The world is seeing grim photos of rescue workers digging through the Champlain South Tower wreckage, and Miami's condo industry, which is the kingpin of condo real estate, is expecting a slide.Jesse-Dean Kluger, a real estate attorney, stated that the immediate effect of the collapse would be disruptive. He said he spent the weekend answering calls from clients who have units in older buildings.You will likely face some resistance from buyers regarding closing dates. After all, why would anyone close without an inspection and satisfactory report? For some clients, this could prove to be a significant deal-breaker.The beachfront Champlain Towers South condo at 8777 Collins Ave. was built in 1981. It partially collapsed shortly after 1:30 AM on June 24, 1981. The building was undergoing its 40-year recertification. Rescue efforts continue.Although the cause of the collapse is not likely to be determined for at least one year, the two main contributors are salt air and the ocean. This should concern potential buyers of older waterfront condos.Rescue dogs and search teams are on the lookout for survivors at the scene of the 12-story condo Champlain Towers South that collapsed in Surfside.Some experts predict that in the near-term, the brakes will be applied to what was a county-wide sales bonanza.According to Ron Shuffield (CEO of Berkshire Hathaway HomeServices EWM Realty), people are becoming more aware of association fees and checking on the financial health of the association. This 40-year recertification is now something everyone is aware of. Buyers are also paying more attention to the construction of a building.Shuffield said that a greater attention to detail is a positive thing. Experts warn that this will likely lead to higher prices for some buyers and discourage others.Alex Barthet is the managing member of Barthet Construction Law Firm, and the publisher of thelienzone.com. He said that every condo, particularly older ones, will want to hire an expert to verify their buildings' integrity.Continue the storyBarthet stated that these items are likely not fully budgeted and will result in higher assessments. This will drive buyers away as they have limited funds to spend on older buildings.According to the Miami Association of Realtors (Majority of Condos) sales jumped by 286% in May year over year, from 563 condos to 2,176. This was primarily due to U.S buyers from tax-burdened States.The median sale price for existing condos increased to $325,000, which is a 25% increase year-over-year. Sales of condos priced between $400,000 and $660,000, which includes many older waterfront buildings, rose 475.4% to 328 transactions.Champlain Towers South was part of this boom, with property records showing that 14 units have been sold in the past three years. Ana Bozovic, founder and CEO of Analytics Miami, stated that condos in Surfside could be especially hard hit in the coming year.The most likely to be affected are buildings located close to the site of the collapse. Bozovic stated that resale values might fall for the ultra-luxury Eighty Seven Park. It is located adjacent to the site where the collapse occurred and currently has seven units available for sale at prices between $2 million and $11 million.It is hard to imagine anyone buying something that would be affected by this collapse. She said that many people died there. People don't want to see the site.She said that the Lower Manhattan area was affected by 9/11. It will be the same here.Experts say that buyer hesitation can also affect the performance of newer buildings.An attorney representing clients who were due to close on a Bal Harbour condo in the wake of the Surfside collapse was one such client. The building they were purchasing is only three years old. They felt cold feet, the lawyer said. They needed to take a moment to learn more about the Champlain Tower. Many people who have active contracts can delay closings but cannot withdraw because they risk losing their deposits. They are stuck.Inspections are underwayThe city of Miami Beach and Miami-Dade County have begun performing visual inspections and audits on buildings that are nearing or at the 40-year renewal process. This is required by law. The city of Miami now requires inspections for all buildings older than 40 years that are six stories tall or more. Condo associations have been given a 45-day deadline by the city to submit letters detailing the condition and signatures of licensed structural engineers.However, buyer concerns have not been lessened by the enforcement increase.Jack McCabe, a real estate analyst, said that safety is more important than being able to walk on the sand. What I thought would be paradise may now be danger.McCabe stated that this collapse is only the tip of an iceberg. Many other buildings that were affected by hurricanes and sea level rise are between 40-50 years old. They have not been maintained well and have had to wait for special assessments that could run into the millions.Mario Gonzalez visited the memorial wall with photos of the missing and messages of support, love and prayers at Harding Avenue on Tuesday, June 29, 2021. This was the sixth day following the collapse of Champlain Towers South in Surfside.Older buildings are attracted by their attractive pricing.It all comes down to affordability, according to Dan Kodsi (CEO of Royal Palms Companies in Miami), who developed the Paramount Miami Worldcenter tower. Many people choose to live in older buildings, as they are more affordable and have the option of living near the water.However, repairs can reduce the differential.McCabe stated that buyers will be more concerned about being hit with an enormous assessment bill. An existing unit could prove to be more expensive than in the past.Age is importantThe numbers tell the whole story.Condovulturesrealty.com reports that 1,660 units are currently for sale in buildings built on barrier islands before 2000, or before Florida's building code was updated to current standards. The average price per unit is $589,692. 779 units were sold at an average price $487,384 during the first three months 2021. At $484,821, 491 units are currently under contract.Comparatively, condos on barrier islands with 1,241 listings have an average asking cost of $3,141 8,845, which is a high price that would be out of reach for most people.This gap is likely to widen.Condo Vultures co-founder Peter Zalewski said that anything built before 2000 will suffer and drop in price. Our clients have been told repeatedly not to view any property built before 2000. The system currently favors the buyer over any due diligence. They are extremely private and won't share any pricing information. The condo docs are given to them and your offer is automatically locked in, according to state law, within three days.Zalewski reports that there were 139 towers facing the Atlantic Ocean in Miami–Dade County, as of November 2019, according to Zalewski. Only 60 of those towers were constructed between 2000 and 2019. Other 79 towers were constructed between 1930-1999.On Monday, June 28, 20,21, the Champlain Towers South condominium building in Surfside, Florida partially collapsed.Although waterfront is a prime location, it has been long considered a desirable option. However, as the waterfront property prices rise and climate change becomes more serious, inland areas are gaining popularity. Recent Miami-Dade climate gentrification research showed that home buyers and renters are choosing higher-elevation properties, which is primarily in predominantly Black and Hispanic areas.The collapse could accelerate inland migration. Cordelia Anderson, founder and CEO of I Heart Real Estate LLC in Miami, stated that one of her potential condo buyers from New York is considering moving her search further inland. She expressed concern about coastal buildings' structural integrity and the rise of sea levels.Falling pricesOlder condos on the beachfront are not only a problem for their brokers and owners, but also for their potential price drops. According to the Miami-Dade County Property Assesser, the county will collect more than $94 million in 2020 taxes from condo owners. This money goes to everything, from schools and police to fire services to infrastructure repairs.All residents of Miami-Dade will feel the pinch if prices for older condos fall, as taxes are calculated based on property values.However, if the prices in older buildings drop enough to make selling difficult, there is another option. Condo termination: Owners decide to sell their entire building to a developer who is interested in building something new.She said that if you sell a whole building in a triple A location to a developer, you will get a better price for your condo. Some associations may not be able to afford the repairs. The owners could sell their buildings to developers, which would allow them to move on before the buildings become unsafe. This is a great exit strategy for many condo owners.
