Miami & Miami Beach Condo Trends – February 2008

February 26, 2008 by Lucas Lechuga

Below, you will find the Miami-Dade County condo inventory and months of supply figures for February 2008. The first box to the left reveals the total number of condos that are currently available for sale on the MLS throughout Miami-Dade County. The second box discloses the total number of closed sales that occurred in the month of January 2008. The third and fourth boxes show the months and years of condo supply in Miami-Dade County. As you can see, the figures are also subdivided into various price ranges to reveal which part of the condo market has been affected the most.

Miami-Dade County Condo Supply - February 2008

Since the January 2008 update, the overall condo supply in Miami-Dade County has increased about 10.3 percent. Most the increase, however, was due to a 25.1 percent increase in the $0-$249,999 price range, where about 41 percent of the overall condo inventory resides. The $250,000-$499,999 and $500,000-$999,999 price ranges had slight increases of 4.5 percent and 2.8 percent, respectively. The $1,000,000-$2,499,999 price range had a big drop of 25.6 percent and the $2,500,000-$4,999,999 price range had an even bigger drop of 39.8 percent in its condo supply.

As many would expect, the lower part of the market is experiencing the most problems, mainly due to it now being much more difficult to obtain financing for those looking to buy in this segment of the market. Those in the market to buy a condo for over $1M, oftentimes, can do so without any financing whatsoever.

The following statistics encompass only those condos located throughout Miami (not other areas of Dade County such as Miami Beach, Aventura, Sunny Isles Beach, etc.):

Miami Condo Supply - February 2008

Miami has continued its upward climb in condo supply this month with a 24.3 percent increase since last month. Again, we see that the lower and upper parts of the market have performed quite dissimilarly. The condo supply in the $0-$249,999 price range has increased 20.6 percent while the $250,000-$499,999 price range has gone up a shocking 62 percent. On the flip-side, the condo supply in the $500,000-$999,999 price range has gone down 26.7 percent and the $1,000,000-$2,499,999 has dropped almost 50 percent.

The following statistics encompass only those condos located throughout Miami Beach:

Miami Beach Condo Supply - February 2008

Overall, Miami Beach experienced a 19 percent drop in its condo supply levels since last month. I was a bit surprised but I probably shouldn’t be. Miami Beach did not come close to experiencing the level of development that we recently saw in Miami. Foreign and out-of-state buyers are also much more likely to buy a condo in Miami Beach than they are somewhere in Miami. I think we will continue to see a widening gap between the Miami and Miami Beach condo supply figures in the months ahead.

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43 Comments on "Miami & Miami Beach Condo Trends – February 2008"


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Anonymous
Solution
8 years 6 months ago

One wonders how many of the upper end $1M+ condos on the MLS were sold versus just taken off the market? Agreed, the foreign buyers want the beach, not inland, but that too will decline once the initial foreigner demand is satisfied and people realize prices are going to continue to decline.

Anonymous
BFG
8 years 6 months ago
I think it is important to look at why the supply decreased rather than just looking at the numbers. If the supply decreased because of sales, that is a good thing. More likely, the supply decreased because many condos were taken off the market. They may end up right back on the market at some point in the near future. I’ve noticed this trend in the past, where the supply may dip during the “season”, when out-of-towners temporarily take their condos off the market while they are in town, only to re-list them during the “spring selling season”. Others may… Read more »
Anonymous
tibor
8 years 6 months ago

my building opera tower is the number #1 condo in america.

Anonymous
Raffi
8 years 6 months ago

tibor,

hahahahaha

Anonymous
8 years 6 months ago

Many owners keep their units listed for sale even though they may have filled them with tenants which will not move for at least 6-12 months. I often see in the MLS “This unit is rented until xx/xx/xxxx. This is something a buyer is not interested in anyway so your inventory of condos in a position to actually resell to an end-user is not as large as these statistics show. It would be virtually impossible for Lucas to go through and make the distinction of actual closeable properties but I thought it should at least be mentioned.

