Jul 22, 2023 - Real Estate

Rising condo fees cause chaos in Tampa Bay's real estate market

Illustration of a row of condo buildings with one wall rising up into the sky and forming an upward pointing arrow

Illustration: Annelise Capossela/Axios

The Tampa Bay condo market is right on the edge of becoming a buyers' market, experts say.

Why it matters: With mortgage rates inching back up to 7%, buyers are desperate for more power.

Driving the news: Rising home insurance costs and condo fees have pushed condo owners to sell, Tampa real estate expert Lea Lagueux tells Axios.

  • A new law requires condo buildings, depending on their age and closeness to the coastline, to conduct engineering studies.
  • Also, there’s a requirement that could push fees higher: Condo associations must set aside a pot of money for structural repairs before 2025.

What they're saying: "It's creating some real chaos in the market. I don't think we’ve seen all of the fallout yet," Lagueux says.

What's happening: Full-time Tampa Bay residents and snowbirds are some of the most sensitive to fee changes.

  • On the other hand, those who own short-term rental properties can raise their rates to cover the new condo fees. For that reason, Lagueux is seeing low inventory and steadier home sales prices in popular vacation rental destinations like Clearwater.

Zoom in: Tierra Verde, for instance, more condos are hitting the market compared to other Pinellas zip codes, Lagueux tells Axios.

  • Condo fees in this area are skyrocketing, between flood insurance costs and the new inspection requirements.
  • Prices have been softening here for months, and Lagueux expects them to continue to fall. "Sellers here are not typically getting asking price," she says.

The big picture: More buyers have turned to condos and townhouses as home prices surge, Realtor.com analyst Hannah Jones tells Axios.

  • Across the U.S., that segment's prices are now climbing at a faster clip than single-family homes, the real estate company's data shows.

Yes, but: Condos are still the more affordable option. The median sales price for a condo in Tampa was $137,283.83 cheaper than a single-family home here, June data provided by Zillow shows.

Reality check: The post-pandemic housing shortage is keeping prices high across the country.

Year-over-year change in median sales price of homes in Tampa
Data: Zillow; Chart: Alice Feng/Axios

Tampa Bay condo price growth has slowed but still outpaces single-family homes, per the latest Zillow data.

  • In May, the typical condo here sold for $252,083.60, compared to $389,367.43 for a single-family home.

Yes, but: Tampa condo owners need 1.3 years of income to upsize to a house, according to a March analysis by real estate company Point2.

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