After a turbulent post-pandemic period, condo prices in eastern South Florida are expected to return to pre-2020 levels, according to a real estate analyst.
Peter Zalewski, founder of Miami Condo Investing Club, explained that the pandemic artificially inflated condominium values east of I-95. As a result, prices could drop by 38% over the next few years, returning to 2019 levels. This would mean a decline from $379 per square foot recorded in May-October 2024 to $231 per square foot in 2019.
Zalewski, a former South Florida real estate journalist who tracks condo values east of I-95, attributes this upcoming adjustment to several factors: the Surfside tragedy, high interest rates, and the return of tech workers to Silicon Valley after an initial influx to the region.
Since the pandemic, South Florida’s home and single-family property prices have surged, as high-income households relocated to the area from across the U.S. and abroad, seeking to avoid Covid-19 restrictions. Even as the pandemic subsides, South Florida continues to attract high-income households due to its favorable climate, lack of state income tax, and business-friendly environment.
However, condo and townhouse sales across South Florida dropped by 19.6% year-over-year in November, according to Florida Realtors‘ latest figures. Zalewski referred to this sharp decline as “falling off a cliff,” comparing it to the sales slump after the 2008 Lehman Brothers collapse.
The situation could worsen due to a new state law mandating stricter inspections for condo buildings over three stories tall and older than 25 years along the coast and 30 years inland. Following the Champlain Towers collapse in Surfside, this legislation has driven up condo assessments, causing prices for older units to drop or remain stagnant. Zalewski believes that the price drop will not be limited to older condos, as he predicts even new luxury condos will see some price reductions.
Additionally, a University of Miami study revealed that 35 condo and hotel towers in Sunny Isles Beach, Surfside, Bal Harbour, and Miami Beach are sinking faster than expected, with some buildings in Broward and Palm Beach also affected. This data has created further uncertainty in the market.
Zalewski also noted that corporate mandates requiring remote workers to return to the office, particularly those focused on AI development, will reduce the anticipated influx of high-paid tech professionals to the region.
Craig Studnicky, CEO of ISG Group, acknowledged the drop in value and sales for condos older than 30 years, with these units losing 21% of their value in just one year due to fears of special assessments. However, he pointed out that condos under 30 years old have appreciated by 10%. He dismissed the UM study as having “zero impact” on the market and predicted that prices for newer condos will continue to rise, driven by the ongoing influx of high-income households into South Florida.
“We’re dealing with the laws of supply and demand, and there simply isn’t enough supply of new condos,” Studnicky concluded.
Source: SFBJ
