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?
From what I’m hearing January is weak so far in contracts on MB condos.
Tom
If you want a truly “walkable area” I don’t reccomend Sunny Isles. A single guy who doesn’t like to drive should, for the most part, be in South Beach.
To Buyer Tom: I recently bought in Sunny Isles and am happy to discuss this area. I spent a lot of time there and visited most all of the buildings. I really feel if you can wait, you should at this point. But you should be hovering and lowballing where possible. In particular, from what I heard, the trump towers at the south end are going to be trouble. In my view, from what I know, $500 sq ft right now is too high.
Sunny Isles is in the process of “turning” – everything is new and the properties across the street will take some time to develop – with new restaurants, upgraded food stores etc. I think in 3-5 years it will be a great place to live. Right now, though, it is a mess, and to agree with Sean – only marginally “walkable”.
As for a per sq ft range, it all depends on the building – at the higher end you have Jade Ocean, Acqualina, Turnberry. A seller in Jade Ocean told my agent he “just wants to get his money back” – but he is in at $950 sq ft.
I know you can and will be able to get better than $500 sq ft, even in a new building – as long as you don’t want the super high end.
If you do find something you like, make a lowball offer and stick with it – there aren’t many buyers, and those buyers that do exist are looking for super low deals and aren’t going to get into a bidding war. If you really want the place you can negotiate from there, if not, just wait and let them come back to you. Also, definitely keep in mind there will be short sales/forclosures, and resales of defaulted units (once the closings in some of the newer projects get under way) – this will offer more opportunity.
Matt – I think you’re right. Walkability will improve but that is a ways off. I just don’t want to have to get in the car everything time I want something… Also, was surprised that the beach is almost totally in the shadows by 2 p.m. in Sunny Isles… Sorta of big negative. The Trump towers look to me just too many units right now and the new Solis is going to really block their view. Maybe South Beach would be sunny in the afternoon? Also, it is possible that prices are going to plummet in Sunny Isles if buyers don’t start showing up. Maybe I should just lease a beach front condo and spend my time waiting for the right deal to come along? What about Surfside or is that mostly older people? Thanks!
Tom – South Beach is definitely sunnier in the afternoon – the buildings simply aren’t as big right on the beach.
If you are relatively new to your search i would definitely rent/wait right now – each area and building is so specific. You have time on your side and you can look for something to fill most of your needs. Don’t fall into the trap of “oceanfront is different and will sell out quickly – got to act now.”
Personally I have a family and wanted 2200 or more sq feet (3 real bedrooms) right on the beach – and when prices started to fall – i wanted direct ocean. So I went with Sunny Isles, which I personally prefer Sunny Isles to North Beach – its newer and very close to both aventura and bal harbor.
Of course south beach is much more desirable – but ocean views are still expensive there.
A couple of points:
Don’t dismiss older buildings from the 90’s out of hand – they can have many more amenities as it was cheaper to build then. Also, sellers may have farther to come down.
Decide between a pure condo and a hotel condo – for recreational use, the hotel condo might not be bad.
Like I said above – keep an eye out for foreclosures, short sales, and defaults – something might just pop up.
Besides the buildings in Sunny Isles, keep tabs on One Bal Harbour, Continnuum II, Mei, Mosaic, Caribbean. Also, in south beach, Murano Grande may have some deals – but its not on the beach. I still think Icon is a ridiculous building and overpriced.
Matt – Thanks so much for the important insights. If I decide to move to FL, I want to be on the beach for sure. I think I will take my time, although there is one unit I would like, but probably over priced right now.
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 ocean would be appreciated. It sure seems like a heck of a lot are sitting empty … no lights on at night. Are units in these new buildings going to sell for less than pre-construction pricing in 6-12 months???? Thank you!
I am only interested in a condo directly on the ocean and beach with direct ocean view and prefer new or newer. Range is $500K-$1.2M anywhere from South Beach to Ft. Lauderdale. Want a nice walkable area for a single guy (have lived in areas where you have to drive to everything and want a change). Should I rent for a year, check out the areas, and wait for a bargain??? It’s either Florida or California for me now.
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?
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.
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.
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.
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 help with this would be appreciated!!! Thanks.
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 units.
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 for private mortgages is completely dead).
as for your other argument that we are in a market where people need to sell, yes i agree. but we will also be in that market next year and posssibly the year after that.
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 developer because enough buyers won’t bite the bullet and buy. Now what the developer does with those units are anyone’s guess. But I can tell you this, 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. They may just hold on to the units and rent them out for a few years – they would be in a great position to do so with defaulted deposits siting in an account.
“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 safety of gov’t securities, return be damned (especially in the current market state for equities). if they say yes to equities, then gov’t securities become cheaper,which in turn, drives up yields, including the 10 year (and by extension, mortgage rates).
as i said above, this is in general terms and this is by no means an absolute. statistically, the only material correlation that has ever been established between mortgages and any gov’t rate is the 10 year treasury.
