Is island living losing its appeal? Condo values dropped for these five in 2019
Home values can dip anywhere, even on Miami’s exclusive islands.
The average and median price per square foot for condos dropped on Brickell Key, Fisher Island, Grove Isle, Key Biscayne, Venetian Islands and Williams Island from 2018 to 2019. But Realtors in South Florida said the decline reflects these markets weening themselves off of the foreign buyer.
In most cases, luxury condos on the mainland neighborhoods bordering the islands experienced a similar decrease, according to data from Berkshire Hathaway HomeServices EWM Realty. Ron Shuffield, the company’s chief executive officer and president, analyzed the change in price per square foot and inventory from November 2018 through January 2019 and November 2019 through January 2020 for homes priced over $1 million.
The problem: Oversupply measuring 18 months of inventory. “Once you have more than 18 months of supply the price per square foot is going to stagnate. When you have more than five years of supply, the price per square foot is going to reduce.”
In the luxury category, the ideal inventory for both condos and single-family homes is between 12 to 18 months of supply.
“The entire world is looking at our luxury market. But buyers are not willing to pay yesterday’s prices,” Shuffield said. “What motivates buyers is price reduction.”
BRICKELL KEY
The 44-acre island near Brickell saw a 9.69% decline in price per square foot, according to 2019 data from the Miami Association of Realtors, dropping from $424.11 in 2018 to $383.33 in 2019. The decrease mirrored pricing trends in nearby Brickell, which dropped by 10.3%, from $716.77 to $642.77.
“You have a lot of older buildings lumped into that on Brickell Key compared to other islands,” said Daniel Guerra, vice president of sales for Fortune International Realty.
The median price per square foot on the island is less than the $502 median price per square foot found on the mainland in Brickell in 2019.
“You have more inventory on Brickell than Brickell Key and a lot of that is newer,” Guerra said. “It’s not one that the inventory is better; it’s just different.”
Brickell also offers a wider array of options, including those with There are more diverse buildings in Brickell, including condominiums with more amenities — picture cinema rooms, shared work spaces, playrooms with rope climbing and game stations, charging stations for electric cars and rooftop pools — and upscale finishes.
“Newer buildings have the ability to provide more amenities for more buyers working increasingly from home,” Guerra said.
.jpg)
Brickell Key’s popularity remained steady, with about 130 transactions per year in both 2018 and 2019.
The highest sale in 2019: a 3,608-square-foot unit at Asia Brickell Key that went for $3.75 million, or $1,039 per square foot, in July.
“It’s an established market,” said Guerra. “You don’t have a lot of inventory flooding out.”
FISHER ISLAND
On the 216-acre Miami Beach island reached only by boat, the median price per square foot dropped by 6.25% in 2019, from $1,700 in 2018 to $1,600, according to Elena Bluntzer, senior global real estate advisor for the Bluntzer Group, an affiliate of ONE Sotheby’s International Realty.
“What sets it apart is that it’s very exclusive,” she said. “You can only go onto the island if you are invited by a resident, a member of that club or are staying in one of the 13 bungalows.”
But that exclusivity didn’t stop prices from sliding more than in Miami Beach overall, where the average price per square foot for luxury condos grew by 2.2%, from $1,136.94 to $1,161.53 as inventory decreased from 54.4 months to 46.6 months.
“What led to the dip was too much inventory at one time,” Bluntzer said.
Still, the number of transactions increased from 36 in 2018 to 41 transactions in 2019.
“The sellers that reduced their listing prices achieved a sale of their properties,” Bluntzer said. “This was not the case in 2018, when sellers were just testing the market at unrealistic listing prices.”
A growing pool of empty nesters and financiers from the Northeast are outpacing foreign buyers that once dominated the market in the early-to-mid 2000s.
The highest sale last year — at Palazzo Della Luna unit — measured 4,904 square feet. It sold in September for $22.92 million, or $4,673 per square foot.
“Due to our favorable tax situation which affects buyers from the US, predominantly from New York, Connecticut and LA, we have seen an uptick of investors and new residents purchasing substantial real estate here,” she said. “This started in the last quarter of 2019 and is increasing steadily. Also, Brazilian buyers are starting to invest here again as their economy is showing signs of recovery.”
