Miami & Miami Beach Condo Trends – May 2008

May 14, 2008 by Lucas Lechuga

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.

Below, you will find the Miami-Dade County condo inventory and months of supply figures for May 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 April 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 most affected.

(Note: If you’re over the age of 40, you may want to have someone younger read the numbers below aloud to you. Either that, or bust out a magnifying glass.)

Dade County Condo Trends - May 2008

I was shocked to see that the months and years of supply figure had gone down significantly since my February update. The number of available condos has fallen slightly since February but the number of sold condos in the previous month has gone up about 41 percent. That’s a huge increase in sales activity. I was puzzled that the number of condos on the market actually fell. We’ve seen a lot of new condo buildings begin closings since the beginning of the year. I would have expected the number of available condos on the market to be much higher than in February.

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 Trends - May 2008

The number of available condos on the market went up slightly since February but again the number of closed sales within the previous month showed a proportionately much larger increase. Miami condos experienced around a 44 percent increase in closed sales when compared to the figures presented in February. Miami now has a 5.32 year supply of condos. The $250,000-$499,000 price range has the highest supply at 8.16 years while the $1,000,000-$2,499,9999 is sitting on only 2 years worth of supply.

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

Miami Beach Condo Trends - May 2008

There’s been a decrease in the number of available condos in Miami Beach since February and about a 57 percent increase in closed condo sales. Miami Beach is now sitting on 3.03 years worth of condos. The $500,000-$999,999 price range has the highest supply of condos at 3.57 years while the $1,000,000-$2,499,999 price range is the healthiest at 2.32 years worth of condos.

What does everyone make of these figures? There’s definitely been an increase in the number of closed condo sales since February. I don’t think anyone can dispute that. However, what is happening to all the new condos that have hit the market since February? I expected sales activity to have picked up because of declining values and better opportunities than were available in February but I also expected to see a much higher number of available condos on the market. Are most of these condos being rented or is it too early to see an impact from the newly constructed condos because developers, for the most part, don’t list there unclosed condos on the MLS?

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92 Comments on "Miami & Miami Beach Condo Trends – May 2008"


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Anonymous
Renter Tom
8 years 4 months ago
“Are most of these condos being rented or is it too early to see an impact from the newly constructed condos because developers, for the most part, don’t list there unclosed condos on the MLS?” Yes many are being renting but my money is that the later is a bigger factor. My prediction has been and remains that the second half of the year, particularly toward the end of hurricane season, is when we will really see the blood in the streets and the full effect of the credit crisis and decline in prices. Check back with me in December… Read more »
Anonymous
8 years 4 months ago

We’re now entering the slow season. If we continue to see a decline in the condo supply 3 months from now then we may have something here. I don’t expect that to happen but, then again, I expected the supply to have grown significantly since February and instead the opposite occurred. I guess time will tell.

Anonymous
JNadrowski
8 years 4 months ago

I think I speak for everyone when I say how much it is appreciated that you do these calculations.

With that said, your numbers surprised me. Especially with so many headlines today about foreclosure number are through the roof in Nevada, California and Florida (i.e. http://www.sun-sentinel.com/business/realestate/sfl-foreclosure0514,0,5323786.story).

My only thought is that the uptick is because of the new condo building closed sales…albeit a small percentage of units available in the buildings? But that the non-closed (returned) units are not yet listed on MLS?

Anonymous
8 years 4 months ago

JNadrowski,

The closings for new condos don’t appear in the MLS. There would be a much higher number of closed sales if those condos were taken into account as well. Only resales (those not closed through a developer) are included in the MLS numbers.

Anonymous
Once Again
8 years 4 months ago

I agree the units are empty but just not showing up on th eMLS. Look at the Plaza Brickell just a few units show. Find it hard ot believe less than 5 units for a 1000 unit PLAZA.

Must be developer take backs or people just hanging on hoping for something that isnt goign to happen.

Thee blood will spill dont try to cover it up with a bandaid Same thing over and Wind. Not many on MLS but I find it hard to believe that everyone closed.