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 and are comfortbale and are gonna live then then frickin buy. Sooner or later your home value will go up, down, breakeven in the next 30 yrs anyways.
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 get you a better price anyway. How novel… you actually get to walk inside a new construction unit before making an offer!
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!
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 to purchase a home and also to stay in their home. Now if you want to talk about getting settled into a new property with a view you can enjoy the rest of your life this is a great time to buy. If you are looking to move out of your current home into a new home then you are in a different situation, maybe you can afford to wait. But I for one never liked renting an apartment when I knew I was paying someone elses mortgage. Whether I pay more for my mortgage+taxes+maint fees I like that fact that I own my property and that I can’t be forced out because the landlord wants to raise the rent or has a better offer from a new tenant. This is the time to go shopping. The best time to buy is when everyone needs to sell and we clearly are in that market. Also remember that not everyone is in the same situation. Some yes, bought at the top of the market, some borrowed money to put a deposit, some bought with outright cash and some financed. You also don’t have 500 owners in a building of 500 units needing to sell either. You also don’t have 500 penthouses, or 500 bayview units or 500 one-bedrooms with bayview or 500 (2000 sq ft+) units out there in a building with 500 units. Everything is relative.
This thread is great…lots of good info and insight.
I moved to miami in Jan 2004 and looked at a few condos in the portifino towere in sobe. They were in the 700K range then and now are in the 1.2M range. What is a fair price for those condos? It is certain not 1.2M….700K also seems high for a 1900 sq.ft condo.
Also note that Continuum II will block the ocean view of most of the Portifino Towers residents.
About Continuum II, I love the location and style….lets see if the prices are reasonable or not.
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 will never happen again. The juice that gamed the market is gone and won’t come back. The banks were burned and inevitable lawsuits are coming. Real Estate appreciation will deviate back to the norm as the speculative component is erased for good.
The risk of buying now -before all the fraud and flippers weed themselves out of the market- might be a catastrophic purchase. The risk of waiting until 1 year after a bottom has occurred might be that you are buying 0-3% off the bottom price.
Why buy now when the Real Estate Market has to digest many unknowns regarding true demand along with an increasing supply yet to come on line?
Wait till the market bottoms, then give it another year to see if that bottom holds and believe me, you will be able to safely purchase a property 0-3% from THE BOTTOM.
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.”
Ok, I see many opinions but I need to make a decisions soon. I bought a condo at pre-construction prices 3 yrs ago. The condo should be ready soon, should I go ahead with the purchase and close? or loose my deposit and be done with it. Any advice??
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!
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 a 60% correction is “outlandish”? Also the Miami Herald is not the Chamber of Commerce or an arm of NAR and should attempt to be fair and accurate, not promote FL property. We haven’t even gotten to the fear stage yet, much less the panic and capitulation phase, but it is just around the corner.
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 going to make money flipping in the short run so don’t even wait for the absolut bottom because you won’t find it. If you are buying for primary residence then jump on the deals out there today in waterfront buildings.
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 to live in it and arent a flipper then I would say yes the deals are there. Just don’t expect to have that same mentality flippers had when the boom was peaking. Ya gotta think long term here and if you live in it fo ryears to come you’ll have a great place near eveything a a city morphing around you. Cause after it morphs and shines even more you’ll be kicking yourself saying I should of bought then.
Rememebr SOBE….1980’s prime spots…..oh how cheap and look now. ….millions.
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 in your home. Real estate is cyclical, before you know it we will be back in the upswing. Take advantage of the low interest rates but make sure you have 20% to put down. Don’t expect to flip, but expect to enjoy a bayview for a good portion of your life.
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, unless there is something that screams deal, i.e., 200-250 sq foot in brickell or less than 400 sq foot on the beach, there is no harm in waiting another six months/year. with all due respect to those that suggest there are real deals out there, please cite some specific examples. frankly, my own, unsupported with anecdotal evidence, opinion is that there may be a few deals today, but in the coming months, the so-called good deals will increase. the reality is that real estate corrections take far longer, and are more excruciating than say for example, stock market corrections. right now, we’re in year 2 of a correction. considering the mortgage fraud and just outright overpayment made by multiple purchasers in 2005 and 2006, you’re simply wrong if you thing we’ll pull out of this in the next year. moreover, with any of these new buildings, if i’m a long term buyer, i would be downright hesitant to even consider buying in there until the association has had some time to show the building is operating in a viable manner.
finally, to the poster who blames the herald, please, the negative publicity is merely the result of the very real, bad numbers. all during the boom, the question was posed “yeah, these things are selling, but at the end of the day, who will be living there?” i think the answer has suddenly been realized – the demand was never there to begin with.