Miami Beach — the barrier island city that features many of South Florida’s priciest residences — is showing signs of overheating following a rapid recovery in recent years from the devastating real estate crash of 2007.
Strong appreciation in condo and single-family house resales during the past two years has led to current asking price levels that are now higher than at the peak of the last South Florida real estate boom in 2006.
The aggressive pricing of late in Miami Beach is triggering the amount of condos and single-family houses on the resale market to grow to inventory levels that traditionally benefit buyers.
As a general gauge, many industry watchers claim a healthy residential market has about six months of resale inventory. Any resale levels higher provide an advantage to buyers while lower inventory benefits sellers.
Concurrently, nearly 600 new South Beach condos built during the last real estate boom — typically not listed on the Southeast Florida MLXchange database of resale properties — were still unsold for a third consecutive quarter as of March 31 even as 17 towers with nearly 1,100 new Miami Beach condo units have been proposed at prices that in some cases exceed $3,000 per square foot, according to Miami-Dade County records and marketing literature.
Added to this, the amount of rental inventory — a key factor for investors who pay resale prices based on potential revenue generated from leasing out residential properties — on the market is also rising as more tenants lease newer units at lower prices on the mainland side of Biscayne Bay in Greater Downtown Miami.
The combination of conditions is making for an upcoming summer stretch — historically a less active time of the year for resales in Miami Beach — where prices for condos, single-family houses and rental properties are poised to potentially weaken given increased inventory levels.
To this point, the Miami Beach condos, single-family houses and rental properties currently under contract waiting to transact have a median asking price that is below the completed transaction amount realized in the first four months of 2013.
Condo prices in Miami Beach are up 20 percent to a median level of about $336 per square foot in the first four months of 2013 compared to about $281 per square foot in the same January-through-April period in 2012, which was up 19 percent from about $236 per square foot in the first four months of 2011.
The median asking price for a Miami Beach condo currently stands at about $490 per square foot — a level that is 12 percent higher than the $437 per square foot price achieved at the peak of the last South Florida real estate boom in 2006.
The increased prices have led to a growing number of condo resales listed on the market in Miami Beach.
As of May 20 more than 1,400 Miami Beach condos are on the resale market in an area where an average of nearly 225 units transact monthly. At the current 2013 sales pace, Miami Beach now has 190 days — more than six months — of condo resale inventory available.
It is a similar environment for Miami Beach single-family houses where prices and inventory are headed higher.
Miami Beach has nearly 260 days — nearly nine months — of single-family house inventory on the resale market as of May 20.