The year 2015 may well prove to be the pivotal moment for South Florida during this current preconstruction condo boom.
As South Florida enters the fifth year of the real estate cycle, a number of trends began to take hold in 2015 that could influence the longevity of this current condo boom east of I-95 in the tri-county region of Miami-Dade, Broward and Palm Beach.
As foreign currencies continue to weaken against the U.S. dollar amidst a slowdown in the global economy, the financial safety measures instituted by South Florida’s preconstruction condo developers to reduce risk and improve the chances for success have reportedly begun to be eroded during this last year.
Competition for buyers in a South Florida market where at least 415 new condo buildings with more than 49,000 units have been announced since 2011 is reportedly prompting a variety of maneuvers to gain an upper hand by some of the region’s most recognizable developers.
Topping the list of notable strategies implemented in 2015 was the relaxing of hefty 50 percent presale buyer deposits in some of Miami-Dade County’s most active condo markets at a time when broker commissions — in at least one case in Greater Downtown Miami — have been ratcheted up to as much as 10 percent.
Added to this, the spigot of condo construction financing from private lenders and traditional banks appears to be open and flowing in South Florida based on the flurry of new loans that have been reported in the last year.
In looking back at the South Florida preconstruction condo market trends of 2015, here are five trends that are worth monitoring in the tri-county region:
In the aftermath of South Florida’s volatile boom-bust period from 2003 to 2010, developers, lenders and investors alike are noticeably anxious about the tri-county’s current level of preconstruction activity with nearly 60 new condo buildings that have already been completed and an additional 125 towers currently under construction.
The unanswered question going forward is whether 2015 will prove to be the peak of South Florida’s preconstruction condo market or just another milestone reached during this current real estate cycle.
Peter Zalewski is a 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.