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Florida was once considered an affordable state perfect for retirees on a budget and young families. But as of late, the Sunshine State is becoming more and more expensive for homeowners.
And it’s not just the gap between soaring home purchase prices and average salaries in the state that worries residents. Florida homeowners are about to be hit with a triple whammy in the form of higher property taxes, insurance costs, and homeowners association fees.
Here’s what Floridians need to know about what’s coming—and how to lower their homeowning costs.
Property taxes are increasing
Floridians have faced a lot of challenges when buying their homes lately. Home prices continued to rise, and mortgage interest rates also increased. But the bill that’s often unexpected is increased property taxes.
“Prospective buyers should be aware of the potential influence that property taxes can have on their entire cost of homeownership,” says Sara Sharp, founder of SK&S Law Group and Acta Tax Consulting.
The property tax the previous owners paid doesn’t tell you anything. That was based on their purchase price and assessed value. If the home is now worth double or triple the price, the taxes could go up as soon as the property changes hands.
“Florida’s expanding population and booming real estate industry have increased property values, which has raised tax assessments,” says Sharp. “So it’s crucial to learn about local property tax rates.”
What can homeowners do?
- Challenge wrong assessments. “Homeowners can consider challenging the assessment if there are inconsistencies or an overvaluation by following the proper procedures,” says Sharp. “A real estate attorney or tax expert with knowledge in tax appeals can help you through the process.”
- Take advantage of exemptions. Property tax burdens can be lowered by homestead exemptions, senior citizen exemptions, and other tax relief initiatives.
- Get involved in local government. “Attending meetings and keeping up to date on any amendments to tax laws or local ordinances are two more ways to have an impact on homeowner-related tax legislation,” adds Sharp.
Rising insurance costs
Florida homeowners already pay some of the highest insurance premiums in the nation. According to the Insurance Information Institute, as of last year, Florida homeowners were paying $4,231 a year for insurance, compared with a national average of $1,544.
And it’s about to get higher, which has less to do with the state’s hurricane exposure than years of insurance-claim lawsuits causing insurers to become insolvent or to leave the state.
“Florida’s property insurance market was driven to near collapse due to years of rampant legal system abuse, fraudulent roof replacement schemes, and excessive lawsuits,” explains Logan McFaddin, vice president of state government relations at American Property Casualty Insurers Association. “This led to skyrocketing insurance costs and fewer consumer choices in the marketplace.”
When an insurer becomes insolvent, the Florida Insurance Guaranty Association, a nonprofit agency created by the state, takes on a homeowner’s claim. But as the number of claims has been mounting, a series of assessments have been issued to help cover them. This cost gets passed on to policyholders as additional fees.
Insurers that remain in the state are dropping people, making eligibility requirements stricter, and increasing premiums. These policyholders end up paying more or looking for a more affordable policy. And that’s a challenge, particularly for retirees or those on a fixed income.
What can consumers do?
- Check your policy. June is the start of Florida hurricane season, so review and update your policy.
- Maintain your property. “Trim back any nearby branches or trees, inspect the roof and repair any loose or damaged shingles, secure loose gutters, and seal gaps and cracks around windows and doors to prevent water intrusion,” says McFaddin. “And consider installing a wind-rated garage door or hurricane shutters.”
- Thoroughly research state-backed insurance. “Citizens Property Insurance Corp. is the state-backed insurer of last resort,” explains McFaddin, “where homeowners can obtain homeowners insurance if they are not able to get insurance in the private market.” Just be aware that Citizens is strained. At a news conference in Fort Meyers on March 17, Florida Gov. Ron DeSantis caught everyone’s attention when he said Citizens has not been solvent and if a major hurricane hit, they might be unable to pay all claims.
HOA fees are increasing
June 24 marks the second anniversary of the Champlain Towers South collapse in Surfside, FL. The 42-year-old condo building had structural issues that were going to cost upward of $10 million to fix. So the board kept putting it off, and there were no laws in place to require that it be addressed.
Today, some laws will lead to increased costs for condo owners.
First, buildings that are three stories or higher will be required to have a structural integrity reserve study done every 10 years, which will examine the physical condition of the property and estimate repair costs.
Second, condos will have to keep enough money in reserve to pay for future building maintenance. To support this, HOA fees might rise substantially.
Additionally, buildings that had been deferring maintenance and keeping HOA fees low will likely need to issue special assessments that could be $30,000, $40,000, or even $50,000 per condo unit owner to ensure reserves are met and repairs are made.
What can consumers do?
- Condo unit owners: Familiarize yourself with the condo deferred maintenance program that goes into effect in 2025. Obtain your building’s reserve study. Building management is required to give it to you if you ask.
- Prospective purchasers: If you’re buying into an older condo, get the reserve study through the seller or the seller’s agent. Newer condos must have a structural integrity reserve study done when the building is 10 years old. Also, obtain the most recent annual financial report and read through the last four months of the board’s meeting minutes. And finally, ask the board if there’s an assessment or if one is planned.
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