Anonymous
Michael
8 years 6 months ago

With a 6.31 YEAR supply, I doubt it makes much of a difference Samir. But thanks for sharing. I would also point out that condos under construction also aren’t on the MLS generally. With a 20 year additional supply that was being added, that 6.31 year supply could grow to a 10 year supply.

Anonymous
Wild Bill
8 years 6 months ago

The MLS availability numbers are much lower than actual units available. My condo in Miami Beach has 10% of the units that are for sale by owner. Add all the units that were bought in bulk and units rented by developers and the numbers are much worse.

Anonymous
Generalmagic
8 years 6 months ago
These are all great points made by everyone here. Bottom line is we are trouble unless things turn around. A couple of points I would like to add. How many more months until unit owners who recently closed on new construction run out of cash with the negative they have on the units. Also, I would like to address the rampant mortgage fraud units that have not even come to the market. I know units on the beach that falsely got appraised at $800K and now are literally worth $400K. This is a big problem especially when regular sales are… Read more »
Anonymous
Julian
8 years 6 months ago
So one question answered by the realtors. Years supply in the $1m range is now nearly 9 years. There appears to a be a massive problem with the data though – you will also see in the next six month, years supply falling as non-MLS units such as closings on Paradiso, MEI etc, falsely boost the no of units closed. If my understanding of the way this data is compiled is correct, it can actually be quite misleading. Lucas- can you clarify? Are the closed sales from government data and the available is from the MLS? If my analysis is… Read more »
Anonymous
8 years 6 months ago

Julian,

That’s not correct. New construction closings do not appear as closed sales in the MLS. The data above is strictly from the MLS.

Anonymous
Interesting
8 years 6 months ago

http://www.nytimes.com/2008/02/26/business/26econ-web.html?ex=1361768400&en=92b6997853438827&ei=5124&partner=permalink&exprod=permalink

“A recent report by analysts at Credit Suisse, the investment bank, said that prices in some metropolitan areas like Phoenix, Miami and Los Angeles would have to decline by 20 percent to 40 percent more than they have already fallen for home affordability to be restored to its long-established level.”

Anonymous
Julian
8 years 6 months ago
Lucas – thanks, stand corrected. So it is more of an existing inventory on existing sales comparison. My second question – what was the monthly or annual Miami Beach sales rates in 1997-2002/3? I.e. are we now at a normalised sales rate (72 units per month?) based on these years? What is the number of units in the housing stock today (pre-new construction closings in 08/09) versus say year 2000? I think this will give us a good idea of how far from bottom we are (I am not convinced real estate drops like equities do by the way). I’ve… Read more »
Anonymous
Off Topic
8 years 6 months ago

Off topic question (sorry about that) – does anyone know if La Perla in Sunny Isles is valet ONLY parking?

Anonymous
cord
8 years 6 months ago

Lucas,

Did you change the formating of the comments? The font is now very small and hard to read…

Anonymous
8 years 6 months ago

I know. I’m not sure what caused it. Something within the comments is causing it because the front page is not having this problem. I’m having my developer take a look at it.

Anonymous
8 years 6 months ago

Maybe something in your related posts pluggin. The font seams to be the same size as that.

