The condo market in Miami is heavy in inventory, which essentially means lots of people trying to sell their properties. Buyer demand is strong, but there are many places to choose from where buyers are placed in the driver’s seat. But the BOLD buyers are the ones that get great deals in this market. I’m already seeing properties selling below the listing price at 10-15-20 percent, and buyers who picked those up only got them because they made offers instead of taking things at face value. That’s why I call this a “market of opportunity.” There are opportunities, but only for people who seek them and don’t let little things like asking for prices get in the way they try. Buyers picking up properties in this market have the advantage of having plenty of choices. Buyers waiting for the market to flatten or start rising will end up being able to participate in lower prices but may not get the choice of units they really want and will be left with the remaining ones.
The current Miami condo inventory glut will decrease by the end of 2019 or first quarter of 2020, bringing balance back to the market, in the absence of any general global or national economic challenge. In other words, if inventory is engulfed, buyers won’t be in control anymore as they were this year and will be for much of 2019. While the 2010-2015 boom was driven primarily by foreign nationals from Latin America but also from Europe and other continents, domestic buyers, primarily from the northeastern U.S., will still drive the past few years and probably 2019.
On the selling side, market drivers are likely to be the same pre-construction buyers between 2015-2018 who bought in speculation of rising prices, who are now caught in a market where they are probably upside down and possibly with a mortgage that may not cover their monthly carrying costs. Many of them will probably want to sell, and their prices will need to be flexible. Before the 2008 market crash caused by the global financial crisis, there are also many owners who are ready to sell now. They waited long enough to see their property values go down and then up, to find now that they are still floating around a price that is similar or lower than when they purchased. They have held on to the investment for long enough (10 + years is not a short time to hold an investment) and are ready to move forward.
Not all neighborhoods from the top real estate companies in Miami are the same, as Edgewater, Downtown Miami and Brickell focused most of the new condo construction. In general, neighborhoods such as Coconut Grove, Coral Gables and South Beach will be a little more stable. That said, there is a lot of luxury ($ 1M+) condo inventory even in those neighborhoods, so overall price pressure will inevitably be down in 2019, with Greater Downtown Miami seeing the most acute price pressure. There are some price points that have suffered a few percent declines already, but I don’t think they have much more room to go down. 1-brs in the range of 100-250 K and 2-brs in the range of 250-350 K may still have a small amount of downward pressure but not much. The properties where lots of opportunities will be available are the $400K+ 1 bedrooms and $600K+2-bedrooms. In this latest condo boom, there were just too many of those built, and it will take at least another 12 months to clear the glut of those new condo resales. And the bold buyer will have plenty of opportunities.
Most top rated real estate agents who have not yet begun construction or are still in the early stages of construction are outsiders, meaning developers who do not have long building records in Miami, or smaller developers building more boutique-style buildings in lower density neighborhoods such as North Bay Village. Jorge Perez’s likes have no condo projects in the pipeline and have actually flown the nest to other Latin American and U.S. cities until there is a greater appetite for new condos here in Miami. For many years now, Florida has been one of the top places in the US housing market for many good reasons. First, Florida is the fourth most populous state in the U.S., and many people are translating into a lot of rental demand for Miami (and landlords) real estate miami beach. Moreover, according to the United States. Census Bureau, Florida enjoys one of the country’s highest rates of population growth. The local economy is doing pretty well, and the unemployment rate has dropped in recent years. All these factors outline the perfect recipe for a profitable rental property’s long-term rent. Couple these with the many tourist attractions and beautiful climate, and you’ll also end up with an ideal location for investing in short term rentals (or vacation homes).