Miami & Miami Beach Condo Trends – January 2008
I also mentioned the inclusion of a condo rental index. I still plan to include these stats within the next couple of months.
Below, you will find the January figures. The first box to the left shows the total number of condos that are currently available for sale on the MLS in Miami-Dade County. These include condos located in Miami, Miami Beach, Aventura, Homestead, Kendall, Coral Gables, Coconut Grove, etc. Keep in mind that these numbers do not include single family homes, just condos, townhomes and lofts. What surprised me is that the total number of listed condos has gone down since the November report. It dropped about 2 percent. However, the number of closed sales in the previous month fell sharply, down about 22 percent. The current condo inventory now represents 5.72 years of supply. That is roughly a 20 percent increase over the November figure. Thousands of new condos are ready to be delivered within the coming months, so we should see subsequent increases in upcoming months. Most of this increase will be throughout Miami, as opposed to Miami Beach or other areas of Miami-Dade County. You'll notice that the figures are also broken down by price range to give you a better idea of which part of the condo market has been affected the most.
Below you'll find the same statistics but these only encompass condos located in Miami. In November, the existing condo inventory represented 4.04 years of supply. Now, just two months later, we're sitting on 6.01 years of condo supply. This represents approximately a whopping 49 percent increase! This is mainly attributed to a large drop-off in closed sales in the previous month.
The following statistics encompass condos located throughout Miami Beach. The increase of inventory in Miami Beach isn't so startling. Miami Beach now has 6.15 years of condo supply compared to the 5.89 years of condo supply that we saw in November. This represents an increase of about 4.5 percent. There were only 3 fewer sales in December compared with the number of closed condos in October.
The inventory levels, as of right now, for condos located in Miami and Miami Beach are relatively close. I think by next month you'll see Miami pulling ahead. What's your prediction for the inventory levels that we'll see for Miami condos in July 2008?
i think the data highlights the very simple reality that the entry level luxury market (i.e., the condos priced from 500k to 1.5m) has a significant amount of price reduction to experience. don’t tell me about the euros and the canadians coming to the rescue (even if their currency is strong a smart purchaser looks at price in absolute, and not relative, terms).
That is very interesting.If these unit’s were discounted 20% to a more realistic price….I think you would see sale’s increase at least 25% a month.That results to less foreclosure’s and more COMMISSION’S.C’mon folk’s let’s get realistic…and get the realestate ball rolling.
I think some condo developments will fare much better than others. The ones that were priced at the beginning of 2004 will do much better than the ones that were priced towards the end of 2004 to beginning of 2005. Construction prices increased significantly during this time frame and this was reflected in the initial contract prices.
Yep. Miami Beach needs to fall another 20-30% before us Europeans will take a sniff. Cash and corn are king right now. Personally I think the quote below is pretty apposite.
“They used to say the three keys to real estate were location, location, location,” Eichner told the Miami Herald in 1999. “That’s not true. The truth is it’s 50 percent location and the other 50 percent is timing. If you’re at the wrong time, it doesn’t matter if it’s the Taj Mahal. You can’t give it away.”
Aren’t the inventory numbers going to soar in the next six months as the new inventory comes online?
Good Quotation. However, “Gourge” Perez one-upped you in a Miami Herald (April 18, 2005) article:
“If you find me under a bridge, you’ll know I made the wrong call.”
Top that!
Lucas,
What sales number do you use to calculate supply?
It will get a lot worse before it gets better. 2008 is the year of weeding out in the real estate business. Only the strong will survive.
Until prices come down to 2001-2003 levels, that 6 year supply will just sit there. Just not enough buyers in Miami for $500,000 small condos. This isn’t a big corporate relocation town with jobs pouring in every year like other cities.
I am scared. Not by the 7% fall in European equity markets today but by people who might take advice from individuals who post here. Everyone should have an opinion and history will show who was right but poor grammar, spelling and sentence construction only make me think “would you buy from that man/woman”.
