The real-estate market from Miami was red hot in recent months: the possibilities of working online steps from the beach and especially in a state where less taxes are paid than in the rest of the United States, had encouraged a strong demand for properties in the city of the sun.
But the collapse of the Champlain Towers caused an earthquake that extends beyond the tragedy that has so far left at least 34 dead and more than a hundred missing.
Thus, while the grim images of rescuers searching through the rubble still circulate around the world, Miami’s real estate sector is already suffering the impact of this collapse.
The causes of the collapse of 55 apartments in the south tower of the complex, built in 1981 on the Surfside coast, are not yet known and may be a set of several of them.
But the dramatic fall opened up a heated debate on the state of the buildings of the city, the structural revisions of the older ones, the increase of the insurance of the properties, the coding of the zone and the potential damage of the sea water in the beach front.
Almost two weeks after the collapse, search work continued under the rubble of the Champlain Towers in Miami on Wednesday. Photo: AFP
All this already has impact on the construction and sale of real estate.
“I believe that the effects of the devastating collapse of Champlain Tower South will spread throughout the construction and real estate market in Miami, South Florida and possibly the entire country,” he told Clarion Alexander Barthet, a Florida Board Certified Construction Attorney.
The collapsed complex was in a recertification process or reevaluation required by Surfside County every 40 years.
Reports on serious damage
The engineer Frank Morabito had discovered in 2018 “serious structural damage” in the swimming pool that leaked into the slab below and corroded the concrete of the garage columns.
It suggested immediate repairs that were not taken care of. A report from an expert engineer also emerged that noted that the building had sagged a few millimeters over the years.
The president of the consortium of owners of the building resigned last year because many of the residents of the Champlain were opposed to spending the 15 million dollars coming out of the fixes.
Although these were particular problems of that complex, Barthet highlights the concern that today arises among those who live in the older towers of Miami and the impact on the market.
“Current and new occupants, whether they are owners or tenants, are now hyper-focused on the state of repair of the building in which they may reside,” said the expert.
“This approach is making the owner – be it a condo association or a commercial owner – be required to prove that the structure they are living in is sound. This, I think, will make newer buildings more attractive (and therefore therefore impose a higher price) and older buildings, especially those without engineering reports to back up their claims of structural integrity, much less desirable (and will therefore lower prices), ”he added.
¿Boom real estate?
Ana Bozovic, founder of the real estate and consulting firm Analytics Miami, told Clarion: “Four years ago I made a graph of the resale value of buildings in Miami Beach, according to the decade built. The pattern was clear: the older the structure, the worse it performed at resale. Since this collapse, that gap will simply widen. “
Another study by Bozovic’s consultancy describes a recent real estate “boom” in the city.
In Miami-Dade County, he says, sales of condo apartments that cost $ 1 million or more increased by 300% from January to May 2021 compared to the same period last year.
Condos that cost less than $ 1 million (typically those that are older buildings, like the Champlain) saw a 92% increase from last year.
A mountain of debris from what was once the Champlain Tower in Miami, which collapsed on June 24. Photo: AP
She emphasizes that in recent times there were a wave of people who came to Miami from other states, encouraged by telecommuting facilities and lower taxes.
“Professionals moving to our region want modern buildings with large windows, amenities, and so on. And now, to a situation that was already difficult for old buildings, is added the fear of structural defects. I have no doubt that the prices of older homes are going to fall further, ”he says.
Concern among owners
The expert adds that she has received many inquiries after the collapse. “I have friends who live in old structures in Miami Beach and they are very concerned. That’s right. We have an unfortunate reality, in which condominium associations postpone the maintenance of old buildings, “he says.
And he explains: “This is due to the cost and the fact that many residents of these complexes cannot afford the assessments necessary to address the big problems in these buildings. If your property is worth only $ 300,000, and if you are older and have an income fixed, how would you feel if you had to pay about $ 50,000 or more for recertification? You probably can’t afford it. So repairs get delayed over and over again. “
Buildings located near the site of the collapse may be the most affected. Bozovic said resale prices could fall even for the ultra-luxurious Eighty Seven Park, neighboring the crash site, which currently has seven units for sale priced between $ 2 million and $ 11 million.
“Who wants to buy something with a view to the collapse? People died there, ”he said. “People don’t want to see the place.”
The authorities sought to give assurances. Miami-Dade County and the City of Miami Beach started with visual inspections and audits of buildings that are about to turn 40 years old and the city of Miami gave old condo associations 45 days to submit letters detailing their expertly inspected structures.
But these measures have not alleviated buyers’ concerns.
“This collapse is the tip of the iceberg,” real estate analyst Jack McCabe told Miami herald. There are many other buildings that are between 40 and 50 years old affected by sea level rise and hurricanes that have not been well maintained and that have postponed special assessments ”, which can number in the millions.
To this panorama are added other complications: Right after the Champlain collapse, several insurers sent letters to condo owners demanding that they provide proof that their buildings have passed proper inspections, he noted The Miami Herald.
Photos of the dead and missing after the collapse of the building in Miami, in a makeshift memorial in front of the place where the tower was. Photo: AP
The cost of insurance
Insurance companies have already been a nightmare for the residents of the buildings on the beach who have had to deal with policy increases due to the threat of hurricanes and tropical storms and also the effects of climate change.
Some even refused to cover older properties. Experts estimate that insurance costs will also escalate as a result of the collapse and will have an impact on building expenses and the resale value of the units.
While it has always been a great privilege to have a beachfront location, Miami’s inland venues have been gaining traction as the prices of buildings along the coast have skyrocketed and climate change becomes a concern.
More and more buyers and renters are choosing properties on higher ground, further away from the beaches.
The landslide can accelerate this inward migration. Cordelia Anderson, founder of Miami real estate firm Heart Real Estate LLC, said one of her prospective buyers from New York is now considering moving her search further offshore, concerned about the structural integrity of the coastal buildings and rising sea levels.