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Luxury Condo Glut Forms in Downtown Miami, Suburbs

At Current Sales Pace, Inventory Would Take Years to Clear Out
September 13, 2018
Credit: Paul Owers for CoStar Group.

Downtown Miami isn’t the only area in Miami-Dade County saturated with luxury condominiums, a sign buyers may be seizing control of the softening market.

Sunny Isles Beach, an upscale suburb in the northeastern part of the county, has almost 600 units listed for sale at $1 million or more, according to Condo Vultures Realty, a brokerage and consulting firm.

With an average of nearly 12 condos selling every month in the first half of the year, it would take about 51 months to unload all the units in Sunny Isles if no more came on the market, according to the Condo Vultures data.

A market balanced equally between buyers and sellers has a six-month supply, analysts say.

Meanwhile, it would take more than 42 months to absorb all the luxury condos for sale in Aventura, another northeastern Miami-Dade suburb, Condo Vultures said. Miami Beach has a 24-month supply.

It would take 70 months – about six years – to sell the 559 units on the market in downtown Miami.

Their analysis includes only for-sale units, not condos in the development pipeline.

Condo builders have been bullish on Miami-Dade since the end of the six-year housing bust in late 2011, but the numbers show the seller’s market is losing steam.

Land prices have shot up because of a shortage of dirt, so most builders have little choice but to target well-to-do buyers, according to analysts.

Buyers have the leverage now, and if sellers want to unload their properties quickly, they'll have to lower their asking prices, said Peter Zalewski, principal at Condo Vultures.

“I would be pessimistic for the foreseeable future,” he said. “It’s a race to the bottom.”

Miami economist Ken Thomas said he was struck by the number of cranes on a recent visit to downtown. A sure sign of a struggling market is an uptick in concessions to buyers and brokers, but Thomas said he isn’t noticing an abundance of perks.

“I’m sure some developers will be caught with a little more inventory than they want,” he said. “But I think the market is still doing well. There’s strong demand from Latin America. Miami is still a safe haven.”

The supply of luxury condos also is elevated, but to a lesser degree, in the two counties just north of Miami-Dade, according to Condo Vultures.

It would take 22 months to sell all the luxury condos in Broward County, while Palm Beach County has a 13-month supply.

Paul Owers, South Florida Market Reporter  CoStar Group   
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