“WHY WAIT FOLKS?!?! THE TIME IS NOW!” If you wish to front run a global recession/depression then by all means “THE TIME IS NOW!” Miami realty still has a 30-50% price correction coming in 2008-2009 and patience will be rewarded. Supply and demand. Period. Too much supply, slackening demand, propery tax system in dissaray, severe money and lending contraction, and both domestic and global economy deteriorating hourly do not make this an opportune time to purchase FL real estate…..This is not about PR, it is about reality. The market can run up 300% and everyone thinks this is normal, but… Read more »
Somebody needs to tell the Herald and other fear-mongers to start SELLING Miami and stop the Fire drills. Perhaps with better, less biased media coverage, including to disallow writers (no names shall be mentioned) who propose dimm images of our market for the world to read, while engaged in private enterprise that lets them “hedge” against those dire predictions and WIN BIG, then perhaps the world will begin to take a second look and pull their money from their cofers, pillows and mattresses and begin buying again. The same applies to locals. Note the number of transactions registered in the… Read more »
Lucas,
Please disregard my previous (stupid) question. I see that you used the December closings. Is there an industry standard used when calculating supply? I keep hearing different numbers.
lucas,
i think after today’s global financial markets crash, prices in the condo market will HAVE to come down very fast in the next 6-12 months. i think you will start to notice this within the next few months as even foreign buyers start to hurt a bit – commitment to an illiquid market unless they plan on living in it – is not smart is a dumping market. i think by year’s end, there will finally be some real deals …
Everyone on here talks about real deals finally coming. The fact is there are real deals out there today. I have buyers that have bought over the last 4 months and are not worried at all. You just are looking in the wrong places if you’re still waiting for the real deals. Please remember folks that you may have tons of supply on the market but if you are looking for the best units in the best buildings with the best views those tend to move first. Don’t miss out by sitting on the sideline too long. No one is… Read more »
Agree with that assessment. There are deals and the best one’s that you would wan tto live will go fast. Sure there are overpriced ones but yes there are deals to be had. Wait to long and you’ll shoot yourself in the foot. Think of it thsi way….when the boom was going on you waited and you lost money because you didn’t invest and then flip before the boom stopped. However, you knew that damm you should have bought in. Now you’re in the same predicament. “Should have I bought now?” there’s no easy answer but if you do plan… Read more »
I remember the days of not buying in the 90’s – in an older building but 2 bedroom with bay view I had an opportunity for $90,000. That eventually went up to $300,000’s and now back in the mid $200,000’s but still an older building. I bought back in early 2004 and got a great deal on a brand new condo but then I even kicked myself for not getting a higher floor or a better view because prices started the run up. Today I have a second chance. I say if you have the money in your savings invest… Read more »
i’m going to disagree with those that claim now is the time to buy for the very simple reason that no one can explain what intrinsic value was suddenly realized in miami real estate starting in 2003 that beforehand, was completely ignored and not priced in. markets are not necessarily efficient, but on the same token, they are not that inefficient. as such, the hypergrowth experienced during that period is something that i am unwilling to pay for. whether i’m right is something that will play out in the next two years. more importantly, if you’re a long term buyer,… Read more »
samir – you’ll never see an upswing in miami like 2003 to 2005 in your lifetime, again. as for interest rates being low today, if rates go up, then all is not bad – it will act as a downward pressure on prices.
Unless thousands of new jobs are created with starting salaries at $100,000 new construction will see a drop to about $200-$250 a foot. Those buildings were sold while there was a boom, a boom of false demand, created with greed and fraud. Real demand is and has been demonstrated with our rental market with average historical increases. Financial institutions are writing off BILLIONS weekly, BILLIONS that were pumped into a false boom that was and is unable to support the inflated vales we have experienced. Forget about where were because we will not get back there until a real demand… Read more »
Please, excuse my grammar and spelling from the last entry. One last note. When world markets report tomorrow it could spell further weakness and confidence in US real estate as the world finally reacts to our “over exuberance” .
“you’ll never see an upswing in miami like 2003 to 2005 ” Concur with that. Who knows where the bottom is from here… another 10%… another 40% (bringing beach prices back to high-normal per foot prices)? Nobody knows which is why you shouldn’t buy now if you have a choice. What is obvious though, is that when the market does bottom it is going to go relatively sideways for quite a long time. The fraud mortgages and the developer wink wink “approvals” of investors as non-investors to shove down the throats of banks who willingly looked the other way… that… Read more »
JL,
I totally agree with you.
