New Condo Sales Slow 46% In Greater Downtown Miami In Q1 Published on 4/18/2012 9:49:51 PM
New condo sales in Greater Downtown Miami slowed by nearly half in the first quarter of 2012 on a year-over-year basis compared to the same period in 2011 as the average price for developer units increased 14 percent to nearly $400 per square foot, according to a new report from CondoVultures.com.
The slowdown in new condo sales between January and March of this year has extended the period of time expected for Greater Downtown Miami to sell out of boom-era units to 2014 from the previous projection of 2013, according to an analysis based on the Condo Vultures® Official Condo Buyers Guide To Miami™.
"Greater Downtown Miami's condo market is in a state of change," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC. "As condo developers attempt to increase prices from distressed-level lows for the remaining unsold units built during the South Florida condo boom, buyers are reacting by purchasing fewer and fewer new units which in turn is slowing down the anticipated sell out date for the existing inventory overhang.
"It is unclear what impact - if any - the 30 newly proposed condo towers slated for coastal South Florida is having on the market for unsold developer units from the last boom and bust."
CondoVultures.com is scheduled to profile new unit sales by project in the first quarter of 2012 in the seven largest coastal condo markets in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach counties.
Beginning the week of April 16, 2012, the Condo Vultures® Market Intelligence Report™ plans to publish a seven-part weekly series analyzing new condo sales trends in Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island.
Between January and March of 2012, buyers purchased less than 180 new units for a combined $89 million to reduce the number of unsold units controlled by the original developers to seven percent of the nearly 22,250 condos created in Greater Downtown Miami during the South Florida real estate boom, according to the new report based on an analysis of Miami-Dade County Property Appraiser data.
The remaining unsold developer units are situated in two dozen of the more than 80 condo buildings that were created in a 60-block stretch comprised of the Brickell Avenue Area, Downtown Miami, and the Biscayne Boulevard Corridor during the real estate boom that began in 2003, according to the report.
At the current 2012 sales pace, the Greater Downtown Miami condo market could be sold out of boom-era developer units in the second quarter of 2014. At the end of 2011, Greater Downtown Miami was on pace to sell out of developer units in early 2013.
A year ago in April 2011, developers controlled 14 percent - nearly 3,150 units - of the new condo inventory in Greater Downtown Miami. In April 2010, the number of unsold developer units represented 30 percent - nearly 6,500 units - of the new condo inventory added to the market during the condo boom, according to the report.
Competition for buyers is intensifying in Greater Downtown Miami as bulk owners attempt to resell units at the Paramount Bay and Vizcayne - formerly the Everglades on the Bay - for a premium and a series of recently announced new projects strive to catch the attention of buyers.
At least 11 new towers with more than 4,000 units are proposed for Greater Downtown Miami which has been the epicenter of the South Florida crash, according to the CondoVultures.com Preconstruction Condo Projects list.
Spurred by a strong pool of foreign investors, attractive land prices, and competitive building costs, developers are proposing or already constructing the 23 Biscayne Bay, MyBrickell, Sky Palace at Mary Brickell Village, Brickell Citicentre, the Resorts World Miami, BrickellHouse, One Bayfront Plaza, and an unnamed project on the former Onyx 2 site in the Greater Downtown Miami market that stretches from the Julia Tuttle Causeway south to the Rickenbacker Causeway, and Interstate 95 east to Biscayne Bay.
Of the more than 20,000 developer units created and sold since 2003, about 90 percent of the Greater Downtown Miami condos are owned by investors and second-home buyers as of July 2011, according to a recent CondoVultures.com report.
Greater Downtown Miami has the lowest rate of primary users - based on Homestead Exemptions filings - in South Florida's seven largest coastal condo markets east of Interstate 95 in Miami-Dade, Broward, and Palm Beach counties, according to the report.
The high concentration of investors and second-home buyers with foreign currencies focused on Greater Downtown Miami is contributing to the new found optimism about future development, industry watchers said.
In the first quarter of 2012, the transaction activity for developer units in Greater Downtown Miami was concentrated in 16 projects, according to the report.
Of the nearly 180 developer units to change ownership in the first quarter of 2012, the greatest number of unit transactions occurred at the Axis On Brickell condominium in the Brickell Avenue Area of Greater Downtown Miami.
More than 50 developer units at the two-tower condo project were purchased on an individual deal basis for a combined $15.5 million between January and March of 2012, according to the report.
The Mint condo tower ranked second with nearly 40 developer transactions for a combined $15.5 million in the first qurter of 2012, according to the report.
None of the other projects that sold developer units in the first quarter of 2012 were able to achieve 20 or more transactions during the same three-month span, according to the report.
Overall, developers unloaded nearly 224,000 square feet of salable space at an average of $398 per square foot in Greater Downtown Miami in the first quarter of 2012, according to the report.
It is worth noting at least an additional 500 units in Greater Downtown Miami that were previously purchased by bulk buyers are now being actively marketed for resale on an offmarket basis, according to an analysis by the licensed Florida brokerage CVR Realty™.
An additional 900 condos that were built and sold to individual buyers since 2003 are currently on the resale market at a median asking price of $400 per square foot in Greater Downtown Miami as of April 20, 2012, according to Florida Realtors association data.
Between 1963 and 2002, developers constructed 11,500 units in the Greater Downtown Miami market. The boom years of 2003 to 2010 nearly tripled the total inventory to nearly 34,000 units in Greater Downtown Miami.
The overall inventory could have been even greater if not for several proposed projects such as 600 Biscayne, Capital at Brickell, and Infinity at Brickell II being delayed or even canceled during the crash.
It is important to note there are various stages to a residential real estate transaction in South Florida.
A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.
As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.
The CondoVultures.com new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.
Condo Vultures® LLC is a real estate consultancy and marketing company based at 1005 Kane Concourse, Suite 205, Bal Harbour, Florida, 33154. You can reach Condo Vultures® LLC at 800-750-0517.
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