The Sunny Isles Beach condo resale market in Northeast Miami-Dade County is trading at its highest average price level in at least a decade — and possibly ever.
In the first quarter of 2015, buyers purchased Sunny Isles Beach condo resale units at an average price of $450 per square foot, which is nearly 15 percent higher than the level of $392 per square foot reached in the peak year of the last South Florida real estate cycle in 2006, according to data from the Southeast Florida MLXchange.
It is unknown if the current condo resale prices are the highest ever in Sunny Isles Beach as statistics before 2006 are no longer readily available.
What is known is that Sunny Isles Beach condo resale prices have more than doubled from 2010 when average transaction values had slumped to a first-quarter low of $218 per square foot in this barrier island city that stretches from Haulover Park north to the town of Golden Beach, and the Atlantic Ocean west to the Intracoastal Waterway.
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Since the bottom of the last cycle, condo resale prices have steadily increased on a year-over-year basis in the first quarter for five consecutive years, according to the data.
Since 2010, condo resales prices in Sunny Isles Beach have risen on a per-square-foot basis to $243 in 2011, $295 in 2012, $380 in 2013 and $421 in 2014, according to the data.
It is important to note the value of the dollar for the average transaction prices cited has not been adjusted for inflation.
The impressive recovery of the Sunny Isles Beach real estate market has been driven by international investors from countries such as Brazil and Russia who came to South Florida looking to capitalize on the low condo prices from the previous market crash at a time when their foreign currencies were strong.
It is unclear exactly what percentage of Sunny Isles Beach condo resales is being transacted by foreign buyers as no recent studies have been released publicly.
To understand just how international the Sunny Isles Beach community — where a super-majority of the available housing supply is located in high-rise condo towers — is, consider that nearly 59 percent of the city’s 21,700 population was born in a foreign country, according to Census data.
To this point, a “language other than English” is spoken “at home” for nearly 70 percent of the residents of Sunny Isles Beach, according to the data.
Sunny Isles Beach’s success in attracting international investors could, ironically, raise the risk levels for the condo market in the near term.
In the last year, the attractive economic conditions — low real estate prices, strong foreign currencies and a growing global economy — that had revived the Sunny Isles Beach condo market from 2010 lows has begun to change.
The dollar has strengthened substantially against most foreign currencies.
In the last year, Brazil’s real has fallen 28 percent against the dollar, and Russia’s ruble is down 30 percent, according to the currency exchange website OandA.com
Added to this, condo resale prices in Sunny Isles Beach have risen to levels in which some foreign buyers are beginning to withdraw given worsening economic conditions in their home countries.
Concurrently, competition for domestic buyers — who have strong dollars — is intensifying as condo projects planned for other parts of the barrier island work aggressively to sell preconstruction units.
This combination of factors could help explain why the number of condo resale transactions in Sunny Isles Beach has fallen by 20 percent on a year-over-year basis to 180 deals in the first quarter of 2015, according to the data.
In the first quarter of previous years, Sunny Isles Beach’s condo resales totaled 224 units in 2014, 199 units in 2013, 207 units in 2012, 257 units in 2011 and 193 units in 2010, according to the data.
As total transactions are falling, the number of condo units available for purchase is rising.
More than 900 units are currently available in Sunny Isles Beach at a time when an average of about 60 condos transacted monthly in the first quarter of this year, according to the data.
The 2015 sales pace means Sunny Isles Beach has more than 15 months of condo resale supply available for purchase.
A balanced market is considered to have six months of condo supply. More months of supply indicates a buyer’s market, and fewer months suggests a seller’s market.
In addition to the growing supply of condo resale units on the market, developers have announced plans to build 20 new condo towers with more than 2,650 units in Sunny Isles Beach during this cycle, according to the preconstruction condo projects website CraneSpotters.com.
(For disclosure, my firm operates the website.)
Currently, eight new Sunny Isles Beach condo towers with nearly 1,050 units are under construction and one other tower with 39 units has been completed since 2011. An additional 11 towers with nearly 1,600 units are in some stage of the planning or presale process.
Given the lack of Sunny Isles Beach towers to be completed to date during this cycle, it is difficult to forecast the percentage of new condos that are likely to be listed for resale upon completion, especially since the mean minimum price per square foot for presale units was nearly $1,500 per square foot in April, according to CraneSpotters.com.
The unanswered question going forward is whether the Sunny Isles Beach condo market has enough buyer demand in this current cycle — given the amount of available supply — to support a continuation of price increases in future quarters.
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.
Sunny Isles beach condo resale prices climb to new heights
This is a summary of the annual condo unit resale transactions in Sunny Isles Beach in the first quarter (Jan.-March) 2006-2015.
Condo resale units
Average price per sq. ft.
Source: Southeast Florida MLXchange