Miami is reaching the end of cycle in the luxury real estate market, where the inventory of units in the hands of construction companies would be decreasing, as well as the pace of new construction. The consequence could not be anything other than an imbalance between supply and demand in this specific segment. ISG World – MIAMI REPORT 2020 brings numbers that corroborate with the trend.
According to the report, there are 19,404 units in the Miami real estate market in new condos. The number represents all existing units in new construction launched since 2012 in the communities of South Beach, Miami Beach, Surfside, Bal Harbor, Bay Harbor Islands, Sunny Isles Beach, Hallandale Beach, Hollywood Beach, Aventura, North Miami Beach, Coconut Grove and Key Biscayne).
The report shows that more than 90% of the new units have already been sold (17,733), leaving only 1,672 in the hands of the construction companies. These are called “developer units”. Of these, 1,004 are already ready and 668 are under construction.
The data is relevant, since the so-called “developer units” exert pressure on the offer. Unlike units already sold, where owners, often families, tend to stay in properties, developer units need to be disposed of by construction companies quickly and in quantity.
While inventory at construction companies is low, there is no prospect of large volumes of new units delivered in the coming years. The pace of construction for luxury condos in Miami , which has been on the rise since 2012, has reached its peak peak in 2014, the year in which the city of Miami registered 23 launches. Since then the numbers have plunged on the graph, to the point that Miami recorded only 1 (one) launch in 2019.
Without the volume of new construction, there is no prospect of growth in supply for the coming years. The downward pressure on the offer of new condominiums becomes even more relevant when we consider the new period of completion of the work. The new developments take approximately 5 to 6 years to be delivered, almost twice as long as the condominiums launched in 2010 – 2012. This is due to the fact that the new buildings in Miami provide for considerably larger towers, with 50 to 100 floors.
That is, even if the majority of developers in Miami accelerate the pace of construction in the city, the new units would begin to enter the market in 4 or 6 years.
Is it time to buy or sell in Florida?
Faced with this new scenario, the condominium market in Miami, which is now “buyer” (favorable for buyers), tends to change soon to “balanced” or “seller”. Without competition from developers’ units and, in the absence of a considerable volume of new units, those who currently own a property in Miami will be able to benefit from the new cycle that will begin.
As we are in a transition phase in this specific segment of Miami condominiums (apartments), where the market is still a “buyer”, the moment brings interesting opportunities with up to 40% below market value (in relation to the amount paid by the buyer). Soon these units will no longer be on the market. Generous discounts outweigh the high dollar. It is an excellent time for anyone thinking about buying an apartment in Miami.
For those who want to sell, everything indicates that in the medium / short term the market will change from “buyer” to “seller”. Now is the time to start preparations for sale. In this way, when the new cycle begins, the “product” will be ready, ahead of the competition. It is time to talk to your broker in Florida about the best strategy, price, creation of the ads and home-staging. Don’t wait for the market to change before taking action.
However, there is a situation where it may be opportune to sell now and not wait for the transition. This is the case of Brazilians who bought in the past, with a low dollar (3 reais or less). In this case, selling now, this buyer will realize an excellent profit in reais, even if the dollar profit is not so expressive. We have examples here in the real estate of clients who chose to sell below the amount paid in dollars and, even so, made an excellent profit in reais.
About AMG International Realty
AMG International Realty is a global real estate firm specializing in Florida. If you want to learn more about the real estate market in Miami and Orlando, or if you want to sell your property in Florida, contact us now and chat with me on WhatsApp: +1 (308) 318 6968 (Heloisa Arazi).