Why didn't romance languages develop in the balkans despite being apart of the Roman Empire?

Great question. I may go off on a few tangents, but bear with me. There is a general disinterest in Western historiography for the Balkans in this period, despite it being an important and unique chapter in the transition from late antiquity to the early Middle Ages.

Latin and Greek were in fact commonly spoken throughout the Balkans, from the 1st century BC until the early Middle Ages. However, this was a largely urban phenomenon. City-dwellers along the Adriatic coast and in major inland cities such as Sirmium (today's Sremska Mitrovica) spoke Latin, but the countryside was inhabited by various Illyrian, Thracian, and Dacian speakers, along with other dialects we can only speculate about. The Dalmatian vulgate, descended from Latin, was the predominant urban language in Dalmatia well into the early modern period. The mountainous geography and low level of urban settlements were a barrier to latinization, even at the height of roman authority in the Balkans however.

We're not certain exactly how or when Slavic languages came to dominate the Balkan Peninsula, nor the relationship between ancient Illyrian or Thracian with modern albanian. We're not certain if the two even existed as homogenous groups, let alone languages. However, we know that with the gradual decline in Roman authority on the Danubian frontier, combined with the archeological evidence for shrinking or even disappearing towns and cities, the economic, political, and cultural ties between the more romanized coastal regions and the interior were very much reduced by the 7-8th century AD. Without trade links and provincial administration, Latin fell out of use and was replaced by Slavic languages. Again, this is an extremely murky period, and I've simplified my answer as much as possible.

For more information, I would point anyone interested towards Florin Curta's "The Making of the Slavs" (2001), or Danijel Dzino's "Becoming Slav, Becoming Croat" (2010). Dzino in particular focuses much of his research on the shift from a "Latin" Balkans to a "Slavic" Balkans, and how this is generally misunderstood in both native and external narratives. John V.A. Fine's two-volume history of the Balkans in the early and late Middle Ages also provides a good background on this transitionary period.