s first quarter compared with the same period last year, while new pending sales fell by 13% and active listings soared a full 35%.
That scramble for the exits has hastened as scores of condo owners in the Sunshine State saw their dream purchase sour thanks to spiking insurance costs and other fees, as well as a plunge in property values.
The crisis emerged in the wake of the Surfside condo catastrophe in 2021, a collapse that saw 98 people lose their lives and led to mandates for structural inspections and reserve funds to cover potential repairs.
Buyer confidence has plummeted – and less than a quarter of condo associations throughout the state are currently meeting those new standards, the Department of Business and Professional Regulation says.
The new regulatory oversight has had a big impact on lending in Florida, realtor Alexei Morgado told Mortgage Professional America. “The condo market is in the midst of a perfect storm,” he said. “The combined effect of these new laws made over 1,400 condos in Florida ineligible for the standard loan. Buyers now rely on non-QM loans to buy condos in Florida, and the rates and terms are worse.”
Insurance, HOA fees continue to surge
Meanwhile, insurance premiums are on the up due to climate risks and those structural concerns, and Morgado said HOA [homeowner association] fees and special assessments have “skyrocketed”.
“It’s not unheard of for monthly HOA dues to exceed $3,000,” he said. “Insurance costs in the Florida condo market have climbed due to increased climate risk, which has led some insurance companies to withdraw from the condo insurance market completely. The insurance is another hurdle because buildings without full coverage cannot qualify for a Fannie Mae-backed loan.”
Newer condo prices are remaining steady, helping prop up the overall average condo cost across the state, but older properties are having a hard time finding buyers because of that whirlwind of factors.
Meanwhile, supply continues to rise as a buyer’s market strengthens. Across the entire Florida housing market – not just the condo space – 34% of homes sold with price drops, according to Redfin, and just 10.2% of properties changed hands for more than the listed price.
Climate risks are mounting around the Florida housing market
Another big regulatory impediment to hopeful sellers: a so-called mortgage “blacklist” held by Fannie Mae, which the government-sponsored enterprise (GSE) uses to mark buildings ineligible for loan backing.
EMBED LINK: <blockquote class="twitter-tweet"><p lang="en" dir="ltr">Credit availability for mortgages backed by Fannie Mae and Freddie Mac has hit a record low this year – and Trump administration cuts to the government-sponsored enterprises (GSEs) are threatening to weigh against the US housing market’s recovery.<a href="https://t.co/9tgV12jMZX">https://t.co/9tgV12jMZX</a></p>— Mortgage Professional America Magazine (@MPAMagazineUS) <a href="https://twitter.com/MPAMagazineUS/status/1923453919537054192?ref_src=twsrc%5Etfw">May 16, 2025</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
The Wall Street Journal and experts tracking the issue say the number of South Florida properties on that list has more than doubled during the past two years and features 696 condo buildings across Miami-Dade, Broward, and Palm Beach counties.
Like California and Louisiana, the growing prominence of natural disasters in Florida has sparked an exodus of insurers from the state – and Federal Reserve chair Jerome Powell has sounded the alarm on the growing risk of climate change to the US mortgage market.
“If you fast-forward 10 or 15 years, there are going to be regions of the country where you can’t get a mortgage,” Powell said during his semi-annual testimony before Congress in February, noting the increasing reluctance of financial institutions and insurance providers to cover areas prone to environmental threat.
But Morgado is still positive about the outlook for the future of Florida’s condo market, saying that buyers who do their homework will be able to purchase a property with little ado.
“These pressures are causing sales to stall and prices to drop,” he said. “However, buyers willing to put in the time and effort to read each proceeding datum represented by the reserve study, inspection reports, and insurance reports can buy a good condo that will prove to be a solid investment.”
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