Top investor’s chilling warning about Florida’s condo crisis with 80% of owners at risk of losing money on their properties: ‘Worse than global warming’

Florida’s apartment crisis is threatening to become a national problem, with a top investor warning that 80 percent of the state’s apartment owners are at risk of losing money on their properties.

Grant Cardone, owner of 15,000 properties, told Dailymail.com that the “perfect storm” of skyrocketing insurance premiums, inflation and interest rates was now likely to cause a national property crisis.

Florida apartment owners have been forced to cut prices by 40 percent to sell their properties rather than pay huge repair bills to comply with new state laws that were put in place after the collapse of the Champlain Tower South in Miami-Dade County, which killed 98 people.

The laws mean that hundreds of thousands of apartment owners now have to pay hefty sums to modernise previously neglected properties.

It is estimated that in South Florida alone, 360,000 homeowners cannot afford the repairs required by the new law.

Cardone predicted the crisis would likely spread across America, as as many as 80 percent of Florida condo owners are affected.

“It has already started and will continue to expand to the point where homeowners associations and apartment complexes are being penalized,” he told DailyMail.com.

Cardone said that if the federal government does not “step in,” housing association reserves across America are “at risk” of going bankrupt.

“There is no time left to solve this problem. It is a bigger problem than global warming,” Cardone warned.

‘I have always been against investing in apartments because of the endless cost increases for taxes, insurance and the excessive costs and contributions of the Homeowners Association.’

A St. Petersburg condo owner paid $1.2 million for a three-bedroom, two-bathroom home $715,000 to sell – a reduction of $485,000.

According to ISG World, there were 20,293 condos for sale in Palm Beach, Broward and Miami-Dade in the second quarter of this year, up from 8,353 in 2023.

The properties with the largest price declines were in St. Petersburg, Sarasota and Venice on the West Coast and in Miami, Fort Lauderdale, Boca Raton and West Palm Beach on the South and East Coasts.

The Champlain Tower disaster exposed the widespread neglect of old apartment buildings, with associations delaying major repairs to save money.

Cardone says the problem with many of his associates is that they are too familiar with cheap condominium owners because his association, he says, “is run by someone who has too much free time.”

“It’s a great building that has been doomed by people who don’t know what they’re doing. This is a common story among condos and HOAs in the US,” he told DailyMail.com.

The collapse of Florida apartment complexes prompted lawmakers to introduce SB 4-D in May 2022. The bill would require all apartment complexes 30 years or older in the state to be inspected by the end of the year.

Condominium owners and homeowners’ associations must commence the repair and maintenance work specified in the report within one year of receiving the report.

Nearly 90 percent of the more than 20,000 homes for sale in Palm Beach, Broward and Miami-Dade are in buildings that are at least 30 years old.

Miami real estate agent Steven Kupchan told DailyMail.com earlier this month that people are flocking to Georgia, Texas and the Carolinas and even moving to countries like Mexico or Central America.

“With the rise of remote work, some people who moved to Florida for work are now considering relocating to states with a lower cost of living or more stable real estate markets,” Kupchan said.

During the pandemic, Florida experienced a population explosion, with more than 700,000 people moving to the state in 2022.

Condo sales are also falling in Texas’ major cities, raising fears that the state could follow Florida’s lead.

Unsold homes are piling up in Fort Worth and Dallas as high insurance costs and devastating natural disasters make it difficult to sell condos, Redfin Data shows.

According to Redfin, the number of condos for sale in Florida rose 53 percent in the year through July. But Texas is catching up fast — with a 42 percent increase in that time.

In the US, the number of apartments for sale is also increasing and the number of houses for sale is decreasing, but not as much as in Florida and Texas.

In Houston, for example, apartment supply increased by 35.9 percent, sales decreased by 35.3 percent, and prices fell by 6.5 percent.

In Fort Worth, the number of listings increased by 65.4 percent and sales decreased by 33.3 percent.

Meanwhile, Dallas saw a 61.7 percent increase in the number of apartments for sale, a 58.3 percent increase for San Antonio and a 28.6 percent increase for Austin.

There are several reasons why the demand for apartments in the Lone Star State is declining.

Frequent and intense natural disasters in Texas – as in Florida – are a major factor in the rising cost of home insurance. This in turn contributes to rising HOA fees in apartment buildings, as maintenance costs are passed on to unit owners.

Those rising costs, combined with the risk of being caught in a natural disaster yourself, are deterring condo buyers and motivating owners to sell, Redfin said.