Capitalizing Risk, Regulation, and Revised Perceptions: Sequential Shocks in Florida's Condominium Market

Housing markets capitalize new information about future risks and ownership costs, yet less is known about how capitalization evolves when closely sequenced information and regulatory shocks alter what markets had previously priced. This study examines Florida condominium market following the Surfside collapse and the subsequent enactment of Senate Bill 4-D (SB4D). Using statewide administrative condominium transaction data from 2020 to 2024, the analysis employs a common-treatment, three-period difference-in-differences design comparing condominiums in buildings inferred to meet the statutory three-story threshold with those in lower-rise buildings across the pre-Surfside, post-Surfside transition, and post-SB4D periods. The results show statistically significant, negative capitalization at the three-story threshold during the post-Surfside transition, with an estimated relative price decline of approximately 3.4% in the adjusted specification. Negative capitalization is significantly greater in the post-SB4D regime, reaching approximately 6.1%. Heterogeneity results further show greater post-SB4D negative capitalization among younger and higher-valued properties, with weaker evidence for properties closest to the coast. These patterns are consistent with capitalization reflecting revisions in perceived future user costs rather than the absolute level of those costs alone. A policy-anticipation analysis further divides the post-Surfside transition into an immediate post-collapse period and a pre-enactment period in which regulatory intervention was increasingly anticipated. Capitalization does not differ significantly between these two periods, suggesting that the greater negative capitalization in the post-SB4D period is less likely to reflect a progressively intensifying post-Surfside effect.