This is a very good post about how bad it’s buying in a descending market and how it’s not as bad to buy after the bottom:
http://www.soflahousing.com/2007/10/risk-of-catching-falling-knife.html
You know what, I’m a broker and I wasn’t worried last year and I’m not worried this year, buyers still want to buy and they want to secure their slice of the American dream. Not everyone likes to wait around for ‘the’ deal, they may be passing up another if they wait, who knows. Today the fed cut another 75 basis points. What do you think this means? That means lower mortgage rates to come meaning there is no added pressure for sellers to drop prices between today and the next 6 months. It just became more affordable for someone… Read more »
samir the fed lowering its feds fund rate has nothing to do with mortgage rates. it’s the benchmark 10 year treasury market bond yield that matters. as for those people locked in ARMs, the feds move may have no effect – it depends what the benchmark rate is. moreover, the fed rate has no effect on the jumbo market (which a lot of miami real estate falls into right now). right now you’re near or at a 100BP differential between conforming mortgages and a 30 year jumbo. you won’t see that rate coming down for some time (the securitization market… Read more »
I believe the Fed meets again at the end of the month. Any idea what they will do then. I have to think that any change in the fed fund rate will eventually have an effect on the mortgage market. Of course the 30yr rates are not closely tied to this but I see a trend. As far as the market there are some that want to sell and some that need to sell. If you can’t get a mortgage you need to sell. I’m sure many will be in this boat but expect units to go back to the… Read more »
“I’ve spoken with a few developers and those close to them and not all will sell below original pre-construction pricing like many here think. ”
That’s how you know the RE market isn’t close to a bottom.
How do you figure? Not all preconstruction was sold at $500+ per sq ft. Many solid developers – Related, etc. are considering just holding on to inventory and renting them out. The inexperienced developers will try the auction route or price below original preconstruction. I wouldn’t want to put my clients in these properties anyway. You get what you pay for.
Samir,
If developers don’t pay their taxes on their properties, the county will just take their property away and be turned in to the government. We the consumer set the prices in the long run, not the sellers.
Jo Co
i don’t think taxes are going to become an issue. the senior (or mezz or equity) on any of these properties will pay what’s necessary before the gov’t ever gets a whiff of control.
Samir quite to the contrary, a reduction in the fed funds rate can increase mortgage rates. although this is in general terms…the basic gist is that lowering fed funds rate has some effect on the pricing of short term, newly issued gov’t securities. short term securities in turn, can play a role in the pricing of the 10 year. price, of course, moves inverse to yield. if the rate of return on these gov’t securities becomes unattractive to purchasers, then they will move to equities. the issue becomes whether investors want to dive into equities rather than flea to the… Read more »
jcrimes,
I don’t think there is a “flight to safety” nowadays. Either way you swing it, there is risk on both sides.
lucas
respectfully, if you’re talking about default risk, us gov’t securities are the hallmark of a riskless investment. indeed, this truism is one of the fundamental pillars of modern financial theory.
if you’re talking about the opportunity cost of foregoing additional return on a perceived “riskier” investment by investing in gov’t securities, that’s not risk, but rather, a function of risk tolerance of the particular investor, i.e., by choosing a gov’t security over a higher returning security, you have conciously chosen that safety (and the commensurate lower return) is more important than return on a higher yielding asset.
Cool. End up with short rates at say 2.75%, all items inflation at 5% and option adjusted spreads on home mortgages at 200bps+
End result – you might save the real estate market for a bit, but you are impoverishing the population and devaluing its savings and provided the US Regional Banks with a steep yield curve to make some more money.
The Fed’s actions are to protect the financial system, not to help Mr Ordinary borrow again and ramp up house prices. Please understand that.
