Miami-Dade County

Luxury real estate weighs down the Miami market. Values dip in ritzy Key Biscayne.

Miami’s skyline has soared in the past decade thanks to an influx of anonymous and foreign money.
Miami’s skyline has soared in the past decade thanks to an influx of anonymous and foreign money. Miami Herald file photo

Aventura, Key Biscayne and other ritzy enclaves in Miami-Dade County saw their property values dip this year as a sagging condo market cut into prices and new construction slowed down from its previous boom pace.

"We are beginning to see the effects of market corrections, primarily with condominiums and high-value, single-family residential properties, such as in Key Biscayne and Sunny Isles Beach," Pedro Garcia, the county's elected property appraiser, said in releasing his office's preliminary 2018 report on real estate values. "We continue to see the same market trends as last year, with an oversupply of condominiums putting downward pressure on condo values."

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Real estate values continue to grow in Miami-Dade, but a new report of city-by-city tax rolls shows weakness in some of the ritziest housing markets in the county. Miami Herald file photo

The report is closely watched by local governments, which use the calculation on real estate values within their jurisdictions to determine how much property-tax revenue they would receive under current rates. It also offers the broadest look available at the county's housing market, although the results are pegged to valuations at the start of 2018.

Overall, Miami-Dade continues to see decent gains in property values, thanks to broad demand for single-family homes in the middle of the market and the completion of nearly $6 billion in new construction launched during more robust times for new sales. Countywide, property values grew 6 percent at the start of 2018. Factor out new construction, and existing values were up 3.9 percent for the year.

Middle-class neighborhoods drove much of the growth. In Key Biscayne, one of the wealthiest cities in the county, existing values saw a rare drop, declining 1.8 percent. Hialeah, a working-class stronghold about 10 miles from the coast, posted gains of 7.2 percent for existing properties.

"Lower-end properties are going up. Higher-end properties are going down," said Lazaro Solis, the county's deputy property appraiser. "This could just be a market correction. If we see the same pattern next year, it's more indicative of a slowdown in the market."

In Broward County, a market that has largely avoided the kind of high-rise building boom of luxury condos that defines Miami real estate, the June 1 report was far more bullish.

Existing properties in Broward saw values increase by 6.1 percent, with a 7.7 percent increase once new construction gets added. No Broward city saw existing values decrease. The lowest gain came from Weston, at 3 percent; the highest came from West Park at 10.4 percent.

“We saw another year of strong growth in Broward County,” said Marty Kiar, Broward’s elected property appraiser. “But the thing about real estate is: you never know.”

For Miami-Dade, the report brought some breathing room for the 2019 budget. The county had forecast 5 percent growth for the budget year that begins Oct. 1, a bit below the 6 percent growth reported countywide in the June 1 report. A second report, issued July 1, will provide the final values used to generate 2018 tax bills.

The undisputed leader for overall gains was Surfside, which saw values soar 43 percent over 2017. That was thanks almost entirely to the completion of the $1 billion Four Seasons luxury tower in the oceanfront city, where values of existing properties dipped nearly 4 percent. On the bottom of the scale stood Key Biscayne, an island municipality where new construction is limited. Overall values dropped 1.5 percent.

Every corner of the report portrayed a housing market cooling off, compared to the 2017 results. This year's $5.6 billion tally of new construction was down 30 percent from the $8 billion recorded in 2017. Downtown Miami's special taxing district, known as the Downtown Development Authority, is the heart of the city's newest crop of high-rise towers.

The Downtown Development Authority district saw overall gains of nearly 13 percent in 2017. In 2018, that plunged to 3.2 percent. That was thanks entirely to new construction, too. Existing values dipped half a percent in the district.

Nelson Gonzalez, a real estate agent who specializes in luxury Miami Beach condominiums, ticked off a string of seven-figure sales he's seen or closed in recent months. But overall, the demand for pricey apartments remains cool.

"There's a lot of inventory," he said. "The buyers still have the pick of the litter."