As concerns grow about the United States being dragged into the current global economic downturn, South Florida developers are increasingly faced with the realization that the asking price for a new coastal condo unit listed on the Multiple Listing Service is averaging more than $2 million each.
By comparison, the average transaction price for a condo unit located east of I-95 in the tri-county South Florida region of Miami-Dade, Broward and Palm Beach sold for less than $450,000 each in 2015, according to data from the Southeast Florida MLXchange.
It is unclear whether new condo units priced above the market resale average will be in high demand at a time when fears are rising that the United States is entering a recession due to a strong dollar and a prolonged lackluster global economy.
What is known is that more than 1,125 new South Florida condo units built or planned east of I-95 since this cycle began in 2011 are currently available for purchase at an average asking price of $2.14 million as of Tuesday, according to the data.
The current average asking price represents a decrease of nearly 6 percent — or more than $133,000 each — from the original average asking price of $2.27 million for these same new condos when they were initially listed for sale on the MLS, according to the data.
Calculating the average price per square foot for these new South Florida condos currently listed for sale on the MLS is a bit more challenging as the amount of livable space for more than 130 units was omitted from the marketing information for the respective properties.
For the listings of the nearly 1,000 new South Florida condos that do include the livable space totals, the average asking price for a unit is $1,144 per square foot, according to the data.
Originally, these new South Florida units were marketed an average asking price of $1,163 per square foot, according to the data.
New South Florida condo units developed or preselling during this cycle east of I-95 account for nearly 8 percent of the more than 14,250 condos listed for sale at an asking price of less than $863,000 each, for an average of $449 per square foot, according to the data.
The average asking price for the 13,000 South Florida condo units built before this cycle began in 2011 is currently listed at less than $730,000 each — or $426 per square foot — at projects located east of I- 95, according to the data.
It is important to note that only a fraction of the more than 50,000 new condo units in the South Florida preconstruction pipeline are listed for sale on the MLS.
Consider that South Florida developers have completed 57 new condo buildings with more than 4,300 units east of I-95. An additional 129 new condo buildings with more than 12,900 units are currently under construction in South Florida.
A combined 227 new condo buildings with nearly 32,800 units — nearly 66 percent of the total tri-county pipeline — are currently in the planning or presale phase of development in South Florida.
The unanswered question going forward is whether South Florida developers will be able to successfully attract enough buyers of preconstruction condo units, at a time of heightened uncertainty about the international economy and a growing price disparity between new and existing properties available for purchase.
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.