According to the public records compiled by Cranespotter, Miami’s real estate has suffered of a downshift that is just now starting to recover.
Out of 350 units over the $5 million dollars that are today on the market, only 6 units are sold per month. And out of this closed deals, 96% of them had to decrease their price for closing. However, the average percentage of reduction is only 5% under the listing price. Investors are just trying to get rid of their South Florida real estate assets.
Since 2011, we have witnessed in Miami of a lot of new condo constructions. Most of them are either put on hold or even canceled as there is a lot of supply for the demand at this moment. Developers are not anymore interested in constructions in luxury neighborhoods such as South Beach or Brickell. They now have a new playground. Any guess? well, for those who thought it was Downtown, bravo!
According to the brokerage Peter Zalewskis Condo Vuture Realty, this district offers the geographical advantages of most luxurious neighborhoods, with more affordable prices. Developers don’t want to stop investing in Miami, but they are forced to find new alternatives that attracts more public. Despite this effort, projects that already have started their sales, are now forced to freeze or to cancel.
What we can see here is a market re-balance. All these condos’ constructions cancellations are just a way for the market to correct itself. The demand is low, and the supply is way to high, so a lot of developers won’t take the risk of investing much more money on a project that might not even arrive into the economic balance point.
Out of the constructions that have started since the beginning of this downshift (2011) in Miami, only 100 are now completed. More than 64% of the constructions are either proposed (81 units), under planning process (46 units) or they are still under construction (53 units).
We know this has happened before, there is a lot of quiet before a market boom! The real estate market in Miami is now in stand-by, but it is just the quiet rain before the rainbow to appear!