South Florida resales suffer as new projects move forward
At a time when South Florida’s condo resale inventory is growing, nearly 10,100 new units are currently under construction or recently completed in the coastal South Florida region during this latest real estate cycle.
The number of new units being built or already constructed represents nearly 30 percent of the more than 35,100 units announced east of I-95 in Miami-Dade, Broward and Palm Beach counties since 2011, according to the preconstruction condo projects website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
Developers are now constructing 70 new condo towers with nearly 9,300 units and have already built an additional 16 towers with less than 800 units.
A supermajority of the condo construction activity is occurring in Miami-Dade County, where 54 new towers with more than 8,060 units are being built. An additional seven towers with nearly 600 units are already completed.
Broward County is the next busiest preconstruction condo market, with 14 new towers totaling more than 1,060 units under construction. One additional condo tower with 49 units has already been built.
In Palm Beach County, developers have two new towers with more than 165 units under construction. An additional eight condo buildings with a combined 155 units have been completed to date.
Overall, the new condo units under construction are primarily being built using buyer deposits of about 50 percent of the presale contract price.
In recent months, some ultra-luxury projects already under construction, such as the Oceana Bal Harbour, Faena House and Surf Club Four Seasons Private Residences, have obtained financing tied to the buyer deposits.
It is unclear if the other 170 new condo towers with more than 25,050 units that have already been announced will ultimately be constructed.
Nearly 100 planned towers with about 13,450 units already have approvals in place and an additional 71 proposed towers with more than 11,600 units are seeking approval to build.
A factor becoming clear is that South Florida’s preconstruction condo market could be diverting some prospective buyers away from the tri-county region’s resale market.
Condo resales in coastal South Florida are down in each of the three counties between January and July, according to data from the Southeast Florida MLXchange.
In Miami-Dade County, condo resales are down nine percent to about 6,358 units this year, compared to more than 7,000 deals during the same period in 2013. Miami-Dade County currently has nearly nine months of condo resale supply on the market.
In Broward County, resales are down four percent to about 3,514 in the first seven months of 2014, compared to about 3,659 transactions in the same period of 2013. Broward County has more than six months of supply of condo resales.
For Palm Beach County, resales are down two percent to about 3,407 transactions in 2014, compared to nearly 3,490 deals in the same period of 2013. Palm Beach County has less than six months of supply of condo units on the resale market.
A healthy condo market typically has about six months of inventory on the resale market. Any additional months of resale supply suggests a buyer’s market, and fewer months of resale supply indicates a seller’s market.
The unanswered question going forward is whether enough buyers will enter the South Florida condo market to absorb all of the existing and preconstruction condo units currently available and planned for the tri-county region to avoid any potential for stalling in future months.
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.