South Florida’s condo and townhouse market is showing signs of strain.
The tricounty region of Miami-Dade, Broward and Palm Beach has not had this many condo and townhouse units listed on the resale market in the later part of March since the current real estate cycle began some four years ago.
Added to this, the number of units under contract that are waiting to transact — also known as pending sales — is at its lowest level at this time of year since the bottom of the last real estate cycle in 2009.
Piled on top of this, the number of South Florida condo and townhouse resales that transacted in the first two months of this year fell by 5 percent on a year-over-year basis to less than 7,050 units compared to nearly 7,450 units a year earlier in 2014, according to data from the Southeast Florida MLXchange.
The combination of factors is raising concerns the South Florida condo and townhouse market could be in the midst of a change.
As of the week of March 23, more than 27,150 condo and townhouse units in Miami-Dade, Broward and Palm Beach counties were available for purchase, representing an 11 percent increase compared to the same period in 2014 when 24,360 units were listed for resale, according to the data.
A year earlier in 2013, about 19,300 condo and townhouse resale units were available for purchase in South Florida, according to the data.
The recent run-up in the supply of units on the resale market is impacting all three counties in South Florida:
▪ Miami-Dade — with a population of 2.6 million — has the greatest number of units currently available for purchase at nearly 11,850 compared to less than 10,500 units in 2014 and about 7,550 units in 2013. Miami-Dade accounts for about 44 percent of all condo and townhouse supply on the resale market.
▪ Broward — with a population of 1.8 million — currently ranks second with nearly 8,725 units available for resale. In previous years, the number of Broward condos and townhouses on the resale market totaled less than 7,550 units in 2014 and nearly 5,825 units in 2013. Broward represents about the 32 percent of the resale market.
▪ For Palm Beach and its 1.4 million population, the nearly 6,600 units currently on the resale market ranks third in South Florida. In previous years, Palm Beach had less than 6,400 units available for purchase in 2014 and nearly 5,950 units in 2013. Palm Beach accounts for about 24 percent of the South Florida resale supply.
For units on the resale market, the prospects for selling are deteriorating.
Currently, fewer than 9,550 condo and townhouse units are under contract in South Florida as of March 23, according to the data.
Last year during the same period in 2014, the number of condo and townhouse units under contract totaled about 11,050. In 2013, the number of South Florida units under contract totaled some 12,700, according to the data.
▪ On the pending sales front, Miami-Dade once again is the regional leader in pending sales, accounting for more than 3,800 units that are under contract. The current number of resale units under contract in Miami-Dade is down from nearly 4,800 units in 2014 and more than 6,200 units in 2013.
▪ For Broward, the current number of units under contract totals about 3,400 in 2015, down from 3,900 units in 2014 and 4,600 units in 2013.
▪ In Palm Beach, pending contracts on condo and townhouse resale units total more than 2,300 this year compared to 2,400 units in 2014 and 1,900 units in 2013.
Given the latest statistics, it is impossible to immediately know whether the current condo and townhouse resale environment is in the midst of a downward trend or rather just experiencing a dip in an otherwise upward-oriented market.
It is reasonable to assume that the combination of rising asking prices for resale units by bullish sellers during the winter buying season, falling values of foreign currencies against the dollar and competition from the nearly 43,000 new South Florida condo units slated to be developed east of Interstate 95 are impacting the resale market in the tricounty region.
The unanswered question going forward is whether enough domestic buyers and suddenly cash-strapped foreign investors are around to reverse the current momentum of the South Florida condo and townhouse resale 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. Zalewski also runs the preconstruction condo project website CraneSpotters.com in conjunction with the Miami Association of Realtors.
South Florida residential resale listings
This is a snapshot of the condos and townhouses listed as available for sale or under contract in Miami-Dade, Broward and Palm Beach counties since March 2009.
’09 to ’15 change
’10 to ’15 change
’11 to ’15 change
’12 to ’15 change
Active listings of condos, townhouses
▪ S. Florida total
Pending sales of condos, townhouses
▪ S. Florida total
▪ Palm Beach
SOURCE: CRANESPOTTERS.COM COMPILED THIS DATA USING THE SOUTHEAST FLORIDA MULTIPLE LISTING SERVICE