Falling condo prices and increased resales of existing properties cut unit inventory in South Florida to less than 50,000 — a drop of about 25 percent from last July. The number is encouraging, but that doesn’t mean the region’s condo glut is close to over.
Regional Multiple Listing Service data says there are now 49,746 units available — the first time it’s been below 50,000 since the bust. However, Peter Zalewski, a principal with Bal Harbour real estate consultancy Condo Vultures, points out that data doesn’t include the 15,000 or so newly built units, many of them in Miami, that never even reached the MLS because marketing or construction ceased before they were listed. It’s still a three-and-a-half-year inventory, but that’s better than the five-year glut of last autumn.
The change is due mostly to brisk sales of the cheapest units in coastal areas, though sales in the western suburbs are trailing behind.
“We see investors and first-time home buyers gobbling up product priced at or below $350,000,” Zalewski said. The firm crunched numbers from the Florida Association of Realtors to calculate the new inventory count.
“Investors are finally seeing properties trade at a price that permits a positive monthly cash flow,” Zalewski said. “On the primary residences side of the market, the $8,000 Obama tax credit for first-time home buyers can have a huge effect on a deal priced between $100,000 and $200,000.”
If anything, the 50,000 threshold for existing units is a huge psychological boost for a real estate market hit hard by the boom and bust.
It’s also a sign that the condo side of the market — which makes up 60 percent of all resales in South Florida — is catching up single-family sales.
“Condos buyers had so many to choose from,” Zalewski said. “So they would say I’ll just keep looking until I find the perfect deal. Now if they only have four in their price range to choose from, they would have to take a hard look at those units. There is that sense of urgency that was not present before.”
As a case in point, Zalewski is working with one client seeking an ocean view condo for $300,000. Only two are on the market, and both are in older, remodeled buildings. “If they don’t pull the trigger they might miss out,” Zalewski said.
Most of the residential product moving today tends to be east or coastal. This product is highly desirable among primary users, investors, and second-home buyers. As the eastern product is showing signs of stabilizing, it is a different story in the western suburbs of South Florida, where gated communities have sprouted.
“We just don’t see the western suburbs appealing to today’s buyer unless the prices are deeply discounted, which often times means bank-owned properties,” Zalewski said.
South Florida’s total inventory of condos, townhouses, and single-family houses is down 23 percent, or 24,735, since Thanksgiving week in November when there were 107,527 residences for resale, according to the Condo Vultures data.
Sales could get a boost if financing for condos becomes more obtainable for buyers.
“If the credit market is restored, three years could turn into one year,” Zalewski said.