Anonymous
Renter Tom
8 years 4 months ago
Foreclosures are skyrocketing and could reach 1 for every 25 households before all is said and done… Ouch. The worst of the foreclosures is yet to come. Bankrate article today: Miami/Fort Lauderdale Miami’s party scene may be sought by celebrities, but Markstein says it’s ground zero for oversupply. The city also is one of Local Market Monitor’s most overpriced markets, and foreclosures are the eighth highest in the country. Single-family sales are improving, but forecasters are monitoring the glut in the condominium market to see how many units close this year, Porter says. Overall, the Southeast Florida housing market remains… Read more »
Anonymous
Richard
8 years 4 months ago

The Plaza sales office looks like a zoo with tons of people looking to buy and rent–amazing. Its interesting to note list price and closed sale prices of condo’s shows only normal differences–not the huge discounts one might expect from what you read of the market.

Anonymous
GroundZero
8 years 4 months ago

My guess is that foreclosures are responsible for taking most of these units off the MLS. Foreclosures filed last fall were going to auction in the last few months. Agents will stop listing a property as the auction approaches and it takes a couple months after auction before REO can be relisted on the MLS. This, plus a bargain sale spike could account for the flat inventory numbers.

Anonymous
Mo
8 years 4 months ago

They refuse to even auction off the properties because then they have to take the write down…

See here for a diagram:

http://patrick.net/wp/?p=601

Anonymous
8 years 4 months ago
The uptick in condo sales in recent months should not be surprising. Historically, winter is the selling season in Miami, sales increase when the snowbirds are here and drop when they fly home. This year in particular has seen an increase in sales to Europeans and Canadians due to an incredibly favorable exchange rate and bargains galore. In many articles last year, I predicted this, so no real surprise here. Should this news be viewed as rosy/glass half full? Only if you are eagerly over-optimistic or a real estate salesperson. They have to and always will be happy at any… Read more »
Anonymous
SBKI
8 years 4 months ago

Could the drop in resale listings come from people entering into litigation to get their deposit back. I would assume the unit would be tied up for a little while. Developer probably would not want to add more supply maybe trying inhouse sales/rentals… Related?

Still not convinced the bulk buyers are out there. Why buy avdepreciating asset when you have other choices!

Anonymous
JL
8 years 4 months ago
The below isn’t meant for an A/B comparison. But it really puts in perspective what’s going on in the Miami condo market. People talk about how SoFi was built up “overnight”… If you look at the 5 major condos in SoFi on/near the Bay… Related built them all and they totaled out to about 1,300 units over 8 years and that felt like “overnight”. There’s a reason why all the new construction look like big rectangles. Rectangles are the most efficient way to cram in as many units as possible. Icon Brickell is going to try to do in 1… Read more »
Anonymous
8 years 4 months ago
A decline in inventory that is not supported by sales is definitely an indication of a surging rental market. I’m sure the effect is compounded when factoring foreclosures. According to Peter Zalewski of Condo Vultures, condominiums account for 3,538 foreclosure actions in Miami-Dade and Broward counties. Regarding the rosey outlook for the 2nd half of ’08 reported by FAR, I’m not as confident. Miami will see 31 buildings with more than 10,000 units come online by the end of this year, so any gains on decreasing the amount of inventory is going to lost. This is yet another clear indication… Read more »
Anonymous
Renter Tom
8 years 4 months ago

Jack McCabe said “Rents will drop. Million dollar asking price condos will rent for $4,000 a month and lower.” I know of one $1.85M (list price) condo, brand new, for lease at $4k/month…. and several $1M+ condos for $3.5k/month and $3.7k/month….. So, you can chance the “will” to “are”….. :-)

Anonymous
Michael W
8 years 4 months ago
Hi, My wife and I are from NY (born and raised in France and Italy), and are looking to buy a pied-a-terre in Miami (south of Aventura to south Beach). With the uncertainty of the market, and the load of new units that will flow the market in the next months and years, we are not sure how to go about it and mitigate the risk. This is an apt that we intend to keep for a while so that’s already one important factor. My question to you, specialist of this area, is how to best take advantage of this… Read more »
Anonymous
Raffi
8 years 4 months ago

I agree with Jack, somehow I always agree with Jack.

Anonymous
Renter Tom
8 years 4 months ago

Bernanke is encouraging financial institutions to redouble their efforts to raise capital to improve their balance sheets… Why? Simple, as they have to revaluate their portfolio of real estate holdings (because of foreclosures now REO inventory) they will realize they are bankrupt.

