Inland Florida Condos Outperform Coastal Properties Amid Insurance Crisis

Why Inland Florida Condos Are Bucking the Downward Trend

The Florida condo market is experiencing a tale of two regions. While coastal properties continue their downward spiral, inland condominiums are demonstrating remarkable resilience. Recent data reveals inland Florida condo prices increased by 5.4% year-over-year in January, creating a stark contrast with the Gulf Coast's 4.8% decline and the Atlantic Coast's 3% drop. Notably, inland condos are even outperforming the region's single-family homes, which saw a more modest 3.7% price growth.

This geographic divergence stems from multiple factors transforming Florida's real estate landscape. Christopher Maggart, a Redfin sales manager covering Orlando, points to a key advantage: "Insurance is much cheaper inland than on the coast, which leads to lower HOA fees and more affordable monthly payments for condo owners." This cost differential is becoming increasingly significant as insurance premiums skyrocket across the state.

Additionally, inland Florida benefits from newer construction. "Condo buildings in central Florida tend to be newer and up to date with recent regulations," Maggart explains. "The condo buildings here that are older than 30 years tend to be no taller than two stories, so they're not required to go through the inspections that often drive up HOA dues."

The Impact of Senate Bill 4-D on Florida's Condo Market

Florida's 2022 Senate Bill 4-D has fundamentally altered the condo market landscape. Implemented following the tragic 2021 Surfside condo collapse that claimed nearly 100 lives, this legislation mandates structural inspections for buildings at least three stories tall once they reach 30 years old (25 years if within three miles of a coastline). It also requires substantial reserve funds for future repairs and maintenance.

The December 31 compliance deadline triggered widespread HOA fee increases and special assessments, particularly affecting older coastal developments. This regulatory burden is significantly lighter in inland areas where:

• 47.7% of inland condo inventory is over 30 years old, compared to 57.1% on the Gulf Coast and 71% on the Atlantic Coast

• Many inland buildings are under three stories and exempt from the most stringent requirements

• Newer construction generally means better compliance with modern building codes

The regional HOA fee disparity is striking. Tallahassee boasts the lowest median monthly HOA fee at $250, followed by other inland metros Ocala ($300) and Gainesville ($346). Compare this to coastal areas like Key West, where the typical HOA fee reaches $1,063, or Miami at $965 monthly.

Natural Disaster Risk: A Critical Factor in Market Performance

Flood risk represents perhaps the most significant advantage for inland properties. Just 4.8% of inland Florida condos face high flood risk, dramatically lower than the 59.4% on the Gulf Coast and 45.7% on the Atlantic Coast.

Juan Castro, a Redfin Premier agent in Orlando, highlights the ongoing challenges coastal areas face: "A lot of homeowners associations on the coast are still paying for hurricane damage that happened years ago. Take Daytona Beach—many of the buildings there are still working to fix seawalls and amenities destroyed by Hurricane Ian in 2022."

The correlation between flood risk and HOA costs is stark. Key West, with 81.1% of condos facing high flood risk, also has the highest HOA fees at $1,063 monthly. Conversely, Tallahassee, with just 0.9% of condos at high flood risk, maintains the lowest fees at $250.

Castro adds, "The condos in Orlando are newer, more resilient and 50 miles away from where storms typically hit," underscoring the geographic advantage.

Market Dynamics: Rising Inventory Amid Changing Buyer Preferences

Despite price resilience, inland Florida's condo market faces challenges. Inventory surged 37.5% year-over-year in January, exceeding the Atlantic Coast's 27% increase and the Gulf Coast's 19.2% rise. Simultaneously, inland condo sales dropped 15.9%, compared to declines of 7.8% on the Gulf Coast and 6.9% on the Atlantic Coast.

The single-family home sector shows greater stability, with inland Florida sales dipping just 2.1%, while Gulf Coast and Atlantic Coast sales increased 7.3% and 2.5% respectively.

Castro describes the current market state: "Buyers have so many options that they're overwhelmed. A lot of condos just aren't selling. They'll sit on the market for 200 days, go off the market, and come back on later for a lower price. Sellers are offering major concessions."

This creates a paradoxical situation where overall prices rise even as many individual units languish on the market. "The condos that do sell are the best ones on the market, and there's competition for those, which may be one reason sale prices are resilient even though the market is slow," Castro explains.

Market Spotlight: Examining Inland Florida's Top Performing Areas

Among inland Florida metros, Gainesville leads with a 15.2% year-over-year price increase to $220,000, despite a 19.2% drop in sales volume. Lakeland follows with a 13.4% price gain to $175,750, though sales plummeted 31%.

Orlando, the region's largest market, saw prices increase 4.3% to $208,500, with sales declining 13.6%. This modest growth may partially reflect a recovery from low prices in January 2024.

Not all inland areas are thriving equally. Ocala experienced a 14% price decline to $128,000, with sales falling 40%. Tallahassee remained relatively stable with a slight 0.6% price decrease to $169,000, while maintaining consistent sales volume.

Insights

Why are inland Florida condo prices rising while coastal properties decline?

Inland properties benefit from a triple advantage: substantially lower insurance costs, reduced exposure to natural disasters (particularly flooding), and newer construction that often exempts them from costly regulatory compliance measures. These factors combine to create lower monthly carrying costs, maintaining buyer interest despite market challenges.

How significant is the HOA fee difference between coastal and inland condos?

The disparity is substantial. Coastal metros like Key West ($1,063/month) and Miami ($965/month) have HOA fees nearly four times higher than inland areas like Tallahassee ($250/month) and Ocala ($300/month). This translates to thousands of dollars in additional annual costs for coastal condo owners.

Is now a good time to buy an inland Florida condo?

Market indicators are mixed. While prices are rising, inventory has surged 37.5% year-over-year, giving buyers significantly more options. The best properties still attract competition, but many units sit unsold for extended periods. Buyers who prioritize quality properties in desirable locations may still find strong investment opportunities, particularly compared to coastal alternatives.

Will HOA fees continue rising in inland Florida?

Most likely yes. While inland areas currently enjoy lower fees, they're increasing at concerning rates—Tallahassee and Lakeland saw HOA fees rise 25% and 27.6% year-over-year, respectively. Many Orlando condo towers built in the early 2000s will soon reach the 30-year mark requiring inspections, potentially triggering additional fee increases.

How does flood risk impact condo values and insurance costs?

The correlation is direct and significant. Areas with high flood risk consistently show higher insurance premiums and HOA fees. This impact extends beyond immediate repair costs to include preventative measures, higher insurance deductibles, and additional reserves required by lenders and regulators. The inland advantage in this area appears sustainable long-term as climate concerns persist.