Miami Beach condo resale activity outpaced by 2014 competition

Question: What condo markets east of Interstate 95 in Miami-Dade County have seen the greatest changes in resales and prices in the past year?  

The coastal condo market of Miami-Dade County is in the midst of transition as prices rise and the number of resale transactions falls in all five of the largest markets east of I-95 during the first 11 months of this year.

To fairly assess the winners and losers east of I-95 in Miami-Dade County, it was important to create a baseline for comparison by reviewing the latest Southeast Florida MLXchange statistics of all condo resales and the prices on a per square foot basis for transactions that occurred in Aventura, Bal Harbour-Surfside-Bay Harbor Islands, Greater downtown Miami, Miami Beach and Sunny Isles Beach between January and November.

A review of statistics compiled on Thursday shows the Miami-Dade County resale market east of I-95 experienced nearly a 12 percent drop in the number of transactions to fewer than 8,600 deals in 2014 compared to more than 9,700 deals during the same 11-month period in 2013.

As the number of condo resales fell, the average price per square foot increased by more than 10 percent to nearly $370 this year compared to about $335 in 2013, according to the data.

Based on the year-over-year stats, the condo resale markets of Bal Harbour-Surfside-Bay Harbor Islands and Aventura performed the best in Miami-Dade County with their transaction velocities falling by only 3.5 percent and 7.9 percent, respectively.

By comparison, condo resale transactions dropped by 16.2 percent in Miami Beach, 14.4 percent in Greater Downtown Miami and 13.2 percent in Sunny Isles Beach in the first 11 months of this year.

On the pricing front, the Bal Harbour-Surfside-Bay Harbor Islands market enjoyed the greatest jump in year-over-year resale prices with an increase of 16.4 percent. Sunny Isles Beach was second, based on an average price increase of 14.1 percent this year. Miami Beach ranks third based on a condo resale price increase of 13.4 percent in the first 11 months of this year.

On the down side, Aventura experienced the smallest price increase with condo resale transactions rising 7.9 percent in 2014. Greater downtown Miami was next, based on realizing an average price increase of 9.2 percent.

Looking at the current market, it is important to note that Miami-Dade County has about 10 months of condo resale supply currently available for purchase, according to the data.

A healthy market is considered to have about six months of supply of condo units available for purchase. Less months of supply typically suggests a seller’s market and more months indicates a buyer’s market.

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Based on this rule of thumb, Aventura is in the best shape of the five largest coastal condo markets in Miami-Dade County with 9.2 months of resale inventory on the market. Miami Beach is a close second with 9.4 months of condo resale supply and the Bal Harbour-Surfside-Bay Harbor Islands market is third with 9.8 months.

Greater Downtown Miami has the most condo resale supply on the market with 14.4 months available. Sunny Isles Beach is next with about 11.1 months of resale supply available, according to the data.

The unanswered question going forward is which side – the buyers or the sellers – will compromise first to overcome the price differences necessary to return Miami-Dade County’s coastal condo market to a growth period.

Thought Of The Week: Miami City Commission Appreciates Real Estate Developers

The city of Miami sure does appreciate the economic impact generated by real estate developers.

The Miami City Commission with Mayor Tomas P. Regalado proclaimed Dec. 11 as Jose Luis Melo Day in a “tribute” to the patriarch of the family-owned residential high-rise development group credited with reviving South Florida’s preconstruction condo market after the 2007 real estate crash.

Back in 2011 as this current real estate cycle was starting, the Melo Group under Jose Luis’ guidance launched presales for the 23 Biscayne Bay condo tower in the Edgewater neighborhood of Greater downtown Miami using a 50-percent deposit structure for preconstruction buyers that has become the norm in South Florida.

By comparison, most developers during the last condo boom collected 20-percent deposits from presale buyers, leading some industry watchers to conclude this approach led to widespread speculation and overbuilding.

To date, the Melo Group “has completed six successful rental and condo towers in the Edgewater area and have another half dozen in planning or construction,” according to the official proclamation signed by Regalado and City Commission Chairman Willy Gort.

For disclosure, my firm has provided consulting services in the past for the Melo Group.

Peter Zalewski is a real estate market consultant, non-practicing licensed real estate broker and columnist for The Real Deal who now answers reader questions about the South Florida real estate market in a weekly Friday column. Questions and comments can be sent to The TRD editors will choose which submissions will be addressed.