See:

bubbletracking.blogspot.com/2008/05/dont-buy-into-hype.html

youtube.com/watch?v=LCW4A0ACDKM

Anonymous
Renter Tom
8 years 4 months ago

The REO inventory is the shadow inventory that isn’t reported so these new numbers do not accurately reflect the reality of the situation. It is much much worse, not getting better.

Anonymous
Renter Tom
8 years 4 months ago
Bernanke urged financial firms to raise more capital By Greg Robb Last update: 9:24 a.m. EDT May 15, 2008 WASHINGTON (MarketWatch) — Banks and securities firms should continue to raise capital to help them navigate the treacherous waters of the financial market turmoil, Federal Reserve Board Chairman Ben Bernanke said Thursday. “I strongly urge financial institutions to remain proactive in their capital-raising efforts,” Bernanke said in a speech to the Chicago Fed Bank’s annual banking conference. Bernanke couldn’t quite bring himself to criticize federal oversight of financial institutions, saying only that supervisors must redouble their efforts. Earlier this week, San… Read more »
Anonymous
8 years 4 months ago
Yes but they are raising capital so they are not insolvent in 6 months when they get this massive amount of REO’s in their books, with the Lis Pendis and the 8 month foreclosure process the banks and lenders are very aware what is coming to them in the next months and they need to raise capital. I deal with many foreclosures every day and the banks need to get organized to sell this, their departments do not have the infrastructure or staff to handle this inventory. Its almost impossible to get a hold of an asset manager or a… Read more »
Anonymous
8 years 4 months ago

Icon Brickell is 1800 Units not 1200 so add another 600 to the coming inventory on brickell

Anonymous
BFG
8 years 4 months ago
I would attribute most of the difference between the most recent figures and February’s numbers mostly to a seasonal change. The “years supply” percentages you post are showing big changes, but if you look at the raw numbers, the differences aren’t that big. Dealing in small sales numbers leads to big percentage changes. And of course, that’s ignoring the seasonal adjustments. For instance, Miami Beach’s sales volume went from 72 sales in Feb to 113 sales in May. That’s a 57% increase in sales volume. Sounds like a big improvement, right? But let’s put that in perspective – we’re talking… Read more »
Anonymous
Renter Tom
8 years 4 months ago

What is clear, and these numbers confirm it, the U.S. is in or near a serious and protracted residential real estate recession. Many areas are currently in a recession, others are near a depression and will cross the line in the next 12 months, a few have slight declines, and some that didn’t participate in the housing price bubble will see slight increases (albeit probably below the rate of inflation). Investing in residential real estate is pretty much dead right now…and with good reason. We’re back to housing as a place to live and enjoy…

Anonymous
Seanjohn
8 years 4 months ago

Would love to see any data that actually captures overseas buyers as a percentage in Miami & MB .
Michael W
I would suggest looking at bay view units in the Yacht Club. They allow monthly rentals which can help with the cost basis & the area is considered prime. Real advice is to hook up with Lucas & get your hands dirty, a lot to look at within your paramiters.

Anonymous
carbonblackcab
8 years 4 months ago

There is only so much capital out there that can rescue banks. Given the huge backlog of Foreclosure filings, local banks are in deep trouble. Expect to see some small to mid size banks to fail in the coming year.

Anonymous
Renter Tom
8 years 4 months ago
Foreign buyers would be smart if they separated their currency play from their real estate purchase. First, if you think the exchange rate is favorable and the dollar will weaken, then simply exchange currencies now…don’t let that be the reason to create a sense of urgency to actually buy real estate now. Second, once you’ve traded your Euros into US Dollars, put them in a safe 4%+ account and wait for the 20%-40% price decline in housing then buy. Keep the exchange rate and real estate purchase as two separate transactions. And I agree, there will be a bunch of… Read more »
Anonymous
Renter Tom
8 years 4 months ago

Meant: :” First, if you think the exchange rate is favorable and YOUR CURRENCY will weaken”

Anonymous
carbonblackcab
8 years 4 months ago
RenterTom…you are right. There other easier ways of making money on currency than buying real estate in miami. I think people have been brainwashed into believing that buying cheap real estate is a sure way of making money. Buying low is good..but when it is going to stay low for a while and will cost you money even if you find a renter…is a bad idea. For the next year or two, US govt treasure bonds are the only guarentted way to make money. Everything else could up/down/sideways and has too many unknowns. On a different note, a few weeks… Read more »
Anonymous
8 years 4 months ago

Why are there so many units for sale at the Setai? Isn’t it supposed to be a great building and, in theory, shouldn’t it have a much better and realistic stream of rental income? Do the units have a lot of physical problems? Is occupany at the hotel very low? Thanks in advance for any knowledge or gossip.

