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Greater Downtown Miami looks like a buyer’s market for condos

Peter Zalewski
Peter Zalewski

Do not look now, but a buyer’s market for condominium units is reemerging in Greater Downtown Miami just in time for the winter buying season that begins in November.

Five years since the Greater Downtown Miami condo market hit bottom in 2009, the nearly 60-block stretch from the Julia Tuttle Causeway south to the Rickenbacker Causeway, and Biscayne Bay west to Interstate 95, is once again showing signs of buyers gaining a statistical upper hand over sellers.

Greater downtown Miami now has almost 14 months of condo resale inventory available for purchase at an average asking price of nearly $490 per square foot as of Sept. 30, according to the latest data from the Southeast Florida MLXchange.

During the first nine months of this year, buyers acquired fewer than 1,450 condos — about 160 units a month — at an average sales price of $405 per square foot, according to the preliminary data for September.

By comparison, buyers acquired an average of almost 200 condos monthly at an average price of less than $370 per square foot in Greater Downtown Miami during the same January-through-September period of 2013, according to the data.

As a generalrule, industry-watchers say a healthy real estate market has about six months of residential inventory available for purchase at any time. Fewer months of residential real estate inventory typically suggest a seller’s market and more months indicate a buyer’s market.

In addition to the increasing supply of resale units available in Greater Downtown Miami, developers have proposed at least 64 new condo towers with almost 18,500 units in this market, according to the pre-construction condo market website CraneSpotters.com. (Full disclosure: My firm operates the website.)

Some 31 condo towers with a total of more than 9,100 units are being marketed for presale — quite likely to the detriment of resales — at a mean minimum price of nearly $535 per square foot in Greater Downtown Miami, according to the latest Developers Price Survey conducted in September by CraneSpotters.com.The combination of proposed and existing condos available in Greater Downtown Miami means buyers have plenty of options to choose from when considering a purchase.

This current scenario raises various scenarios about the state of the Greater Downtown Miami market, ranging from an area that is showing signs of inventory saturation to proactive sellers listing their units today in preparation for the winter buying season.

Whatever the answer, market participants are unlikely to have a clear understanding of the current condo climate until the summer of 2015, when the next wet season begins.

In the meantime, buyers and sellers are expected to work diligently in the months ahead in pursuit of a competitive advantage in the Greater Downtown Miami condo market by focusing their efforts on sub-markets that are better-positioned than others.

A closer look at the statistics reveals the Biscayne Boulevard Corridor sub-market — which stretches from the MacArthur Causeway north to the Julia Tuttle Causeway — has the fewest months of resale inventory available: 11.4 months.

Currently, fewer than 475 condos are on the resale market in the Biscayne Boulevard Corridor at an average asking price of about $429 per square foot, according to the data.

During the first nine months of this year, buyers acquired about 41 units monthly at an average price of $365 per square foot in this sub-market.

A notable challenge for the area is the fact that the average transaction price for a condo resale is about 7 percent higher in 2014 than at the peak of the last boom in 2006, when prices averaged $340 per square foot.

The next-best sub-market is the Brickell Avenue area — which stretches from the Rickenbacker Causeway north to the Miami River — where there is about 13.7 months of resale supply.

More than 1,100 condo resales are currently available at an average asking price of $510 per square foot in that area.

For context, the average resale transaction price in the Brickell Avenue area during the first nine months of 2014 is about 5 percent less than the 2006 peak of $443 per square foot.

Based on available inventory, the worst-positioned sub-market is the Central Business District — which stretches from the Miami River north to the MacArthur Causeway — where more than 15 months of condo resale inventory is on the market. Almost 600 condo resales are available at an average asking price of more than $490 per square foot.

Fortunately for this sub-market, the average condo transaction price in the Central Business District in 2014 is still about 2 percent below the price level of $419 per square foot achieved at the peak of the last boom in 2006.

The unanswered question going forward is whether sellers are studiously preparing for the historically busy winter tourism season or simply trying to unload their units to the highest bidder in the months ahead.

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 pre-construction condo project website CraneSpotters.com in conjunction with the Miami Association of Realtors.

Greater Downtown Miami condo resale market

This is an annual breakdown of condo resales in the GDM and its three sub-markets since the peak of the last market in 2006. These figures reflect January to September of each year shown. Please note that all these statistics are for condo resale activity between the Julia Tuttle Causeway and the Rickenbacker Causeway, and Biscayne Bay west to I-95.

Greater Downtown Miami

(Julia Tuttle Causeway South to the Rickenbacker Causeway)

Closed sales

Resale

Units

Change

Monthly

resales

Average

Change

2014

1,441

-18%

160

$405

10%

2013

1,751

19%

195

$367

24%

2012

1,474

86%

164

$295

36%

2009

791

12%

88

$217

-48%

2006

707

79

$420

Biscayne Boulevard Corridor

(Julie Tuttle Causeway South to the MacArthur Causeway)

Closed

sales

Resale

Units

Change

Monthly

resales

Average

Change

2014

371

-14%

41

$365

17%

2013

432

24%

48

$311

32%

2012

347

127%

39

$236

48%

2009

153

5%

17

$159

-53%

2006

146

16

$340

Central Business District

(MacArthur Causeway south to the Miami River)

Closed

sales

Resale

Units

Change

Monthly

resales

Average

Change

2014

343

-12%

38

$412

8%

2013

390

18%

43

$381

28%

2012

330

1647%

37

$297

17%

2009

125

136%

14

$253

-40%

2006

53

6

$419

Brickell Avenue Area

(Miami River south to the Rickenbacker Causeway)

Closed

sales

Resale

Units

Change

Monthly

resales

Average

Change

2014

728

-22%

81

$422

9%

2013

930

16%

103

$387

21%

2012

799

55%

89

$319

41%

2009

517

1%

57

$226

-49%

2006

514

57

$443

Source: CraneSpotters compiled this chart using data from the Southeast Florida MLXchange as of Sept. 30

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