Hey morgages rates are at their lowest level in years! Yes there are deals right now. Whatever you consider a deal and are comfortbale paying for then buy. If not, sit in your current home or keep paying your rent. Wait keep waiting and wait soem more. Some people are never happy cause they keep waiting. Just remeber you may die tommorow so keep on waiting that extra yr or 2, 3 or 4 to buy that nice condo you wanted by the time you know it you’ll be an old as and still waiting. If you go tthe money… Read more »
Actually though, the one thing I love about waiting in a market like this is that you get to actually see these new constructions built out before making a decision. How can I truly tell if I want a certain line/floor in Marina Blue or 900 Biscayne or Marquis or Icon Brickell from renderings and online photoshops? The Bentley Bay and TMP marketing material all looked great, but both turned out less than ideal. It’s actually cool to be able to wait till a condo is finished out before making an offer and knowing that waiting is probably going to… Read more »
JL – on this we agree. RA – sorry, emotional arguments about property/RE are one thing but you need to understand the economic concepts behind low short rates and high inflation and a damaged banking system. That environment is specifically designed to bail out the banking system. The end result of inflating away debt load will help the consumer but at in real terms, at a very real cost!
some people here may want to read about what happened in the late 80’s, early 90’s and why the government set up the Resolution Trust Corporation. you also don’t just rent things out as you please … that market is very weak, along w/zero pricing power. there is an inevitable situation going on which is not being reflected in the financial markets … what some are experienced is called ‘cognitive dissonance’
… sorry, i mean “IS being reflected in the financial markets”
Lucas,
what do you know about Flagler First
location? worth the price 225,000 for a 1/1?
any info you have is appreciated
Anyone have thoughts on 900 Biscayne-
What the future holds for that project as for prices and how many people will actually be able to get financed and close?
Have a friend who has a contract and looking for advice?
Paul Crissy
ReMax Partners
I am looking at a unit on the beach in Sunny Isles. It has a great great view right on the beach. It is not new but nice. Is the $490-$560 s.f. a reasonable price? The asking price is much higher than that but looking to make an offer. I am currently dealing with the sellers agent directly. I think I need an objective assessment…..are there any consulting real estate agents out there (I’ve already done all the work to locate it so paying a full commission seems silly) or should I just get an appraiser out there ASAP? Any… Read more »
You should have your own buyer’s agent. Doesn’t cost you anything and at least there is someone looking out for you not just wanting to sell you that property. I think Sunny Isles has way too much product for sale. Be careful in that area.
Paul, I think 900 is going to be one of the best overall projects in South Florida. While Ten Museum Park has amazing east facing 2 story units for many people they are not practical and as we’ve heard the building feels unfinished. I think you will get a more traditional product from 900 Biscayne but high quality. The baths and kitchens look great. And the views will be amazing. Now if your client bought early pre-construction he should be fine. He may not be able to flip easily but this is the market to hold and enjoy these great… Read more »
Samir Patel – Thanks for your response. Do you know of any good objective appraisers for a buyer like me? What do you think a Sunny Isles condo directly on the beach with direct ocean views should go for per s.f. (2 bedroom, 2 bath)? Just looking for a range. I am concerned that a buyer’s agent just wants their commission too.
Hi Tom,
I have a great unit in Sunny Isles. 2bd/2 bth direct ocean.
Thanks lara, I think I have found what I want….just don’t want to over pay, esp. in this market.
Tom, I would need to know which building you are considering. Not all buildings are valued the same as you know. How old, how much sq ft. Larger units in a building tend to fetch a lower psf than your let say studio due to demand -everyone wants a tiny slice of oceanfront without the huge cost. I don’t have a recommendation of an appraiser sorry.
Buyer Tom,
In Sunny Isles, Brickell, and Aventura you also need to consider the foreclosure rate in the building.
Many buildings in those areas were victimized by rampant mortgage fraud…and the ensuing foreclosures and unpaid association dues. Consider the financial health of the association. You may think you can afford the maintenance now. But what happens when you have to start picking up the slack for all those other units?
Thanks “Other Tom”….. I did my research and it is a very stable building. I also had read about Florida Condo law limiting the amount a foreclosure unit would have to pay for condo fees. I was shocked that it was limited to something like 1%. That is ridiculous since the costs of repairs, reserves, etc. has little correlation to whether a unit is occupied or not…. they are real costs. Where can one easily find out about foreclosures in a particular building? Any one have any comments that they want to share about Sunny Isles condos directly on the… Read more »