As South Florida enters the busy winter tourism season with this week’s internationally acclaimed Art Basel festival, new and returning visitors are sure to be overwhelmed by the glaring changes in the residential real estate market of Miami-Dade, Broward, and Palm Beach counties.
Gone are the days of an abundant number of bank-owned properties, short sale condos and mortgage notes for purchase by cash investors. Distressed properties now account for less than 15 percent of the resale market.
Good luck trying to find discounted developer condo units from the last boom-and-bust cycle that started a decade ago in 2003.
At the end of the third quarter of 2013, less than 1,800 developer units – about four percent – remain unsold from nearly 49,000 condos created in coastal South Florida between 2003 and 2010.
Only 38,000 single-family houses, condos and townhouses were available for purchase in the entire tri-county region through Monday. By comparison, nearly 106,500 residences were on the resale market five years ago, when the U.S. financial system was on the brink of collapse.
The period of widespread distress in South Florida has been replaced by an almost obnoxious level of optimism by sellers of resale and preconstruction units.
Sellers and their listing agents, who just a few years ago were begging for offers as their properties sat unsold, are now making stringent demands to the competing pool of buyers attempting to purchase their residences.
As a result, the average asking price for a condo or townhouse on the resale market in South Florida is now more than $300 per square foot, according to the Southeast Florida MLXchange.
For transactions completed in the first 11 months of the year, the average resale price is about $168 per square foot, compared to $140 per square foot in 2012 and $129 per square foot in 2009.
The lack of resale inventory combined with increasing prices has spurred a new condo boom that is reliant on presale buyers making 50 percent deposits instead of bank construction loans. Four towers have already been built and 41 more are being developed.
Overall, more than 175 new condo towers with nearly 23,350 units – and counting – have been proposed for the tri-county region as of Nov. 29. Presale prices range from less than $300 per square foot to more than $2,600 per square foot.
Despite the rising prices, the number of proposed new condo units is projected to surpass the halfway point of the last South Florida boom-and-bust cycle in early 2014.
Numbers are one thing, but the best way to grasp the magnitude of the condo construction boom currently underway is to spend an afternoon driving north up State Road A1A on the barrier island from South Beach to the Port Everglades inlet just south of Fort Lauderdale Beach.
Along the way, it quickly becomes clear by the number of construction cranes, condo presale offices and street-level signage on proposed condo development sites that South Florida is in the growth phase of one of its real estate cycles that seems to occur every seven to 10 years.
The question going forward is if visitors taking the State Road A1A preconstruction condo tour will keep traveling north in hopes of not getting caught in one of those dramatic residential real estate busts.
Peter Zalewski is real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.