Anonymous
cyrus
8 years 6 months ago
OFHEO just relieved some caps on FANNIE MAE and FREDDIE MAC which will open up billions for them to lend out in the mortgage markets. this was a big shackle taken off their necks. don’t know if it will help the miami condo much …but it’s a step … a very slow step to helping potentially stabilize the lockup in the lending markets. we won’t see the prices of the past few yrs again (maybe not for 5, 10, 15 yrs)…but maybe it’ll help somehow. i’m realistic about the r/e markets as many who write here are. we are smart… Read more »
Anonymous
Julian
8 years 6 months ago
Cyrus (1) dismantle/raze to the ground and convert back to parkland/everglades some condos and some communities. Protect these lands for the future. CHange your zoning policies and make permission much harder to get in the future. Building profligacy always ends in teas. (2) taxes. Cut property tax to either 1% of value or put property in bands with inflation adjustment to the $ tax in each band. Raise additional revenue, initially through sales tax, but then income tax for earnings made in state of Florida. It’s going to happen, just make it happen. (3) Keep inflation high, rates low. Inflates… Read more »
Anonymous
BFG
8 years 6 months ago
“… anyone have ideas of how this situation can be somewhat stabilized/improved? besides the big price correction that’s necessary … trying to think outside the box…” The simplest solution to the situation is to let the market correct itself. I don’t see any reason to try and artificially “prop-up” the market. Who does that benefit, other than some speculators who paid too much for their property? There are plenty of people who want to move to Miami (and South Florida, in general) but can’t afford it. By all objective measures, there is currently a net outflow of people from Florida.… Read more »
Anonymous
Wild Bill
8 years 6 months ago
The Ponzi scheme mentality of the 1920’s market is still here, all we need is another hurricane like the one in 1926 to finish the game. Anybody here know what Three-card Monty is? The Realtors, developers lure the mark in with prospects of easy money and future gains. The mark then buys a condo in a up and coming area only to be alerted by the county court system that in fact the game really consists of liens, foreclosures,and contractors liens. The building department and government are also involved. They are the ones that made impact glass code approved for… Read more »
Anonymous
jcrimes
8 years 6 months ago
cyrus that’s a tough question. on one side of it, bfg is absolutely right – the only way this gets fixed is if you let it fix itself, i.e., let prices return to the fundamentals. not to mention, the moral hazard implications that are triggerd in trying to effectuate a solution are concerning. the gov’t didn’t save my ass when i bought CMGI when it was hovering at $150 a share (post split) and then proceeded to get crushed, so why should speculators in real estate fare differently? our system handsomely rewards risk takers when they are right. conversely, when… Read more »
Anonymous
Generalmagic
8 years 6 months ago

As a realtor we need a hurricane to speed up the process :) Little by little we see the decline in the market. The sooner the better! I still see agents over price units. It is so frustrating, when these units will not appraise and you can clearly see that the same unit on a lower floor is priced $200k lower. All these realtors are doing is flooding the market wth units that won’t sell.

Anonymous
NJ
8 years 6 months ago

Generalmagic – As a realtor, what pricing needs to be considered to move product today? As an example if preconstruction was $350 psf on 12/03, where is the market today? Is there any traffic that’s purchasing?

Anonymous
Generalmagic
8 years 6 months ago

I think we are going to go below those prices. But it all depends on project! Quantum is a building that really should hold up well. I think prices there are around $250 psf. I see a lot of buyers shopping around with offers being made at about $100K below asking. I work on the beach and I mostly see foreigners actually closing on deals. It is just tough and we are slowly reducing prices. I wish it would just happen apready!

Anonymous
Sean
8 years 6 months ago
Lucas The 19% decreace in Miami Beach inventory month over month given the amount of closings makes the data seem very shaky no? I realize that Miami Beach is a very different from Miami but we all watch the market closely. One has to wonder if this is in fact some kind of negative indicator of something ominous? Maybe a chunk of inventory is moving off MLS & into bank or auction category? Either way, if that statistic was a valid & positive reflection of the market I think its safe to say it would be plastered all over the… Read more »
Anonymous
Words
8 years 6 months ago

Proflipperate: When flippers entered the condo market, condo construction proflipperated to levels never seen before. Now prices are continuing to proflopperate downward over the next three years.

Anonymous
Juan
8 years 6 months ago

Lucas or Samir or Anyone who knows,

Kind of off topic but, what experience have you guys had with bulk condo sales? I hear from some that it is a waste of time, but others seem to be excited about the opportunities.

Anonymous
NJ
8 years 6 months ago

Generalmagic – Just to understand where the current bottom is are you saying a project like Quantum is as much as 30% below a 2003 $350 psf preconstuction price?

If that is the case why would anyone close going forward.

Lucas – Any word on when the WSJ article will be released?

Anonymous
8 years 6 months ago

NJ, I’m not sure. I thought that it would be released by now. The reporter did say that he thought it would come out some time this week. There’s never really a way to know though since it all depends on what other stories they want to print for the following day.

