South Florida Condo Financing: Why Half of Sales Are Cash

In July, 47.5% of existing condo sales in Miami-Dade closed all cash. In Broward it was 49.9%. In Palm Beach County it was 57.2%. Those figures come from the MIAMI Association of Realtors' July data, released August 17.

The easy read is that wealthy buyers are dominating the market. The accurate read is that South Florida condo financing has split in two: for a large and growing share of the inventory, an agency mortgage is no longer available at any price. Cash is not winning the bidding. Cash is the only bid the building can accept.

That distinction matters, because it changes what the opportunity is. A market where financing is scarce and product is plentiful is not a market to avoid. It is a market where the lender who can actually underwrite the asset gets to choose from the entire board.

What Changed for Condo Loans on August 3

Two weeks ago, the agency review path most condo loans traveled through quietly closed.

Fannie Mae's Lender Letter LL-2026-03, issued March 18, retired Limited Review for established condo projects for applications dated on or after August 3. Freddie Mac's Streamlined Review closed on the same date. Both moves force projects that previously cleared on an abbreviated file into Full Review, where the association's budget, reserves, insurance, litigation, delinquency, and inspection status all get read.

The same letter tightened the reserve math. Lenders must now verify that a project budgets the highest recommended reserve allocation from its reserve study. Baseline funding plans that let a reserve balance run toward zero no longer qualify. And for applications dated on or after January 4, 2027, the replacement reserve requirement rises from 10% of budgeted assessment income to 15%.

Layer that onto a rule that has been in force since September 2023. Under SEL-2023-06, a project is ineligible if it carries unfunded repairs of more than $10,000 per unit that should be undertaken within the next twelve months. A failed or missing mandatory structural safety inspection is also disqualifying.

Read those together and the picture is straightforward. Florida's Structural Integrity Reserve Study deadline for unit-owner-controlled associations existing on or before July 1, 2022 passed on December 31, 2025, with a concurrent-filing option that runs to December 31, 2026 for associations whose milestone inspection is due by then. Every association that has completed one now has a written, board-approved number for what its building needs. In a lot of buildings that number is well above $10,000 per unit. The study that the state required in order to protect owners is the same document that makes the building ineligible for agency financing.

Fannie Mae's own public statement on its project eligibility database, as of August 2025, named insufficient master insurance and critical repair issues as the top two reasons projects carry an ineligible status. Both of those pressures run straight through Florida, and the August rule changes push in the same direction.

The FHA picture is stark. Of roughly 2,397 condo buildings in South Florida, 21 are FHA approved. That is under 1%.

The Cost Structure Is Not a Spike. It Is the New Base.

The temptation is to treat this as a temporary insurance problem that fixes itself. The data says otherwise, and it says something more specific than the headlines do.

Florida homeowners insurance is genuinely improving. The Office of Insurance Regulation's July 2026 stability report shows average homeowners premiums down in 51 of the state's 67 counties, and Citizens' recommended filing called for an 8.2% decrease on HO-6 condo unit owner policies.

The master policy is going the other direction. In the Citizens rate changes effective July 1, 2026, commercial residential multiperil coverage for condominium associations rose 7.7% statewide, and wind-only coverage for condo associations rose 14.1%. Individual owners are getting relief. The building is not.

Association budgets have reset rather than recovered. FirstService Residential's review of the 2025 budget year, reported that December, put the average monthly association fee for South Florida high-rises of seven stories or more above $1,900 in Miami-Dade, up roughly $500 from the prior year, with $377 of that monthly fee going to insurance alone. Reserve contributions across their portfolio moved to 12 cents of every budget dollar in 2025 from 9 cents in 2024.

Here is the part that matters for anyone hoping the fee side normalizes. FirstService's 2026 high-rise report, released August 5, found meaningful premium reductions in South Florida and associations redirecting that relief into reserve contributions rather than lower fees. That is the rational move for a board staring at a completed reserve study, a milestone repair list, and a lender guideline that reads the reserve line. It also means the owner's monthly number does not come down, and the building's eligibility profile improves slowly at best.

Tallahassee has acknowledged the strain without removing it. HB 913, signed June 23, 2025, raised the reserve item cost threshold from $10,000 to $25,000, allowed associations to fund reserves through a special assessment, a line of credit, or a loan, and permitted boards that have completed a milestone inspection to pause or reduce reserve contributions for up to two consecutive annual budgets through December 31, 2028. Miami-Dade County relaunched its condominium special assessment loan program on June 1, 2026, with roughly $15 million in new funding, a $50,000 per unit cap, no interest, and terms up to 40 years. The program has deployed about $60 million and reached roughly 2,100 families to date.

