Condos' share of Miami residential sales slips as excess is absorbed
By Marilyn Bowden
Condo sales, which have been commanding an increasing share of total home sales in Miami-Dade County since early 2003, dropped back a bit in July. Local brokers say this is a healthy sign that excess condo inventory is being absorbed.
Esslinger Wooten Maxwell's "Facts & Trends," which looks at resale activity recorded on the Southeast Florida Regional Multiple Listings Service, showed condo sales represented 63% of market sales in February, the highest ever recorded. The July tally dropped back to 56%. Since condos first registered at 51% of total resale transactions in February 2003, they had fluctuated between 51% and 59% of the total.
"There was a rush of sales in the second half of last year and first half of this year," said Esslinger Wooten Maxwell President Ron Shuffield, "but that inventory was predominantly short sales and foreclosures.
"We're now back to a six-month inventory of condos and single-family homes. The unknown is how many foreclosed units are still out there, but the good news is we have the whole world wanting to buy here, so demand is strong and prices are still good for buyers." As of July, he said, condos represented 61% of resale inventory, and he said he expects a return to a 55/45 ratio in sales of condos and single-family homes.
Sales of both condos and single-family homes at the high end of the market — from $500,000-$3 million — are thriving, said Ivan Hernandez, co-principal of SoBe Luxury Homes, a division of Douglas Elliman Florida, but condo sales still dominate.
"During the second quarter, the inventory of luxury condos in Miami-Dade was reduced 25%," he said.
One reason condos outperform single-family homes, Mr. Hernandez said, "is that South Florida has traditionally been a second- and third-home market. Single-family homes are more likely to attract the end-user, though we do see some investors buying them."
Only 3% of distressed properties in Miami-Dade were in the luxury bracket, he said, and consequently it has remained more stable. In some areas, "we're seeing a shift upwards in price per square foot."
Condos are convenient for non-resident or part-time owners because "it's much easier to manage a condo from a distance, and much less to go wrong inside a condo," said Ralph E. DeMartino, president of Ocean International Realty in Miami Beach and 2011 residential president of Miami Association of Realtors.
"Secondly, condos tend to be in the coastal areas where people want to be — or, in the case of urban backfill, they're seen as a good alternative to urban sprawl."
The proliferation of distressed condos on the market — falling, but still accounting for more than 50% of inventory in the lower price ranges — has attracted an "unending force of international cash buyers," Mr. DeMartino said.
While in July 756 bank-owned condo units were on the active market, he said, 685 units in this category sold.
"There's less inventory," he said, "and a good, strong, healthy demand."
Statistics don't tell the whole story, said Roman Pavlik, principal of The Pavlik Group at Keller-Williams. For example, new units sold by developers and sales by owners don't show up in the multiple listings service, or MLS.
"The sales numbers may be down in the MLS," he said, "but off-MLS sales have rapidly increased in the past six to nine months. The condo market in downtown and Brickell is much stronger than the MLS indicates."
International investors, who Mr. Pavlik said now compose 50% of his business, are particularly interested in new construction, he said, "because they don't want to deal with maintenance issues, and they want it to have rentability." And they're more likely to sell privately.
Several buildings completed a few years ago are just now releasing new units, he said, because they were stuck in litigation.
He estimated 5% to 7% of units in downtown buildings were affected.
"Now they're being freed up," Mr. Pavlik said, "and none of those units are in the MLS.
"So we have to go by neighborhood and compare apples to apples. We can't just say the whole market is up or down."
But with Miami-Dade pushing up against its development boundaries, he said, "We have nowhere to go but up. Miami's population is growing, and it only makes sense that condos will continue to predominate."
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