Last month POTUS would and did not sign the major housing reform bill, hailed as ‘the biggest housing bill in decades.  Instead, it became law 10 days after it passed through congress and condos around the country are facing some major changes via new lending and insurance requirements. The bill was written in part due to the collapse of the Surfside Condos in Florida in 2021 and authorities shared with Congress committees what’s going on with the dangers of older buildings around the country and lack of housing options.

Example: Did you know that one in seven homes in Florida is for sale, and that they only have eight percent of homes in the U.S.? Most of that inventory is condos and now government regulations have been changed to meet new HOA requirements across the country, not just Florida. A University of Miami-led study found that 35 high-rise condos and hotels along a 12-mile stretch of Miami Beach to Sunny Isles Beach have been sinking or settling between .8 and 3.1 inches over the past seven years including the Trump International Beach Resorts there.

As an example, under the new legislation, if your building is super old and needs all new plumbing and you learn through the HOA meeting/minutes that the bid to replace it is $10mil for 100 units. If the repairs haven’t been paid for by your HOA dues/HOA management, you might not be able to get a loan on the unit or refinance it.  Also, monthly reserve requirements for HOA’s are going up from 10% to 15% and that deductibles will be capped for damage/repairs at $50,000 per unit. Reserves are like a savings account wherein a part of your monthly HOA fees gets deposited in case repairs are needed in a building. Note that insurance costs in some buildings around the country have gone up 60%, which is passed along to condo owners through monthly HOA fees. Insurance companies are averaging an eight percent increase this year in policies overall, but up to 27% in some states. The HOA pays for insurance on your building, but you insure your contents here in Utah.

The good parts of the new bill are that the law streamlines federal environmental reviews for office-to-residential conversions and infill projects that can help shorten permitting timelines for condo developments in mixed-use or infill areas in urban locations. There’s a housing crisis around the country and condos can be a cheaper purchase option than a home. The bill also lifted the Rental Assistance Demonstration program cap by 100,000 units and authorized a new Moving to Work program that might help financing for affordable condo projects and units.

My favorite part of the bill is that it now restricts large institutional investors from buying massive numbers of single-family homes. It doesn’t necessarily target condo purchases but single-family home buys, which could end up influencing condo demand and rental pricing in the long run.