As more residents face foreclosure, condo fees increase for all
In condo buildings throughout South Florida, monthly homeowner
association fees are reaching nearly $1 a square foot, an expense that
is starting to scare away some prospective buyers. In a number of cases, fees
have doubled or worse.
If condo owners stop paying those fees — a common course for occupants and investors in foreclosure or people hit by rising unemployment — the remaining owners must absorb the cost through higher fees and special assessments.
“It’s getting crazy,” said Pablo Alvarez, broker and manager at Kendall-based Realty World Real Estate Center. “Many times when a buyer sees the association fees, that pretty much rules out that property.”
The fees and assessments are sure to rise higher as the number of defaults in a condo building increases.
“I tell my buyers up front that these fees are going to go up,” said Marji Pace, a longtime Miami realtor with Coldwell Banker.
Newer buildings that have a high percentage of developer-owned, empty units on the market or foreclosed units have been hit the worst. Areas such as Sunny Isles and Brickell have been hit especially hard. Established condos with a higher percentage of owner-occupied units are faring better.
Pace has a couple of prospective buyers checking out the Mark on Brickell. Units listed at the bayfront tower for $600,000 a few years ago now sell for about $180,000. However, about 30 percent of the units are in default, which has the condo association increasing fees to cover the loss. A two-bedroom unit comes with $1,000-plus a month in association fees, a number that is likely to get higher.
Some buyers have balked at the fees. So have lenders. Even buyers untroubled by the extra cost have trouble securing financing from banks hesitant to loan money because the building has such a high number of defaults.
The Jade and the Club condos on Brickell are also facing a similar situation. Some of the newer developments on Williams Island are selling in the range of $250,000, but higher fees partially negate of the reduced selling price.
“You’ll get a gorgeous apartment at a great price, but the fees can run you $1,000 to $1,200 a month,” said Marci Trautenberg, a real estate agent with EWM Real Estate about some condos on Williams Island. “And it doesn’t correlate.
“You might get a great deal in the buy, but then you have to pay these rates that have shot up,” Trautenberg said.
Regardless of the size of a community, even a few delinquent owners can devastate an association. In a smaller North Miami beach condo complex, two foreclosures triggered a one-time special assessment of $1,500 for owners.