Condo sellers in Miami-Dade face a bitter reality — prices keep falling. Here’s why
.JPG "Real estate properties sits off Lake Santa Barbara in Pompano Beach, Florida on Monday, April 26, 2021.")
Condo sellers in Miami-Dade County may feel like they’re riding down Walt Disney’s Tower of Terror these days with prices steadily dropping, a result of dwindling buyers and rising inventory.
The median sales price dropped to $420,000 in June, down 6% from this year’s high of $445,000 in March and about the same as a year ago, according to the latest home sales report by the Miami Association of Realtors released on Tuesday.
It’s the third month in a row of declining condo prices, signaling a larger problem for people who want to sell their condos and those who want to buy them.
In addition to usual challenges, such as oversupply, South Florida condos are facing a buffet of new issues including the requirement of boosting reserve funds for repairs as a result of the deadly Surfside building collapse in 2021. That could mean higher association fees, especially in older buildings.
“The patient,” said condo expert Peter Zalewski, referring to the health of Miami-Dade’s condos, “needs open heart surgery. When you assess a condo you need to look at when it was built. Everything before 2000 is in a doom loop. Anything between 2000 and 2010 has standing power. They have high cholesterol. They’re overweight. But it’s manageable. Anything after 2010 is healthy.”
All the changes mean buyers are moving cautiously, said Zalewski, the founder of the real estate consultancy firm Condo Vultures.
Miami-Dade has 8.9 months of condo inventory. A balanced market consists of six to nine months, with anything over benefiting buyers.
Buyers know their condo homeowners association fees may rise because of reserves, repairs and spiraling insurance costs in a state threatened and hit by hurricanes.
This means sellers are reducing prices in desperation to exit a growing crisis.
In Broward, the crisis is not as visible. Prices actually rose last month. The median sales price of $287,500 is up slightly from May at $282,000, an increase of nearly 3% from a year ago.
Another for Broward sellers: slightly lower inventory compared to Miami-Dade, with 7.9 months of inventory.
Condo sales dropped in Miami-Dade about 20% and in Broward 27% from last year at this time. Total sales — including condos and single-family homes — fell by double-digits in both counties. Miami-Dade had a total of 2,051 deals, down 13.2%, and Broward had 2,206 deals, down 18.9%.
Growing pains for condos
The month-to-month drops in condo prices are just the beginning. Expect year-over-year drops in pricing, said Jack McCabe, owner of the Deerfield Beach-based real estate and economic research firm Jack McCabe Expert Services.
“A year from now you and I are going to be talking about prices dropping,” McCabe said.
People now are buying condos when they absolutely need to purchase a home, Zalewski said.
“If you’re a buyer, why would you jump in when the meteor hits the earth?” he said “Watch for prices to pull back.”
Houses going strong
Sellers of single-family homes are living a sweeter life compared to condo owners looking to bounce. Inventory remains on their side, hovering at around four months in both Miami-Dade and Broward. In addition to sellers having the advantage during negotiations, they also keep seeing median sales prices reaching new highs.
Miami-Dade has a median sales price of $657,000 for single-family homes, a new historic benchmark. Prices grew about 6% since last year. It also broke record set in April when median sales prices rose to $654,000.
Broward saw similar trends for single-family homes. Prices grew to $640,000, about 4% more than a year ago. It’s the highest price point Broward has seen this year.
Dwindling cash deals
Of all of Miami-Dade’s residential transactions in June, 37.9% closed with cash. It’s a similar story in Broward, which saw 36.9% of deals close in cash. It’s a high percentage when compared to the national average of 28%. Still, both are down from highs seen in February with 43.3% seen in Miami-Dade and 44.5% in Broward.
This story was originally published July 24, 2024 at 5:00 AM.
