Condos in older South Florida areas are swiftly moving off the market, surpassing the sales pace of newer construction units due to an affordability shortage.
In the bustling metropolis of Miami-Fort Lauderdale-West Palm Beach, Florida, the real estate landscape is undergoing a transformation. Known for its sunny weather and vibrant atmosphere, the region has experienced rapid population growth between 2020 and 2024, making it one of the top three U.S. regions for population growth from 2022 to 2023, driven largely by international migration.
Amidst this growth, companies like Terra Group, Related Group, and Elad Group are making a name for themselves by converting old condos into luxury projects. This trend is not just a passing fad; it's a response to affordability pressures, new regulations, and redevelopment opportunities.
The appeal of older condos extends beyond their potential for transformation. Scott Diffenderfer, a Compass broker associate, compares them to classic cars, stating they have more charm and better layouts. Mitch Roschelle, a managing partner at Madison Ventures+, echoes this sentiment, believing that Florida's condo market has "so much elasticity in the price."
The misconception that older condos are a "money pit" is being challenged. Diffenderfer disputes this notion, arguing that they can be safe and financially stable. Alex Tukh, BH Group's head of acquisitions, attributes the trend to affordability issues. He states that condos built more than 30 years ago are selling for less than half the price of newer units, making them an attractive investment.
Tukh is bullish on the market for redeveloping older associations and co-ops. His company, BH Group, has recently closed on three redevelopments of older condominiums. Renovations can add significant value to these properties, making them a more attractive investment compared to new construction of the same size in Miami Beach.
The trend is also supported by new regulations, such as the Condo 3.0 bill, which requires older buildings to repair and maintain their structures. This bill has made people more comfortable with buying older condos, and Diffenderfer is optimistic about the future of these properties, predicting that their value will come closer to that of newer condos once repairs are completed.
However, the trend is not without its challenges. The Surfside collapse has led to a review of condo laws in Florida, with a task force examining potential changes. South Florida real estate attorney Sklar is a member of this task force.
Despite these challenges, the trend of redeveloping older condos in prime locations into luxury projects is gaining momentum. Older condos, especially those in prime locations, are being considered for redevelopment due to land scarcity in those markets. As the demand for affordable yet quality housing continues to grow, the popularity of older condos in Florida's red-hot real estate market is set to continue.
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