Miami Condo Glut is Coming to an End – reports The Wall Street Journal
November 2, 2011 by Lucas Lechuga
In an article entitled "Miami Condos on Upswing," The Wall Street Journal reported late Tuesday night that the Miami condo glut may soon be over as evidenced by recent sales activity. The article points to a 539-unit bulk deal at Midtown Miami which recently sold for $110M, or $183 per square foot. More importantly, the "acquisition represents one of the last remaining 100-plus unit bulk condominium opportunities in all of South Florida".
The article also states that Icon Brickell, with 1,796 total units, now has fewer than 20 units remaining as of October and is expected to sell out in November. In my opinion, the sell-out of Icon Brickell will ultimately be heralded as the true end of the Miami condo glut. Icon Brickell was depicted, by the media and everyone alike, as the poster child of condominium over-development in Miami and, to me, is as symbolic as it gets. Once the last unit at Icon Brickell closes, those with real estate interests in Miami might as well bust out their vuvuzelas and make some noise because the biggest hurdle will have been overcome for the Miami real estate market.
The recent launch of sales at Paramount Bay is mentioned as well in the article. Paramount Bay launched sales around mid-October. I was recently told that 70 units at Paramount Bay have now either closed or are under contract. More surprising, is the fact that only 4 of the 11 total penthouses remain. None of the penthouses at Paramount Bay with the large terraces (1945 square feet to 2949 square feet) remain available. Given that terraces of that size are rather unique in Miami, there was a mad rush by buyers to grab those. Prices for penthouses at Paramount Bay with the large terraces were priced around $2.1M to $2.9M - a good indication that the luxury market in Miami is also performing stupendously.
Marquis Residences, a 292-unit luxury condo development located in Downtown Miami which was not mentioned in The Wall Street Journal article, hit an important sales milestone recently. I was informed last week that Marquis Residences is now over 75% sold. Remaining 2 bedroom condos start at $590,000 while remaining 3 bedroom condos start at $860,900. A few penthouse condos at Marquis Residences also remain available for sale.
Vizcayne, another condo development in Downtown Miami with remaining inventory, is now over 50% sold. Earlier this week, it was announced that no-doc seller financing is now available with 30% down to qualified buyers. That should make Vizcayne a very popular option among investors once this news is disseminated. Vizcayne prices range from $200K to $2M.
Inventory of new construction condos in Miami continues to dwindle with each successive month. By all accounts, it very well seems that 2011 will go down as the year that the Miami condo glut came to an end. With the worst behind us, I see 2012 filled with announcements of additional pre-construction condo developments throughout Miami. It will be the year that construction cranes will once again grace our skyline to fulfill the future demand for condos in Miami.
Brickell condo sale prices up 18% in 2 years
By Marilyn Bowden
The cost of condos on Brickell has been rising steadily over the past couple of years, but they’re still seen as bargains, brokers say, particularly among the foreign investors whose cash purchases continue to buoy up the market.
“Condos are moving,” said Carlos Villanueva, district sales manager for The Keyes Co. “What happened is that increasing affordability three years ago combined with a significant level of inventory, and that made purchasing a condo more attractive.”
Buyers rushing to grab units at bargain prices pushed up demand, he said, “and the increased demand drove a significant reduction in inventory over the past three years, raising the average price per square foot by almost 20%.”
Between 2009 and 2010, Mr. Villanueva said, the average price per square foot for all Brickell condos rose $13, from $244 to $257. From the end of 2010 till now, those prices have gone up another $31 to $288 a square foot.
Chris Basick, managing broker in Esslinger Wooten Maxwell’s Brickell office, said it’s hard to get up-to-date information about sales in new buildings because they aren’t listed in the multiple listings service and it can take up to nine months for developer sales to be recorded in public records.
Looking at resale activity only, he said, the average price per square foot today in Brickell is $265. A year ago, it was $235.
Mr. Basick attributed the hike to a deep drop in inventory during the past year — from 17 months’ supply a year ago to 10 months now, which is close to a balanced market.
“With less inventory,” he said, “prices tend to go up. But they are still good values.” Due to continued high restrictions on financing, making it tough for most people to get a mortgage, Mr. Basick said most buyers tend to be foreign nationals looking for units they can offer as rentals.
“They’re hoping it will appreciate further while they’re getting a better return than they could get in the stock market,” he said.