Anonymous
JR
8 years 4 months ago
Anonymous
8 years 4 months ago
Anonymous
Renter Tom
8 years 4 months ago
Serious Lucas….yawn on that article. Read it three times already, it is old news and simply makes that case that the rate of decline can’t get more steep. Well, it recently did in the March to April price declines. Moreover, recent housing reports over the last week show that the troubles have accelerated downward, not leveling off or simply decelerating… Obviously, the only thing worse would be an utter free fall with prices plunging below 2001. Might happen, who knows, has happened for some units. I guess it really depends on how you define a bottom. I define a bottom… Read more »
Anonymous
JL
8 years 4 months ago

TK, W South Beach is opening up right next door. Also, I heard the Beach frontage for the Setai has not been kept up well. I haven’t been there in ages so no first-hand knowledge about that.

Anonymous
JL
8 years 4 months ago
Renter Tom said “Being from the midwest, I have found this housing bubble fascinating and …have to ask “what were they thinking?”.” Easy answer, people don’t think down in Miami. They follow. Easiest place to run a scam. Just tell some people you’re making a killing doing XYZ, slap a Daytona on your wrist and lease a car you cant’ afford, walk around with a stripper (or 2) on your arm and you got a great business model. Did Related do so well in the GoGo years because they made amazing buildings? Nope, they did so well because they cultivated… Read more »
Anonymous
8 years 4 months ago

Lots of good clear facts and figures
Plenty of good info clearly presented
thanks

Anonymous
perez
8 years 4 months ago

Miami-Dade Foreclosure filings statistices are in. It just keeps getting worse, and does not bode well for future prices:

January 3,544
February 3,984
March 4,240
April 4,478

At this rate this years foreclosures will exceed the totals from the last 3 years, combined!

Anonymous
8 years 4 months ago

Pending Active Foreclosures by Zip Code
Zip County Foreclosures
33010 Miami-Dade 155
33011 Miami-Dade 0
33012 Miami-Dade 410
33013 Miami-Dade 217
33014 Miami-Dade 250
33015 Miami-Dade 596
33016 Miami-Dade 337
33018 Miami-Dade 388
33054 Miami-Dade 414
33055 Miami-Dade 535
33056 Miami-Dade 591
33125 Miami-Dade 243
33126 Miami-Dade 308
33127 Miami-Dade 334
33128 Miami-Dade 18
33131 Miami-Dade 526
33132 Miami-Dade 123
33129 Miami-Dade 159
33130 Miami-Dade 152
33133 Miami-Dade 320
33134 Miami-Dade 263
33135 Miami-Dade 126
33137 Miami-Dade 206
33136 Miami-Dade 50
33138 Miami-Dade 324
33139 Miami-Dade 669
33140 Miami-Dade 291
33141 Miami-Dade 408
33142 Miami-Dade 552
33143 Miami-Dade 242
33144 Miami-Dade 145
33145 Miami-Dade 214
33146 Miami-Dade 69
33147 Miami-Dade 632
33149 Miami-Dade 62
33150 Miami-Dade 394
33154 Miami-Dade 145
33155 Miami-Dade 371
33156 Miami-Dade 166
33157 Miami-Dade 725
33158 Miami-Dade 38
33160 Miami-Dade 670
33161 Miami-Dade 469
33162 Miami-Dade 462
33165 Miami-Dade 431
33166 Miami-Dade 166
33167 Miami-Dade 199
33168 Miami-Dade 333
33169 Miami-Dade 527
33170 Miami-Dade 192
33172 Miami-Dade 274
33173 Miami-Dade 277
33174 Miami-Dade 174
33175 Miami-Dade 519
33176 Miami-Dade 431
33177 Miami-Dade 743
33178 Miami-Dade 343
33179 Miami-Dade 610
33180 Miami-Dade 450
33181 Miami-Dade 291
33182 Miami-Dade 122
33183 Miami-Dade 388
33184 Miami-Dade 149
33185 Miami-Dade 298
33186 Miami-Dade 763
33188 Miami-Dade 5
33187 Miami-Dade 246
33189 Miami-Dade 335
33190 Miami-Dade 175
33193 Miami-Dade 536
33194 Miami-Dade 72
33195 Miami-Dade 1
33196 Miami-Dade 576
Total 23395

We have over 23,000 Pending Foreclosures in Miami Dade…….

