Miami condominium market sees small price drop

The Miami condominium market is relatively stable and holding its own compared to countywide statistics, experts say, despite a decrease in transactions from this time last year and a small drop in the year-to-date price per square foot.

Integra Realty Resources (IRR) and One Sotheby’s 2016 TRENDS Real Estate Market Report showed a quarterly comparison between Miami-Dade County waterfront and non-waterfront condominium market statistics.

Data of waterfront condos showed that compared to the first quarter of 2015, the first quarter of 2016 saw a sizeable 36% drop in transactions and a 1% increase in average living area.

The average price of a waterfront condo dropped 14%, with the average price per square foot dropping 15% from $834 to $711.

Non-waterfront condos saw a less dramatic drop in the number of transactions between the first quarter of 2015 and the first quarter of 2016, shedding only 6%.

While the 4% drop in average price and the 5% increase in price per square foot – from $427 to $447 – in non-waterfront condos are less extreme than the parallel percentages for waterfront condos, the average living area dropped 8%.

According to Integra Realty Resources, the 2016 year-to-date average price per square foot for downtown Miami condominiums is $441 – down 3% from 2015.

This is compared to a recent history of increases in downtown Miami condo pricing – a 6% increase from 2014 to 2015, a 16% increase from 2013 to 2014 and a 22% increase from 2012 to 2013.

Downtown, often considered the “face and brand of Miami,” is a very important indicator for stability, said Anthony Graziano, senior managing director of Integra Realty Resources.

“It’s the canary in the coal mine.”

One Sotheby’s 2016 TRENDS Report showed that countywide 6,078 waterfront condos were sold in 2015, an 11% drop from 6,806 sales in 2011.

The average price per square foot in 2015 was $479, a 55% increase from $310 in 2011.

For non-waterfront condos, the countywide market saw a 1% decrease in 2015 from 2011, with 10,578 sales in 2015 compared to 10,727 in 2011.

Additionally, the price per square foot was a whopping 72% increase in 2015 from 2011 with $181 per square foot in 2015 compared to $105 in 2011.

Roughly 70% of all transactions are cash, Mr. Graziano said.

“Prices are down 3% to 4% this year. A lot is in anticipation,” he said. “Pricing is starting to adjust.”

“If nobody is under duress, there won’t be a major correction in pricing,” Mr. Graziano said. “Quite frankly, a lot of predictions about a crash are way overblown. Really, the world economy is the biggest variable.”

According to the report, fluctuations in many currencies as compared to the US dollar have weakened the buying power of foreign investors and constrained overall pricing.

However, Mr. Graziano said, brokers agree that a good proportion of sales are still foreign-driven.

“I don’t expect that to rocket back in 12 months,” he said. The market needs to wait “for the world economy to catch hold.”

The next 12 months, the report said, will probably reflect a return to a more balanced market where buyers have more choice and buying power.

“Condo markets are, in general, relatively healthy,” Mr. Graziano said. “But there are different submarkets and they are not all going to move in the same direction.”

Price drops for resale condos in the urban core correlated with new construction in the Central Business District, Coconut Grove, inland Brickell and waterfront Edgewater, reflecting substantial new supply, the report said.

There have been less current sales on pre-construction condos in the past six months, Mr. Graziano said. “Velocity traffic and pre-sales are down about 30%.”

“Quite frankly,” he said, “the city is holding up compared to county statistics.”