Property Values Likely To Fall As Risks and Costs Rise on Older Condo Cmplexes
The Surfside condo collapse has put older buildings under the microscope and created trepidation for buyers.
The partial collapse of Champlain Towers South, a 12-story 136 unit condo on the southern border of Surfside near Miami Beach, is expected to lead to lower pricing in older buildings. Buyers, lenders, and insurers will likely demand more information than ever before about inspections, repairs, and recertifications as well.
Additionally, increased scrutiny on the buildings will increase maintenance costs and accelerated repairs – driving increased homeowners association assessments and corresponding decreases in property values.
The brokers who specialize in the sale of new and high-end inventory don’t believe that a permanent slowdown will occur. Instead, they think it’ll make this type of product more desirable. The condo market has been on the brink of recovery for some time now, with inventory and months supply trending downward (the luxury sector outperforming other price segments). The price for units in older buildings that are not up to date on their inspections or recertifications is expected to fall.
Owners of units in these buildings should keep a close eye on their building’s inspection status and the financial stability of the association. Insurance costs are expected to rise in addition to maintenance costs, and lenders may become reluctant to lend on units in these buildings.
This will all result in lower property values and corresponding adjustments to the property’s assessed value. Normally it takes several years for assessors to catch up to the change in value without initiating an assessment appeal.