A seven-mile drive from downtown Miami — the epicenter of South Florida’s condo crash — over the Rickenbaker Causeway and a series of bridges leads to a residential real estate market that is practically completely recovered from the real estate crash of 2007.
More than six years since the dramatic price crash and ensuing foreclosure crisis, the village of Key Biscayne - a 1.2-square-mile island with an international population of less than 13,000 people — is quietly emerging as one of the clearest examples of the resilience of the South Florida residential real estate market.
The current median price for a single-family house in Key Biscayne is off only eight percent from the levels experienced in 2006. Condo and townhouse prices are down 16 percent from back during the last South Florida real estate boom, according to data from the Southeast Florida MLXchange.
By comparison, median sales prices in Miami-Dade County are still down 47 percent for single-family houses and 31 percent for condominium and townhouse units in the first five months of 2013 compared to the same period in 2006.
For Key Biscayne residential property owners, the last seven years have not been free of economic pain and uncertainty.
The island’s single-family market bottomed out when the median resale price slipped 35 percent to $476 per square foot in 2010 from $736 per square foot in 2006. As of May 31 the median resale price in Key Biscayne is back to $680 per square foot.
In the condo and townhouse market, the median price in Key Biscayne tumbled by 38 percent from $603 per square foot in 2006 down to $372 per square foot in 2011. In the last two years, though, the median price has increased to nearly $510 per square foot.
A critical factor in the rebound of the Key Biscayne residential real estate market has been the amount of inventory available.
Key Biscayne has only 160 single-family houses, condos, and townhouses available for resale in a market averaging 29 residential property transactions monthly. Based on the current sales velocity, Key Biscayne has less than six months of available inventory.
Industry watchers consider a healthy market to have about six months of resale inventory available. Inventory levels that are higher than six months typically point to a buyer’s market with weaker pricing while lower inventory levels suggest a seller’s market with higher prices.
The Key Biscayne residential real estate market is falling in line with the projection.
The median asking price for a single-family house in Key Biscayne is currently more than $925 per square foot as about 56 properties are available for resale. By comparison, nearly 15 single-family houses are under contract waiting to transact at a median asking price of $715 per square foot, suggesting today’s sellers are becoming more optimistic about future appreciation.
In Key Biscayne’s condo and townhouse market, the median asking price for a unit is nearly $625 per square foot with more than 100 units on the resale market. By comparison, about three dozen condos and townhouses are under contract waiting to transact at a median asking price of less than $500 per square foot, once again suggesting bullishness by sellers.
Controlled inventory levels have been undoubtedly bolstered Key Biscayne’s recovery but so has the number of foreign buyers — especially from Latin American — purchasing on the island.
Key Biscayne, more than any other place than South Beach, has benefitted from the influx of foreign buyers who originally came to South Florida to purchase distressed condos in Downtown Miami and elsewhere for investment before ultimately deciding to acquire a personal residence on the island.
An estimated 46 percent of Key Biscayne’s population was born outside of the United States with 62 percent of the island’s residents identifying themselves as Hispanic or Latino origin, according to the 2010 U.S. Census.
Key Biscayne’s diversity combined with the island location and small-town feel has allowed the municipality to come back faster than practically any other market in South Florida.
Going forward, Key Biscayne seems poised for higher prices and lower inventory as developable land is limited on the island. No example is clearer than the fact that only one new condo project — a two-tower complex called the Oceana — is proposed for Key Biscayne at a time when nearly 140 towers with more than 18,500 units have been announced for the coastal South Florida market.
Peter Zalewski is a principal with the Miami real estate consultancy Condo Vultures. Zalewski, a licensed Florida real estate professional since 1995 and founder of CVR Realty and Condo Vultures Realty LLC, advises developers, lenders and institutional investors .