GROVE ISLE
Prices for the waterview condos on the tony 20-acre island off the south end of Coconut Grove also dropped by about 5.45%. That contrasts with the overall luxury condo market in Coconut Grove, where per square foot prices grew by 6.3% increase, from $550.45 to $585.10. Inventory decreased from 50.6 months to 21.3 months.
One big difference: The three Grove Isle condo towers were built in the early 1980s. The center Grove has several new condo buildings.
Along with the 18-story condo towers, Grove Isle is home to tennis courts and the Grove Isle Hotel and Spa. A developer is proposing the addition of a fourth condominium despite facing lawsuits from residents.
Prices vary by square footage, unit conditions and view in the early 80s condos, said Kara Zeder Rosen, a Realtor with the Jills Zeder Group. a two-bedroom unit in 2018 had a median price per square foot of $378.43, which declined to $312.96 in 2019. A three-bedroom unit on the island decreased from $549.64 per square foot in 2018 to $467.06 per square foot in 2019.
The number of transactions increased from a total of 18 in 2018 to 26 in 2019. “Less inventory in 2018 probably led to some higher sales,” Zeder Rosen said.
Zeder Rosen said she sees young families, second-home owners and retirees buying on Grove Isle.
Last year’s highest-value sale — 2,614-square-foot unit in 1 Grove Isle Dr — sold in July for $1.6 million, or $612 per square foot.
“The buildings are set apart so even if you are in the center you get the water view,” Zeder Rosen said. “The units are a little larger because they’re older construction. The location is unique. It’s on island that is private for three condo buildings.”
KEY BISCAYNE
The median price per square foot for condos on 175-acre Key Biscayne dropped by about 16%, from $594.51 to $495.44 in 2019.
The residential tower Ocean Tower One had the island’s highest sale last year. The 6,914-square-foot unit 201 sold in March for $6.6 million, or $955 per square foot.
Pricing is affected by location. While some condos communities sit directly on the beach, others are a block or two away.
“The island is so diversified with non-waterfront housing being less expensive,” said Compass Florida Realtor Martine Paulin.
The number of transactions declined by about 12%, said Paulin, from 207 in 2018 to 181 in 2019. While buyers from Latin America once dominated, Northeasterners are now taking the lead.
“The decrease in transactions and prices is mostly due to the fact that Key Biscayne has traditionally attracted a balanced mix of buyers from North America, South and Central America as well as Europe,” Paulin said. A stronger dollar, she said, is pricing some investors from Latin America and Europe out.
“Also,” Paulin said, “multiple buyers have understood that a price adjustment was necessary in order to sell their properties.”
The buyers that have bought on the island, Paulin said, “like that there will be no more new construction. There are no empty lots. People like that because they know the density will remain the same.”
WILLIAMS ISLAND
The median price per square foot dropped by about 3.5% for the 84-acre island in Aventura, said Ben Brissi, broker-associate with Berkshire Hathaway HomeServices EWM Realty and co-founder of Brissi Group. The median price per square foot decreased to $266.63 in 2019, from $268.77 in 2018.
That’s slightly less than in overall Aventura, where the price per square foot for luxury condos experienced a 4.1% decrease from $469.21 to $449.86 per square foot. The number of units for sale on the market decreased from 68.9 months of inventory in to 65.5 months.
“There is a lot of inventory on the market,” said Zach Joslin, Realtor with Berkshire Hathaway HomeServices EWM Realty and co-founder of Brissi Group. “There are a lot of sophisticated buyers coming and they do not want to overpay. That’s what’s driving prices down.”
Buyers from the northeast, especially New York, he said, are mostly financiers. “People before were looking at what was shiny and new. Today, buyers are looking at what will retain and appreciate in value.”
Condo sales increased by 10% from a total of 72 in 2018 to 79 in 2019. Joslin said, “With the trend or price dropping, we see significant increase of sales.”
The year’s highest sale — a penthouse unit at 3000 Island Blvd. spanning 4,410 square feet — sold in June for $1.55 million, or $351 per square foot.
Besides financiers from the northeast, most residents are attorneys and healthcare professionals, including doctors working at Aventura Medical Center, Joslin said.
Most, Brissi said, are empty nesters and full-time Williams Island dwellers.