New condos at the top of the market in the downtown-Brickell area are now selling for $425 to $430 a square foot, said Alicia Cervera Lamadrid, managing partner of Cervera Real Estate.
“Inventory is being sold out very quickly in these buildings,” she said. “New second-tier units — those that are not on the water or have smaller units — will be released at about $330 to $340 a square foot.”
Prices have been appreciating slowly but steadily all year, she said, as has absorption. Of the 23,000 new units that were built during the boom in downtown-Brickell, she said, fewer than 1,500 remain unsold.
“What’s interesting,” Ms. Lamadrid said, “is that for the most part, all the inventory that closed from 2009 to the present has been closed without any significant financing. So there is no shadow market in Brickell.
“Occupancy is super-high, about 90%, and rents are going up steadily. Miami is now a city that is very much under-leveraged.”
“Miami Condo Glut is Coming to an End – reports The Wall Street Journal”
LOL – ya, right…. – LOL
Real (as opposed to nominal) incomes are down and unemployment is projected to go up a bit. One also has to realize that many floplords (flippers stuck with unwanted condos) are renting them at rates that they have to pay into each month since the rents don’t cover all the costs. Nonsense I say…nonsense.
“Of the 23,000 new units that were built during the boom in downtown-Brickell, she said, fewer than 1,500 remain unsold.
“What’s interesting,” Ms. Lamadrid said, “is that for the most part, all the inventory that closed from 2009 to the present has been closed without any significant financing. So there is no shadow market in Brickell.
“Occupancy is super-high, about 90%, and rents are going up steadily. Miami is now a city that is very much under-leveraged.”
It’s not nonsense its called math.
Some are deniers and no amount of evidence will change their minds. They just don’t deal with reality as you and i know it. If all this is none sense then why did he rush out to buy 2 condo?
Rush out?!?!? Get real. It took me 2.5-3 years to find the right deals that I was comfortable with. That is hardly “rushing”. There are a lot of bad deals out there…probably more bad than good. I hope the condo market does get restarted but in my opinion there is already enough inventory that there will be no price boom regardless. Oh well, feel free to gobble these condos up guys…
People keep believing propaganda..
In a state that is completely broke, where people can barely afford their groceries, it is a joke to talk economic turnaround.
All occupied units are rented by the developers or by potential flippers with foreign money.
Sales are up because of an artifical deflated US dollar.
Since most people here seem to worry more about how much money they have ” potentially made” since 2008 and not about real economic recovery, I guess it is useless to have any kind of real discussion here.
Miami is just avery cheap city compared to the rest of the main cities in the US and the rest of the world.
However, it is cheap for non-floridians.
People who live and work here just like to flash the money they don’t have by driving a range rover or renting an apartment in the so-called luxury buildings with 4 people in a 1 bd. Typical Miami bs.
People live in 1800, quantum on the bay, one miami, vizcayne, and call these luxury buildings?
Miami is a joke!
Let genting come and make it even better..
let’s make it tackier than it already is..
The only deniers are the fools who think Miami has turned into some sort of paradise in the past 2 years rather than a haven for foreign money launderers. Were these condos bought by people who moved to Miami because of new jobs? No. They were bought by foreigners for whom the weak dollar made the deals more attractive. Only a fool or a liar would argue otherwise.
Uh, I don’t get it. Who said anything about miami being a paradise?
I don’t ever recalling making any statements about who is buying those condo’s. Foreign buyers are buying for whatever reason, you are the only one who claims to know who is buying and for what reason. All the evedince shows is that oncce empty condos are now being sold, Once desolate streets are now crowded, bars and resturants have opened and are thriving. The fools are the ones who continue to deny that fact. They claim to know of massive waves of upcoming foreclosures but run out and buy 2 units with cash. You are the ones lying to yourselves.
You keep arguing about the lack of jobs in Miami but that theory just hasn’t panned out because even with a lack of jobs the area in discussion is still growing.
MMT
How many condos have you or your cheerleaders have purchased in last two years? If the market is Soooooooooooooo good as you say, why leave a winning lotto ticket on the table for someone else?
Only in Miami!
poor, unemployed and a fool to boot.
A lot of “haters” out there….
The reality is, the condo market has peaks and valleys, and although we may not see prices rebound overall for a while, demand begets demand. It is a monkey-see, monkey-do world….
