South Florida has an oversupply of condos. That’s expected to change soon
South Florida still has an oversupply of condos but that’s anticipated to change by 2021 or 2022 thanks to population growth.
The number of active listings continues to decline for condos constructed from 2012 to 2019 from east of Interstate 95 to Fort Lauderdale, according to the 2020 ISG Miami World Report.
South Florida had 27,337 active condo listings from early July 2017 to late June 2018, then 26,764 from early July 2018 to late June 2019 and 24,572 from early July 2019 to late June 2020.
A snapshot in early July 2018 shows 3,029 active listings, or 17.52%, then 2,742, or 15.86%, in July 2019 and 2,433, or 13.64%, in July 2020. An inventory above 10% indicates a buyer’s market, according to the report.
At the same time, Florida ranked as the second-fastest growing state after Texas, according to the report. Approximately 950 people per day moved to Florida in 2019. Forty-eight percent came to South Florida that year, including Miami-Dade, Broward and Palm Beach counties.
“It’s a seller’s market for single-family homes; inventory is shrinking. There’s so much interest that prices are going up. That’s drawing interest to condos,” said Craig Studnicky, president of ISG Related. “We expect to see a seller’s market for condos in 12 to 18 months.”
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The percentage of sales dropped year-over-year for condos in April and May, as more buyers — many from the Northeast — gravitated to single-family homes. Eighty percent of residential transactions were for single-family homes for the first six months of 2020 in South Florida, based on the Multiple Listing Service, said Studnicky.
South Florida is also expected to see an uptick from Latin American buyers come 2021, creating more competition for housing, Studnicky said. According to the International Monetary Fund, the global economy is expected to contract by 3% in 2020.
Come 2021, the global economy is expected to see 5.8% growth with China leading with 9% growth. The U.S. is expected to see 4.7% growth in 2021. China’s anticipated growth will create a domino effect: China is one of the largest consumers of South American goods; South American countries are expected to see a boost in their economies, allowing for more disposable income for housing, Studnicky said.
“We now have 15% of our annual condo sales coming from Latin America. If you increase that to 25% in 2020 given the economic growth the region is expected to see, that will impact sales,” he said.
A seller’s market for condos would trigger new development, Studnicky said. “Developers are going to look at when the condo market tips into a seller’s market because that means prices are going up and they can compete with resales.”
