Early indications suggest that primary users, second-home buyers and return-oriented investors — rather than speculative flippers searching for quick profits — are purchasing the super majority of new condo units being developed east of I-95 in South Florida during this current preconstruction cycle.
Only about 13 percent — or less than 340 units — of the nearly 2,550 new condo units that have been constructed since this cycle began in 2011 are currently listed for resale in the tri-county region of Miami-Dade, Broward and Palm Beach as of Tuesday, according to data from the Southeast Florida MLXchange.
The seeming lack of flippers participating in the first phase of new South Florida condo projects to be built during this cycle suggests the hefty 50 percent presale deposit structure — compared to 20 percent during the recent boom-bust period of 2003 to 2010 — may be working to limit the number of speculators playing in the market.
Of the 27 new condo towers completed to date, 16 of the towers with more than 1,150 units currently have less than 10 percent of the total number of newly completed units available for resale.
Some seven towers with nearly 585 condos have between 11 percent and 20 percent of the total new units listed for resale. An additional four towers with more than 810 units have between 21 percent and 30 percent of the units being marketed for purchase.
On the basis of total numbers, the top three new condo projects with the greatest number of units available for resale are all located in the Brickell Avenue area of Greater Downtown Miami.
The 374-unit BrickellHouse project has 101 units — or 27 percent of the tower’s total supply — available for purchase. In the No. 2 spot is the 1100 Millecento Residences project with 382 units, which currently has 84 condos — or about 22 percent of the total supply in the tower — available for resale. The third most active new condo project for resales is the 192-unit MyBrickell project where 32 units — 17 percent — are listed for sale, according to the data.
Rounding out the top five rankings are the 154-unit Oceana Key Biscayne project with 26 condos — 17 percent — available for purchase and the 300-unit Beachwalk in Hallandale Beach with 16 condos — 5 percent — listed for resale, according to the data.
Generally, a condo project is thought to be balanced when 10 percent of the total units are available for resale. More units on the resale market typically suggests a buyer’s market, and less units, a seller’s market.
In analyzing the strategies of buyers of new South Florida condo units, it is important to consider that nearly 350 new condo towers with more than 43,725 units have been announced east of I-95 as of Tuesday, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)
Another test for the South Florida preconstruction condo market will come during the next two years as presale buyers will be required to take ownership of 104 new condo towers with more than 11,200 units that are currently under construction.
The unanswered question going forward is whether the percentage of speculative flippers taking ownership of these new condo units will remain low, given that some developers have begun to reduce deposit requirements as competition has increased significantly.
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.