I’m not claiming that Miami is any paradise. But in mid to late 2009 it seemed as though prices were going to go higher. I was originally wrong because I was making statements about Miami as a whole and not east of I95. I then realized that these are two VERY different markets and I was only paying attention to the market east of I95. Now two years later he reports are out saying how places like Brickell are up 18%.
I’m not claiming its a paradise or that I can read the mind of foreign buyers. But regardless of how you feel about Miami prices are going up, its just a fact.
Gixxer,I need your advice,thanks.
“Now two years later he reports are out saying how places like Brickell are up 18%.”
– From what? Foreclosed bulk sold condo prices? Oh so easily fooled… My advice, do your homework when buying a condo. Research the building…research research research…to make an informed decision. Don’t rely on the hype. Miami is filled with people trying to steal your money…
Right, all these “Condo prices up __ percent” headlines are nonsense. They remind me of Ross Perot’s old quip about a homeless guy having $1 in his pocket, finding $1 on the sidewalk, and having his net worth increase 100%. Without a proper understanding of the baseline, the %s mean nothing.
As for the Miami condo market, the buyers went from domestic flippers to foreigners buying because of the weak dollar. Nothing has fundamentally changed about Miami since 2005 or 2009. Latin Americans have loved Miami for decades, but they weren’t the one driving the r.e. boom. Now they’re using the weak dollar to buy lower-priced condos and rent them to the dopey locals who imploded their own city and can’t afford to buy themselves. And this is seen as GOOD news? Ha ha ha.
There is no baseline need to tell up from down. Joe and Renter Tom were both saying prices were going to continue to go lower from the then low bulk sale pricing. Prices are now higher. Who cares what it went up from. The point was clear. You were saying if one bought a condo in 2009 they were stupid and the price on their investment would go down. Now we know that not to be true and the price went up.
Now you guys are trying to say well the price it went up from was extremely low or the amount it went up is just a statistical game and therefore insignificant, which wasn’t your original argument. It was that prices were going down.
Renter Tom says:
May 19, 2010 at 3:16 pm
“Another month-over-month home price index decline…the “double dip” is on…..or really the one large slide continues with a small government induced bump on the way down. Knife catchers…..”
Renter Tom says:
May 20, 2010 at 1:59 pm
“It really depends on the exact market (area, price point, and type (condo, SFH)). Hence the impression of fence straddling. Let me restate, price will NOT be rebounding now or next year….that was a typo and if read in context should have been clear as I have always posted that there will not be a rebound in prices but rather things will be anemic. With that said, most of the price declines are baked in already but another 10% is very possible and 20% is not out of the realm of possibilities.”
And as Renter Tom was typing these stupid remarks prices were already increasing in most downtown areas. Here is my response correctly pointing out that most of downtown was increasing:
Gixxer 1000 says:
May 19, 2010 at 7:06 pm
Further info as evidence against current price declines:
http://dqnews.com/Charts/Quarterly-Charts/Miami-Palm-Beach-Charts/ZIPFLDADE.aspx
If you look at zip code 33131 which covers Brickell and the main portion of downtown it posted ANOTHER quarterly increase.
No matter what toms, joes and drews of the world are saying. Miami needs 2000 condos built every year to keep up with 1%/yr population growth, as well as attrition of existing housing stock.
So in a year or so the overhang from the previous boom will be gone. And there will be no new meaningful supply coming online for another couple years. Anyone who waits for that very moment to buy their home will always remain a loser.
I don’t even know why someone not bored out of their mind would want to argue with anybody called “poor and unemployed”. Not all poor and unemployed are stupid people (far from it), but in our particular case such a label definitely fits the poser behind the handle.
Which is perfectly fine, since life in the world of totally smart people would be quite unbearable.
Every piece of stats shows incredible recovery in Miami RE market, so what if three or four vocal dimwits want to pretend otherwise? That doesn’t change the reality one precious bit.
“Every piece of stats shows incredible recovery in Miami RE market, so what if three or four vocal dimwits want to pretend otherwise?”
— Yes, and “every piece of stats” in 2005 and ’07 showed big gains, too. Don’t you fools ever learn? A run-up in r.e. prices absent an increase in employment, job creation, real income, etc., is a BUBBLE. The last one was a credit bubble; this one is a foreign-buyer, weak-dollar bubble. Only a bunch of Miami lunatics could believe that the r.e. market can somehow be detached from all other economic indicators and benchmarks.
guys,
I think you have forgotten how I have proved that brand new units that were bought from the developer at the end of 2009 and the first couple months of 2010 in Infinity have went up a lot more then 18%.