Anonymous
8 years 6 months ago

Juan,

I used to get calls for these a couple times a week but I used to shun them off because most of the developers have just begun closings so the bulk deals don’t tend to take place until the developers have closed every possible unit they can close. Every building is on a different schedule but I do expect the bulk buyers to resurface soon. Some either only want oceanfront or they want affordable waterfront. I would expect them to buy and hold for 3-5 years and slowly sell off product after that term.

Anonymous
BFG
8 years 6 months ago
Lucas said: “The $1,000,000-$2,499,999 price range had a big drop of 25.6 percent and the $2,500,000-$4,999,999 price range had an even bigger drop of 39.8 percent in its condo supply” I just looked back and compared the above numbers to January and realized why some of those changes were so dramatic: – First of all, on first read, I thought you meant that the number of units on the market decreased 25 and 39%. In fact, you were referring to the “months of supply”. You might want to emphasize that. Because in raw numbers, the picture looks quite different. Here… Read more »
Anonymous
Juan
8 years 6 months ago

Samir,

I appreciate the response.

Anonymous
Buyer Tom
8 years 6 months ago

BFG – Excellent clarification.

Anonymous
BFG
8 years 6 months ago

Also note the same thing for the “it’s different here” Miami Beach area:

Price Range:
Month: Inventory / Monthly Sales
——————————————
January 2008: 4282/ 58
February 2008: 4299 / 72

A small increase in number of condos on the market, and a 14 unit increase in sales.

A 14 unit increase in sales out of about 4300 still on the market – doesn’t paint a very rosey picture to me.

Anonymous
Buyer Tom
8 years 6 months ago

I think it is clear, with more condos coming online, that the available condo units will continue to far eclipse the monthly sales. I wouldn’t doubt a 100 month supply is on the horizon by the end of the year.

Anonymous
NJ
8 years 6 months ago

Therefore with so many Miami condos on the market have they become a simple commodity with radical price swings and volume discounts?

How does an owner differentiate their product to move it? Location had been important but after looking on-line at 50 condos within a narrow price and location, only two popped due to furnishing/staging. It may be superficial but realtors must have a difficult time getting people to clean up or update the older properties that have 20-30 year old stuff.

Anonymous
Renter in Miami
8 years 6 months ago

Putting the following in perspective…

Price Range:
Month: Inventory / Monthly Sales
——————————————
January 2008: 4282/ 58
February 2008: 4299 / 72

Lucas’ stats are inventory at month’s end. So 4282 was ending inventory in January. 4282 – 72 sales in February + 89 new listings in February = 4299 listings at end of February.

Bottom line is that listing are overwhelming appetite for purchase.

Anonymous
lara
8 years 6 months ago

someone asked about La perla parking.

It has only valet parking

Anonymous
Off Topic
8 years 6 months ago

lara

I ended up asking the realtor that had the rental listing and he said that it was my choice, valet or self-park in the La Perla????

Anonymous
Mark
8 years 6 months ago
Anonymous
Mark
8 years 6 months ago
This is not pretty. Miami is looking at another 8% loss next year, and a 25% haircut in the next 4 years. In my opinion, that is being kind. Factoring in the new hyper inflation of at least 3-5% per year, condo owners, hotel conversions, half occupied developments, and over supply will shave some 50% in inflation adjusted prices off some neighborhoods. Yes, I said 50%. You heard it hear first. Don’t believe me? Take a drive to Miami and see all of the unfinished condos. Travel to West Palm Beach and marvel at the numerous abandoned condo projects. Think… Read more »
Anonymous
Mark
8 years 6 months ago

great site! thanks.
please, take a look here too:
http://floridaoceanfrontcondosmiamisunny.blogspot.com/

Anonymous

[…] Earlier this afternoon, someone left a link in the comments area of a previous post to a Florida Association of Realtors article that reveals an improvement in real estate inventory levels for the state of Florida in the first quarter of 2008. I wanted to see how the Miami and Miami Beach condo markets fared in comparison, so I decided to provide new supply figures for May 2008. My last Miami & Miami Beach Condo Trends report was published in February 2008. […]

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