Anonymous
Renter Tom
8 years 4 months ago

Yes, but we have a bottom since the rate of foreclosure increases is not accelerating! Great time to buy, the bottom is here! LOL LOL LOL (obviously I am kidding here).

Anonymous
Julian
8 years 4 months ago

Amazing how many in 33139

Anonymous
Un-Related
8 years 4 months ago

669 in 33139.

BARGAINS COMING IN TWO YEARS AT THIS RATE!

Anonymous
moretroops
8 years 4 months ago

Good post, JL.

I think the “Miami Business Model” you speak of applies not just here, but in Orange County, Phoenix … hell, even London. People are sheep, and they will follow anyone who appears to know more than them. That’s the byproduct of our consumerist, materialistic culture. It’s not intrinsic to Miami, unfortunately.

And by the way, “what were they thinking” is a lament that applies to every mania and bubble market (in any sector). Bubbles are by definition based on irrational behavior — not thinking.

Where’s the next one?

Anonymous
Renter Tom
8 years 4 months ago

“Where’s the next one?”

Commodities, esp. metals. Also, see condo false bottom fishers in Miami area.

Anonymous
CGVelez
8 years 4 months ago

Great website! i read it frequently. Does anyone know of any recent sales at Murano at Portofino? stats?
thanks.

Anonymous
8 years 4 months ago

One Bedrooms at Murano at Portofino start at $875,000. What a steal! they might as well be giving them away

Anonymous
daniel
8 years 4 months ago

i don’t believe it is accurate since many people have taken their listing off the mkt, my family owns 3 condos in the area, and they have taken their listing off the mkt, not because they don’t want to sell because they don’t want a stale listing, so they just took it off and are waiting, this is not an accurate picture, i’m sure that my family isn’t the only one…..

Anonymous
louix
8 years 4 months ago

commodities are most certainly not a bubble. Investors don’t want to keep their money in dollars so they put them in commodities. Gold and silver are up because of massive inflation and the Fed’s house of cards. Base metals demand is almost equal to supply thanks to global growth much in the same way as agriculture.

Where would you rather have your money dollars, real estate, or gold??

Anonymous
Eddie Peaslee
8 years 4 months ago

I’ve been searching the Miami and Chicago area for great condo investments for a while now so I appreciate your insight and statistics. It seems now is a great time to get into real estate in the Miami area due to the discounted prices. I found a Google Maps mashup that lists Miami condos along with views, etc. It’s been a great asset in searching and researching.

Anonymous
8 years 4 months ago
JL – Thanks for the responsive answer. I guess my real q is: What is the true current rental income yield on these hotel condo-residences? I am referring to 2-3 BR residences (not hotel rooms) at higher end-hotels on the beach in SoBe (like Setai or Ritz)? I am looking at it strictly as an investment property with a focus on cash-on-cash yield. On that basis, these properties COULD be “okay” now (obviously not if you KNOW market will drop 20% more). I am not a silly optimist in Miami RE. I just think these units MAY (that’s why I’m… Read more »
Anonymous
Renter Tom
8 years 4 months ago

TK – Why would you want to buy ONE hotel room and be dependent on that one location with that one management. If you are looking for an investment in hotels, buy a hotel stock. Condo-hotels are generally a loser…you overpay for a hotel room. If was such a good investment why would Ritz or any company sell the rooms to others? After all hotels are their business… Take a step back and make sure you are not buying on emotion and the dream. A condo-hotel room is not a ready liquid investment, a hotel stock is.

Anonymous
Julian
8 years 4 months ago
I agree with Renter Tom. The simple math, halve the gross income received, take of a further 10% for the fees the Hotel will charge you. Then you still have to pay property tax on your con-hotel unit. Also, you place your unit in the pool, but the hotel chooses where to place guests. At 100% occupancy they use yours, at 60-80% (the broad range in Miami Beach upscale hotels), you may not even get a look in. (I believe the Setai’s occupancy rates are lower, as you’d expect with those rates). I know many people getting out of the… Read more »
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