South Florida condo developers seek even richer premiums
As South Florida’s real estate boom gains momentum, developers are proposing a wave of new condo towers equipped with the latest luxury amenities, state-of-the-art engineering solutions and designs by star architects at prices doubling that of the region’s available resale inventory.
Presale prices of preconstruction condo towers proposed east of I-95 in South Florida are now averaging a minimum asking price premium of about 102 percent above the price of units currently on the resale market in the coastal part of Miami-Dade, Broward and Palm Beach counties. As of May 2, the average minimum preconstruction condo price for a presale unit in South Florida is about $768 per square foot, according to the latest Developer Pricing Survey conducted by researchers with CraneSpotters.com. (For disclosure purposes, my company operates the website.)
On a county-by-county basis, presale condos are asking an average minimum price per square foot of about $856 in Miami-Dade, $503 in Broward and about $555 in Palm Beach. Compare this latest preconstruction condo pricing survey with the existing condo units built before 2011 and located east of I-95 on the resale market, which has an average asking price of less than $385 per square foot as of Monday, according to the Southeast Florida MLXchange. On a county-by-county basis for units located east of I-95, resale condos are on the market at an average asking price per square foot of about $484 in Miami-Dade, about $265 in Broward and about $213 in Palm Beach.
The notable difference in the asking prices of presale units versus resale units comes at a time when nearly 31,000 condo units have been proposed – or recently completed – for coastal South Florida since the latest building boom began in 2011. As of May 2, nearly 15,500 proposed – or recently completed – condo units from the overall total of 31,000 units are being – or have been – marketed for presale in coastal South Florida.
By comparison, about 13,700 existing condos built before 2011 and located east of I-95 are available for resale in South Florida, with nearly 7,900 units available in Miami-Dade, nearly 3,200 units available in Broward and less than 2,700 units available in Palm Beach.
In the first four months of 2014, buyers purchased a monthly average of more than 1,770 condo resales located east of I-95.
At the current resale pace, South Florida has about 7.7 months of inventory available for purchase as the region enters the traditionally slower summer months for condo sales to second-home buyers.
A healthy market typically has about six months of resale inventory available, industry watchers say. Any more than six months of resale inventory suggests a buyer’s market while a lesser level represents a seller’s market.
The unanswered question going forward is whether buyers will be inspired in the humid summer months to pay rich premiums for preconstruction condo units at a time when South Florida’s existing resale inventory is being offered at a fraction of the price.
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.