I was not the only person that brought a condo in infinity during that time. At least 30-40 other peolpe bought when I bought and they got the same good deal as I got.
Remember I sold my unit after owning it for less then 2 years for 45% profit (that 45% more then I paid). So there are 30 other peolpe in infinity that will make just as much profit as I did if they sold their units.
I think it is time to face facts — prices in good new buildings in good areas like brickell have went up in price since the end of 2009. And most of the ones sold since then have been 100% cash .
These post 2009 cash owners are much more stable then the previous boom 100% financed owners so the newer buildings will be more stable. The more cash buyers the better. In infinity more then 90% were cash buyers.
So until something really bad happens to US and/or the world financial systems any economy’s, prices are not going back the end of 2009 prices for the newer good building that are in good areas such as brickell.
So those who wanted to buy one of those at those low prices has missed the boat. However I am sure that there are many short sale deals still in less desirable older buildings.
I just think the debate of if the prices of these condos are going up and down is over – in the next 2-3 years they will stop going up as much, but they are not going back to end of 2009 prices.
Everybody shares a valid point at this site. This is why I keep coming to it and I learn. Who could have taught me about a “foreign-buyer and weak-dollar led bubble”? This is a fabulous site.
Miami condo, home sales on pace to hit record highs
By Patricia Hoyos
Largely stimulated by international buyers, the Miami-Dade housing market continues on the right path to end the year with record numbers of home and condo sales, selling more units than during the market’s peak.
According to data from the Miami Realtors Association, sales of existing single-family homes rose 46% in September compared to September 2010. Sales of existing condos also increased 58% compared to last year. Statewide, sales rose about 10% for single-family homes and condos.
Michael Pappas, president and CEO of The Keyes Co., said, “Keyes will close more units in 2011 than in 2005, which was our boom market.”
On average, there were around 1,500 sales per month in 2005 and about 2,015 per month so far this year, said Ralph De Martino, Miami Realtors residential president and president of Ocean International Realty.
“Hopefully, the average will hold up,” he said.
Real estate experts attribute the increase in sales in great part to international buyers who are drawn to Miami’s attractively-priced inventory.
“Compared pricing-wise to first-class cities in the world, we are a bargain,” Mr. Pappas said.
One in every three international transactions takes place in Florida, Mr. De Martino said, and about a third of those take place in the Miami/Fort Lauderdale market.
The percentage of cash transactions has also risen to 63%, with nearly 90% of international buyers in Florida buying properties for all cash, according to the Miami Realtors Association.
There hasn’t been so much cash coming into Miami since the 1980s, Mr. Pappas said.
This year the county’s inventory has fallen and now sits at around a six-month supply for homes and seven months for condos, said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors.
A healthy residential market should have six to nine months of housing supply, experts say.
Still, distressed sales continue to make up the majority of sales, but that figure is dropping. Distressed sales are about two-thirds of the market, Mr. Pappas said.
“We are continuing to grind through the distressed market, and we’ve seen a positive traction in that,” he said. “But we still have great ways to go.”
Experts agree that although the overall picture of the housing market shows an upwards trend, the turnaround has been neighborhood specific, with areas such as the Brickell and South Beach market benefitting more than others.
“The rebound has been very specific,” Mr. Shuffield said, “but overall, there’s been a lot of sales this last two years.”
Just as I’ve been saying: international buyers and all cash (due to weak dollar). Miami’s underlying economic metrics have had nothing to do with it, which is why it’s a precarious “recovery.”
Keep telling yourself that. Just like you have beem saying there is nothing special about Miami and S.Fla. in general. Others have decided you are wrong and a dimwit to keep up this foolish argument in the face of what has been going on in the market. Keep singing your song about how there are no jobs and the economic metrics, corruption,bla,bla,bla….may be it is time to get back to your silly rants about scums that reside in miami and how it it a banana republic. At least you won’t look so foolish and might get a few to agree with you. Right now you sound like a retard with that silly song you keep harping on.
Are you insane? The story specifically says the buyers are overwhelmingly foreign and using cash. Why are you attacking me for mentioning FACTS that a newspaper confirmed? Get back on your meds.