Miami residential inventory dwindling, but Brazilians still dominate the market

Clockwise from left: Jade Brickell, Philip Spiegelman, Kevin Tomlinson and Ron Shuffield

Miami’s residential sales surge in 2011 continues, and with inventory
dwindling, prices are beginning to slowly creep up.

Brokers say it’s
foreigners who continue to lead the way for the market, with Brazilians
dominating that sector.

“[Miami-Dade] is still on track to sell
more [Miami] homes than we’ve ever sold in history,” said Ron Shuffield,
president of Coral Gables-based EWM. “Of course, the caveat is that
values are still low, even though prices have come up quite a bit since
January.”

According to Shuffield, the median price in January for a single-family home in Miami-Dade County was only $160,000, and that number was up to $180,000, as of July. For condominiums, the median price has jumped to about $120,000 as of last month from $90,000 in January.

Emboldened by the real, Brazil’s stronger-than-ever Brazilian currency, Brazilians have led the way — and while they had primarily been limiting their purchases to downtown Miami and Miami Beach, their reach has extended north.

“It’s a big, capital ‘B’ — Brazil, with Argentina right on their backs,” said Philip Spiegelman, co-principal at Miami-based Related ISG. “[They’re] in markets stretching, truthfully, from one end of the waterfront up into Hollywood communities, all the way downtown, and everything in between. They’re out in force, their checkbooks are in their hip pocket, and they’re buying como pan caliente [like hot bread], as we say in Spanish.”

Miami saw a 47 percent jump in single-family sales in July, along with a 33 percent increase in condo sales, both compared to July 2010, according to data from the Miami Association of Realtors.

Statistics from real estate firm Trendgraphix show a slightly different picture.

Last month, the number of sales was almost flat year-over-year, falling 1.9 percent, but Shuffield said the number was closer to a 10 percent increase when factoring in the number of as-yet-unannounced completed sales.

Single-family sales in Miami jumped 6.9 percent, according to the Trendgraphix data in that time period, while condo sales fell 8 percent — both of those numbers would be in the black with the additional 10 percent of unannounced closed deals.

Accordingly, pending sales were up nearly 20 percent in both categories year-over-year, although he cautioned that much can happen with pending data — meaning some pended sales can end up fizzling out.

What gave Shuffield optimism was an increase in prices, the first such uptick he said the market had seen since it first began dropping.

He pointed to Jade Brickell, a luxury condo project in Brickell that saw nearly 71 percent of its units in foreclosure a few years ago, as an example of the specialized price increases that were beginning to appear.

“You can’t find a foreclosure for sale right now [at Jade],” he said. “If you bought a unit in Jade on Brickell [in 2009], you’ve already seen a 25 percent increase in value.”

That was true at several other condo projects downtown — though he cautioned that much of the price recovery would be neighborhood- and building-specific going forward.

The price increase in Miami mirrored what happened earlier this year in the high-end market on Miami Beach, which has seen some of the largest sales in recent memory in the area — with some deals closing for more than $3,000 per square foot. While that comprises a far smaller market share, the trends were the same — dwindling inventory followed by rising sales prices.

According to One Sotheby’s’ Kevin Tomlinson, Miami’s market has historically been driven by developments in Miami Beach.

“I think Miami Beach and South Beach were the catalysts for the renaissance of Miami in general,” Tomlinson said. “It’s always been Miami Beach and South Beach was the hub of the market.”

Now, he said, even lower-tier properties (which range from around $700,000 to $1.5 million) in Miami Beach had seen a dramatic inventory drop, whereas a year ago it was a very different situation.

“If you go second-tier luxury properties in Miami Beach, there’s nothing available,” he said.

With just six to nine months left of supply in the Miami residential market, developers are already looking ahead to new construction, Spiegelman said.

“There’s practically nothing left in the new development inventory that was created in 2005, 2006 and 2007,” he said. “What that naturally leads to is, as we are now starting to see, real-time talk about new construction.”