If the Florida condo crisis were a hurricane, the worst of the storm appears to have passed by Palm Beach.
While the government doesn’t control the weather, it does have command over the regulatory environment that created difficulties for the state’s condo market. In the wake of the deadly Champlain Towers collapse in Surfside, lawmakers scrambled to prevent another tragedy with a slate of new safety laws that have their own consequences. The legislation mandated that condos complete milestone inspections and reserve studies. While these rules apply to every residential building 30 years or older, the effects are evolving into a story of the haves and have-nots, especially when the multimillion-dollar assessments roll in.
As the statewide condo market continues to absorb the shock of regulations, Palm Beach, where money is no issue, illustrates how affluent communities are better equipped to handle the impact.
“Everybody’s reading the same doom and gloom about this market,” said Scott Gordon, a Douglas Elliman agent in Palm Beach. “For the luxury market, those buildings are in better shape than they’ve been in a decade.”
While Palm Beach’s oceanfront estates and nine-figure residential sales are perhaps better known, the island also has dozens of condominiums, both in town and on the South End, the majority of which are older than 30 years and subject to the new safety laws. With the regulations, rising insurance rates and competition from new development in West Palm Beach, agents said the island’s condo market suffered in the first half of the year.
But as activity picks up ahead of the busy winter season, brokers say the sky is clearing for the island’s aging condo supply. The median sale price for condos in Palm Beach has ticked up to $2.7 million, Redfin shows. One hundred sixty-four units are listed for sale, with prices ranging from $315,000 to $17.9 million, according to the listing site. Earlier this month, one Palm Beacher dropped $9.4 million on a unit at Bellaria at 3000 South Ocean Boulevard after selling her home for $30 million.
Costs for assessments and repairs are averaging between $75 and $100 per square foot, with most of the funds going to cover concrete restoration, Gordon said. That translates to $150,000 to $200,000 for a 2,000-square-foot condo. Brokers declined to comment on assessments of specific buildings.
“All these buildings have either completed [assessments and repairs] or have almost completed them,” said Corcoran Group’s Dana Koch.
Elsewhere in South Florida, similar assessments are financially devastating for unit owners. Howard Konetz, who lives on a fixed income and owns a unit at Aventura’s Mediterranean Village, told Fox Business he is facing a $224,000 assessment fee. He wanted to sell, but took the condo off the market after multiple price cuts failed to lure a buyer, Zillow shows.
Market insiders say Palm Beach’s condo owners have deeper pockets than most. If a building had a problem, they had the money to throw at it. Now, the worst is behind them, and all of the improvements are a boon for resales, brokers say. Many buildings are in better physical condition and fiscal health than in recent years, thanks to the regulations. Design updates are also helping to close deals, said Elliman’s Chris Leavitt.
“It really highlights the buildings that are in perfect condition,” said Leavitt, who pointed to the recently renovated Biltmore at 150 Bradley Place. Leavitt closed two sales in the building over the summer, which he credited in part to the updates.
Palm Beach’s older condo buildings benefit from immediacy; they are ready to use now, rather than the new developments in West Palm Beach that have years-long waits. Buyers are also coming in educated and asking the right questions, agents say.
“Buyers have just gotten smart. They will ask, ‘Have you done your milestone inspection? Have you done this? Have you budgeted for it?’” Corcoran’s Suzanne Frisbie said.
Pricing is also playing an important role. Sellers are letting go of pandemic-era dreams, Gordon said.
“Prices are coming down to reflect the reality of the market,” he said. “In order to get a lot of these deals done, the sellers have been much more receptive to paying off special assessments just to move the deals forward.”
Koch said one of his sellers paid $62,000 to cover assessment fees and move a deal along. Some buildings are adopting ‘due on sale’ clauses to mandate sellers pay off their share of assessments, including the Cove at 2784 South Ocean Boulevard, Meridian at 3300 South Ocean Boulevard and Halcyon at 3440 South Ocean Boulevard. Gordon said he had a deal in the Meridian, which took out a $10 million loan for its repairs, that involved a $122,000 payment for its ‘due on sale’ clause.
“I think every contract that we’ve written lately has a ‘due on sale’ clause for the special assessment,” he said. “The seller in almost every sale that we’ve done is responsible for the full payment of the assessments.”