Those are real forms of relief for owners. None of them make the building warrantable. A board that pauses reserve funding to pay for the repairs the milestone inspection identified has solved a cash flow problem and created an agency eligibility problem.

Non-Warrantable Condo Loans: What the Gap Means for Sponsors and Brokers

The financing gap is now the largest single variable in South Florida condo pricing, and it splits the opportunity into two distinct trades.

The first is unit-level. Miami-Dade closed July with 12 months of existing condo supply, Broward with 10, and both counties saw median condo prices decline year over year while transaction volume rose. Miami-Dade condo sales were up 11.4% year over year. That combination, falling prices and rising volume in a market with a year of standing inventory, is what a market clearing through the cash channel looks like. An investor who can finance a unit in a building the agencies have ruled out is not competing with the retail buyer pool. They are competing with the fraction of it that has liquid cash, and they are buying against a discount that exists because of the lender's absence rather than the asset's quality.

This is the case for DSCR. A rental unit in a non-warrantable building still produces rent, and rent is what a DSCR loan underwrites. No W-2 verification, qualification on the property's cash flow, with 30-year fixed or interest-only structures. The building's agency status is not the constraint. The unit's coverage is.

The second trade is building-level, and the numbers have gotten serious. Harbor Towers & Marina in West Palm Beach, 61 units across two buildings, closed in February 2026 at roughly $100 million. Bayshore Park in Coconut Grove, 39 units, completed its buyout in March, where the seven holdout units averaged $985,714 against $661,843 for the 32 owners who agreed early. In February, a pair of West Palm Beach buildings drew a combined offer near $430 million, which has not closed. The reason those prices work is land basis. Roughly 90% of Florida's condo units sit in buildings 30 years or older, and about 86% of active South Florida condo listings are in that cohort. A lot of that stock occupies waterfront dirt that would never be zoned or assembled the same way again.

Both trades need capital that moves on the asset and the sponsor, not on a project eligibility database.

The Real Risk Is in the Declaration, Not the Repair Budget

Underwriting a condo assemblage on the construction cost is the mistake that market has already made once, expensively.

In Biscayne 21, a developer acquired 183 of the building's 192 units at an average of roughly $697,000 apiece against a $150 million loan. The nine remaining units stopped the project. The original declaration required unanimous consent to terminate the condominium, and the developer's position was that the threshold could be amended down to 80%. Florida's Third District Court of Appeal disagreed, holding that lowering the threshold would strip each owner of an implied veto. In October 2025 the Florida Supreme Court declined to review it. The unanimity requirement stood. Owners were displaced for years, and the litigation continues.

The repair estimate on that building was between $61 million and $65 million. That was never the number that killed the deal. The number that killed it was in a document recorded decades earlier.

The lesson generalizes. In a condo repositioning, the termination provision in the original declaration is a senior underwriting fact, on the same level as title and zoning. So is the holdout premium, because the Bayshore Park spread between $985,714 and $661,843 is not an anomaly. It is the price of unanimity once the last owners understand what their signature is worth. A lender who reads the declaration before sizing the loan is protecting the sponsor. A lender who reads it after the third capital call is not a lender the sponsor should have used.

Why We're Paying Attention

The spread between what an asset is worth and what an agency will lend against it is where private credit actually earns its position, and in South Florida condos that spread is currently as wide as it has been in the post-Surfside era. A building can be structurally sound, fully occupied, cash flowing, and permanently outside agency guidelines because of a reserve study line item or a master policy renewal. That is a documentation outcome, not a credit outcome, and treating the two as the same thing is how capital leaves money on the table.

It is also a market where speed is not a marketing claim. Association budgets get adopted, special assessments get voted, milestone deadlines land, and insurance renews on calendars the buyer does not control. In that environment, bridge financing that closes on the contract's schedule is the difference between a deal and a post-mortem.

Every building is a different file. That is exactly the point. The projects the agencies screened out on a rule are the projects that reward someone willing to read the documents.

The financing gap in South Florida condos is not going to close on its own. Someone is going to underwrite it. Working on a condo acquisition, a non-warrantable unit, or a building-level repositioning? Let's talk. deals@lendyx.com.